6. POA Techniques

6.20 Real Options

Guide to Product Ownership Analysis

IIBA.org KnowledgeHub Guide to Product Ownership Analysis 6. POA Techniques 6.20 Real Options

Purpose

Real Options is used to help determine when to make decisions.

See section 7.12 of Agile Extension V2 for details.

In the context of product ownership analysis, practitioners can use real options to determine the sequence of PBIs to be delivered. The options can be defined with different stakeholders, including the:

Business,
Customer, and
Product team.

A PBI may be thought of as an option with a certain decision:

Postpone,
Abandon,
Scope up,
Scope down, or
Switch, etc.

Real options can be easily adapted with a decision tree to evaluate the value if a certain option is chosen over others.

POA Domain	Real Options:
Applying Foundational Concepts	Real options provide a framework for decision analysis, and an opportunity to review the urgency of decisions from a business perspective. Decisions can make use of real options with respect to Structuring work and teams, Aligning the product to the strategy based on features, or Choosing the right business capabilities needed for product development.
Cultivate Customer Intimacy	Real options allow assessing options from the perspective of different personas including the customer. Decisions with maximum value for customers can be determined by using the real options technique. For example, some of the options or PBIs may become irrelevant if not included in the product at specific times, and real options allow an analysis of such options with an expiry timeframe.
Engage the Whole Team	Qualifying options to be real and imminent requires a team effort. POA Practitioners may outline the initial analysis but the whole team, and especially the extended product team, need to decide as a group which options are relevant.
Make an Impact	For an impactful delivery of product features two elements must be met. The value that is derived, and The timing of the release. Real options are a critical tool to analyze the timing as well as the value of different decision options.
Deliver Often	Real options promote a continuous process to evaluate the sequence of features and PBIs. An iteration or a release planning meeting can leverage real options to prioritize PBIs.
Learn Fast	Historical evidence, data points, product metrics, and customer feedback, can become a learning mechanism when applying real options. Analysis results become more robust when there are mechanisms in place to observe both the options and consequences.
Obsess About Value	Value is generated, not only by making the right product decisions, but also the right timing. The real options technique helps practitioners determine the urgency and impact of decisions.