In a project and line organization, responsibility is often divided across functions, departments and managers. Each has its own goals, budget and responsibilities, and projects are set up to deliver initiatives that cut across the organization.
When there is not enough capacity to do everything, different needs have to be weighed against each other. Negotiation naturally becomes part of prioritization. Each person represents their area and makes the case for what matters there.
This customer is waiting.
We have already promised this.
We need to address this risk.
This is critical to our revenue.
These can all be perfectly reasonable arguments. They reflect the responsibilities people have actually been given.
As we move towards outcome-driven steering and stable cross-functional product teams, the logic starts to change. Instead of bringing people together temporarily around different initiatives, we have stable capacity that can be used to create change over time. And outcomes such as increased customer loyalty, shorter lead times or better quality rarely fit neatly within organizational boundaries.
The question is therefore no longer primarily who should get resources for their initiative, but which outcome matters most right now and should get our limited capacity.
But the old logic can remain.
We can have stable cross-functional teams and Epics that describe desired outcomes, while different parts of the organization continue to compete for the teams’ capacity.
We have changed the structure around prioritization, but prioritization itself is still a negotiation between organizational interests.
When each alternative is argued from a different perspective, they also become difficult to compare. One case is made in terms of customer value, another in terms of revenue and a third in terms of risk. They may all be important, but they are being judged by different measures.
Without a shared basis for the decision, something else eventually has to settle it. It may be what has already been promised, who makes the strongest case or who has the most influence.
Or HiPPO: Highest Paid Person’s Opinion.
The real problem is not HiPPO. The problem is that we have created a prioritization system in which we need a HiPPO to move forward.
To make priorities across the organization, we need a shared basis for our decisions. A clear strategic ambition provides direction, but it is not always enough. Several possible outcomes may contribute to the same ambition, so we still need a way to decide what should take priority.
Strategic contribution, expected outcome, time criticality, risk and the capacity required may all matter. The challenge is to consider them together and compare the alternatives relative to each other, rather than having each part of the organization make its case using its own criteria.
There is a lot we can learn here from the economic thinking behind approaches such as Cost of Delay. The point is not to find a formula that gives us the right answer, but to create a better basis for weighing different perspectives and alternatives against each other.
That is The Negotiation Trap in Prioritization: we have moved from projects to product teams and started describing the outcomes we want to achieve, but different parts of the organization are still negotiating over the same limited capacity.
The shift is from negotiating between local interests to making shared priorities based on what matters most for the organization as a whole.
More traps
The Negotiation Trap in Prioritization is one of several traps in the series Traps when moving from projects to product teams.
See the bigger picture
The negotiation trap in prioritization is one example of what can happen when we change the way we work without fully changing the underlying logic.
Our Project vs Product Organization in a Nutshell poster explores this shift from several perspectives including strategy, execution, governance, teams, funding, culture and organization.
