The Sprint and the ROI

April 5, 2013 at 5:59 pm 2 comments


There is a simple, yet powerful idea in Scrum: When every single Sprint has a positive ROI (return on investment) risk management becomes very easy and the need for accurate long term planning diminishes.

When every single Sprint has a positive ROI you can just plan from Sprint to Sprint. When a Sprint planning provides the information that this Sprint would not generate more value for the company than it costs, you just stop the development. You have created something with a positive ROI with the previous Sprint(s) and everything is fine.

Think about it. How cool is that!

Impossible? No. I have seen it working.

Hard to achieve? Of course. You need to resign from traditional project planning and really think about how to create small valuable software increments. And adapting a new perspective is always challenging.

P.S.: One may ask what I mean with ROI. For me a Sprint has a positive ROI when you could just stop after the Sprint and have created a value that is higher than the Sprint costs.

Entry filed under: it-agile-blog-planet. Tags: .

Shades of Scrum: Estimation of the Product Backlog Shades of Scrum: The Sprint Planning and the pull principle

2 Comments Add your own

  • 1. Markus Andrezak  |  April 6, 2013 at 6:57 pm

    Hi Stefan,

    indeed a nice an easy idea. You can abstract from it being about software and look at it as any simple investment.

    If each small investment is supposed to make sense in itself, then you only get incremental improvements. Fine for lots of stuff. But if you look at the innovation portfolio of your dream company there are at least two situations in which this type of investment does not work:

    a) Your beloved pivots – They can be a tremendous task where only the whole pivot (probably more than a sprint) may bring the ROI and the pivot may also be a risky leap of faith action and thus investment.

    b) Any kind of non incremental innovation. I’d have to invest several sprint in a new, evolutionary or even more radically in disruptive innovations. You could cheat by extending the sprints😉 but knowing you – I guess you wouldn’t.

    So – all in all, I think it is a nice idea for steady product maintenance.

    Thanks for the post,

    Markus

  • 2. stefanroock  |  April 19, 2013 at 8:53 am

    Markus:
    To be clear here about a few things:
    * I would extend Sprints up to one once if that makes the ROI thinking possible (in one month a team can achieve a lot).
    * When you learn something this is a valuable result. Therefore a Sprint may have a positive ROI just for the things you learned from it.

    Pivots: There may be cases where a Pivot has to be longer than a month. But I think that in almost every case in software development it is possible to slice the MVP in serveral smaller MVPs – each allowing to gain valuable insights.

    Innovation: Yes. Some breakthrough innovations may require another approach. And again I think that in business almost every innovation is not that kind of breakthrough innovation.

    BTW: I just talked with someone who does fundamental research in quantum optics. He thinks that it would be possible to apply monthly Sprints with positive ROI (measures in insights) in his area. This may not be applicable to things like the CERN, but this is again the exception and not the rule in research.

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