Impact Effort Prioritisation Matrix

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A priority matrix is a tool used to categorically prioritize types of work. It has three primary strengths: simplicity, speed, and applicability to all types of work (projects and operational work). A priority matrix is easy to understand and simple to use because calculations are not required. The Action Priority Matrix is a simple tool that helps you choose which activities to prioritize, and which activities to delegate or eliminate. This helps you make best use of the opportunities available to you. The matrix has four quadrants.

  1. Task Prioritization Matrix
  2. What Is An Impact Effort Matrix
  3. Prioritization Matrix Excel
  4. Impact Effort Prioritisation Matrix Examples
  5. What Is A Prioritisation Matrix
  6. Six Sigma Prioritization Matrix

Prioritization Matrix is a fun collaborative prioritization tool to compare the relative merits of alternative actions visually. This is an extremely powerful activity which combines brainstorming, team building and action planning. It's one that I often use with teams as the conversation is always extremely fruitful.

November 2, 2020 Focus area: Digital Transformation , Strategic Flow , Continuous Innovation

In the previous article, Prioritization Methods and Techniques - Part 3: Eisenhower Matrix, I talked about the Eisenhower matrix as a prioritization method. In this fourth article in the series on prioritization methods and techniques, I will discuss the Value vs. Effort matrix.

The Value vs. Effort matrix (also known as “Action Priority Matrix” or “Impact vs. Effort matrix”) is a lean prioritization approach which is useful in decision making and which helps to identify what is important (or risky) and where to direct the efforts. The matrix is used by product managers and product owners to grade strategic initiatives and features and presents a balancing approach by focusing on the items that are most valuable to the customers compared to the efforts required to implement them. This prioritization technique is similar to the Eisenhower matrix, covered in my previous article, but the Value vs Effort matrix is geared more toward product people, project and operations managers who are managing larger initiatives and teams. This method is quick and simple and has only two variables - Value and Effort - and features are plotted along these two axes.[1]

Let’s discuss the two variables of the matrix – Value (sometimes it is preferred to use Impact as a variable instead) and Effort.

Value: The product manager or product owner estimates the value of a feature (can also be an epic, or another backlog item) from a long-term perspective. The value criteria are arbitrarily defined rather than dictated by a specific formula. Yet, value can be assessed in different ways, but in general the following factors are worth considering:

  • Customer benefit (in order to define the degree of need or urgency of solution)
  • Customer engagement and satisfaction (in order to improve retention and avoid churn)
  • Opportunity size (% of customers impacted)
  • Customer acquisition potential
  • Competitive positioning (differentiation of the offering)
  • Market demand
  • Increased company’s brand awareness on the market
  • Evaluation of the investment from financial point of view (for example, by calculating return on investment, net present value, or internal rate of return)

Instead of value, impact can alternatively be used for the same axis. This can be very helpful because it makes product people (i.e. product managers and product owners) start thinking about outcomes and prioritize based on estimated impact of a new functionality and not about delivery of specific features (output). To focus on outcomes (and hence be able to estimate impact in the longer term) and avoid the risk of simply working in a “feature factory”, many of the world's leading companies use goal-setting frameworks such as Objectives and Key Results (OKRs). OKRs is great framework to ensure real value delivery by achieving alignment between strategic programs and agile execution, which is a key starting point for strategic flow.

Yet, using Impact (as an alternative to Value) as a variable is also subjective, so the best approach would be to make it transparent (and reach consensus) on how to calculate the real impact of a new functionality. A quick estimate can be done using qualitative variables such as low, medium, high. If you want to be more specific, quantitative variables can be used, such as a numeric score (e.g. a scale 1-5 with 5 being the highest) to estimate the value/impact of any feature. Nevertheless, the recommended approach would be to use relative estimation using (modified) Fibonacci sequence to calculate the value or impact of a feature or a backlog item.

Effort: The second variable in the matrix is effort. The product team estimates a feature total cost to the business and represents it as a proxy for the total effort necessary to realize it. Some people tend to use Complexity, instead of Effort, for the second axis. It is important to note that this usage could be misleading because complexity is one of the factors to be considered when estimating the effort of a backlog item. But it is not the only one, there are also other factors such as amount/volume of work, uncertainty and risks with implementation. You can either estimate the effort with a timeframe here (e.g. hours or days — depending on what your team is using), or use relative estimation using Fibonacci sequence. For high-level rough estimations, T-shirt effort size can be used, but make sure everyone understands the work range (in story points or weeks/months range) for each T-Shirt size. If relative estimation in story points using Fibonacci is used on any of the axes, it’s worth first identifying the item requiring the smallest amount of work and then estimate the remaining features/initiatives relative to it.

Once the features or initiatives are scored based firstly on their value (or impact if this variable is being used instead) and secondly on the effort needed to complete them, you can use the scores to plot these items in one of four quadrants. The four quadrants are: high value (or impact) and low effort, high value (or impact) and high effort, low value (or impact) and low effort, and finally low value (or impact) and low effort.[2] The Value vs Effort matrix is shown in Figure 1:

Figure 1: Value (or Impact) vs. Effort matrix

Let’s now explore each quadrant of the matrix.

Quick Wins (high value and low effort): This quadrant contains attractive projects, initiatives or features requiring only a low degree of effort, which can have a high impact on your product.[2] This is the category you should focus on first, the “low-hanging fruit”, which is a great way to win customers quickly. Depending on your product, you might not find many features here, but the ones landing here are definitely worth implementing. Because these features and initiatives give the best return for relatively little effort, the best approach here is to prioritize these features or initiatives on top of your backlog and deliver them first.

Major Projects (high value and high effort). This category is also known as “Big Bets” or “Strategic initiatives”. These initiatives or features have a high value or impact, but also require high levels of effort (high resources and costs involved with them).[2] Big usability redesigns and new major business functionalities often fall into this bucket. The best approach here is to be selective, pursue these initiatives and features and prioritize them high if they are likely to be worth the effort (and of course if you have the time and resources). But plan carefully and execute efficiently, if possible, by breaking down these big work packages into less complex and better-defined work items (this is where the art of slicing work comes in handy). Moreover, due to the complexity and effort of these initiatives, it is a good practice to set specific deadlines and build checkpoints/milestones into your schedule to allow for easy follow-up.

Fill-ins (low value and low effort).[2] This category is also known as “Maybes”. These are unimportant items that are usually “nice to have”. Things like small improvements to an interface, or minor software updates. These features should definitely not be picked up first and can be parked for later phases/releases or can be delegated. These are the activities your team can pick up when they have some spare time, as they can represent small wins without the need to invest a great deal of effort or resources.

Thankless tasks (low value and high effort). This category is also known as “Not worth it”, “Money pit” or “Time Wasters”. The implementation of these tasks/features would bring very little value and these items are time consuming and require a high degree of effort from your team to implement.[2] These activities or features are generally not worth implementing as they are simply waste, so the best approach here is to try to eliminate them altogether. However, if this is not acceptable, then deprioritize them and try to defer them to a later date when potentially it makes sense to implement them.

Overall, looking at this matrix, we can conclude that the highest-priority features and initiatives are the ones that you can get more value with less effort. In numerical terms, this means dividing the value by the effort and prioritizing on top of the backlog the items with the highest total score.

Let’s now discuss the pros and cons of the Value vs. Effort matrix.

Pros of the Value vs. Effort matrix

  • No detailed and time-consuming calculations are required. Even though you can compare features by calculating numeric scores for both value and effort variables, this is not mandatory. For example, if you don’t have time to calculate specific numeric scores for value and effort variables, you can simply think about ‘low’ or ‘high’ value or effort for the assessed items and place them on the matrix, or make a quick estimation using Fibonacci sequence.
  • Easy and quick customization of the method. As you can arbitrarily define the value, you can do the same with the second dimension. Instead of effort as the second axis, you can decide to replace it with other more variables such as risks, costs, time or feasibility.

Cons of the Value vs. Effort matrix

  • Subjective nature. Since there is no well-specified scoring formula (yet, some guidance and estimation tips are described above), the prioritization method is still quite open to debate and can be considered as subjective. As a result, it is very important when prioritizing with this method to make it transparent to everyone and explain clearly why a feature or initiative is defined with such a value or effort.
  • Some ambiguity of the effort variable. The easiest would be to simply estimate an initiative’s overall cost to the business and use that cost to serve as a proxy for the total effort required for implementation. This single metric is often sufficient. However, it is important to note that the effort variable can have a broad scope and if divided into subcategories, multiple components can be considered, such as operational costs, developer hours, risk, available in-house development skills and others.
  • Not a valuable method when having a big comprehensive product. The method can be time-consuming for big product teams dealing with extensive product features. This is especially true when more accurate effort calculation is needed (and not high-level rough estimations using T-shirt sizing, for example), and developers/engineers participate in refinement sessions to estimate the effort score of each single feature.

When to use the Value vs. Effort matrix

The Value vs. Effort matrix works great when you are in the early stages of new product development, for example when you are building a new product. With new products, this matrix can help a team uncover many low-hanging-fruit opportunities (i.e. high-impact initiatives requiring low effort of implementation).

Another good use case for this prioritization technique is when you have a strict deadline in the near future or very limited development resources (e.g. there is a need to identify MVP when you are building a product from scratch and have limited time or budget). This prioritization method is then helpful to find out what you can realistically deliver with the current available resources, it might be the case that you can only implement low-effort features. Moreover, the method does a very good job when you want to apply a more objective lens to the initiatives your team is feeling very positive or very negative about. By simply plotting initiatives on the Value vs Effort prioritization matrix, you may find out that some initiatives are indeed with very high business value but require significant implementation effort and are not the recommended ones to pursue straight away (as they don’t bring quick wins).

As the product matures, you may run out of low-hanging fruit and the only approach would be to embark on implementation of some bigger features. This is when this matrix is not so effective, and you’d better use another prioritization scheme.

In my next article I will talk about the Weighted Shortest Job First (WSJF) model. Meanwhile, if you want to know more about prioritizing using the Value vs. Effort matrix, please feel free to contact me.

References:

[1] Gonzalez, E. L. (2011). How to Become an Extraordinary Manager. AuthorHouse

[2] MindTools (n.d.). The Action Priority Matrix: Making the Most of Your Opportunities. Retrieved from https://www.mindtools.com/pages/article/newHTE_95.htm

also known as Impact Effort Matrix, PICK Matrix, Effective Achievable Analysis, Opportunity Analysis, Project Desirability, Project Prioritization, or Project Selection

Your Excel Decision Matrix template (DecisionPICK.xlsx)

plots your alternatives into a chart with 4 visual quadrants,

depicting trade-offs between

  1. the Impact that an alternative will probably have to achieve your objectives
  2. and the Achievability of the Effort that will probably be required

Impact Effort Matrix

This Decision Making Matrix was popularized as a tool for Lean Six Sigma quality improvement

and has become even more popular

as a tool for selection and prioritization of Lean Six Sigma projects.

It is the most popular decision-making tool for any type of business decision making.

Sample Decision Matrix example
Download free trial Excel Decision Matrix

why

How to reduct conflict using your

Decision Matrix template

Group decision making gets a whole lot easier when your team agrees on a decision-making process

Having an agreed-upon decision-making tool can be particularly useful to counterbalance the personality differences common to almost every group of 2 or more people,

where some people tend to be a little outspoken while others keep their (often better) ideas to themselves.

An Impact Effort Matrix decision-making tool can be especially useful in those uncomfortable moments when you find yourself in the position of being the designated facilitator in a group that happens to include your boss.

Video: Decision Making Tools

Or your boss's boss.

Whether it's your career on the line, or just a mild desire to avoid any possibility of unnecessary conflict..

a skilled group facilitator will become competent using every one of the many types of decision making tools that each are useful for different types of decision-making situations.

how

How to use your

Decision Matrix template

These instructions are for the Decision Matrix Quadrant Chart (DecisionPICK.xlsx)

Instructions for the simple Decision Matrix template (DecisionSimple.xlsx) are found near the bottom of this page.

Open your template the usual way

Find and open your template

Find and open your Decision Matrix template

(DecisionPICK.xlsx)

in the same way that you find and open your other 150+ Systems2win templates.

If you don't yet own a license, you can download your free trial now.

Save your working document

following the usual document storage and naming conventions established by your leaders

Open a Blank Sheet

When you're ready to start doing your own real work..

click the button to 'Open a Blank Sheet'

Excel Ribbon > Systems2win tab > Open a Blank Sheet

This blank sheet is where you will do your real work

(not on the Sample sheet — which gives you sample data that is extremely helpful for learning how to use your new tool, but is the wrong place to do your real work)

Rename your new sheet.

If English is not your preferred language

Switch to your language, just like every Systems2win Excel template.

Before getting started using your

Decision Making Matrix

Choose Chart Type

In the dropdown list near the top of the page, choose either:

  1. Impact Effort PICK Matrix

    Higher scores are better for Impact, but lower scores are better for Effort, and the desired quadrant is in the upper left

  2. Effective Achievable Analysis

    Higher scores are better for both Effectiveness and Achievability,and the desired quadrant is in the upper right

Impact Effort Matrix

is the more popular format for a decision making chart

Effective Achievable

is perhaps more intuitive because for both scales a higher score is better and Achievability often considers factors beyond Effort

PACE images from Karen Martin and Associates

Define your rating scales

On the DV sheet, define the rating scales that will appear in the dropdown lists,
perhaps choose from the many popular rating scale options.

Now your team is ready to start using your

Decision Making Excel template

Define the decision that needs to be made

Title

Succinctly summarize the problem in the Title field near the top of the page

Ensure that everyone understands and agrees upon what is to be decided.

List Alternatives

Perhaps use your Values List template, and/or your Hansei questions,
and/or any of the brainstorming techniques to come up with creative and comprehensive Alternatives.

Reminder:

As with all Systems2win templates..

you can use Link Icons to easily insert intuitive shapes with hyperlinks to related documents

At a minimum, you should link to the Project Charter for each Alternative.

Now skip down to the Details section

As with any Systems2win template.. Never edit blue cells that contain formulas.

Those cells will auto-populate when you complete the details section.

Agree upon Objectives

to evaluate proposed solutions to the problem

Objectives

If you are selecting and/or prioritizing Lean Six Sigma Projects see our online training page filled with ideas and examples
of factors to consider for Selection and Prioritization of Lean Six Sigma Projects

To generate additional ideas perhaps use any of the many brainstorming techniques

To clarify, prioritize, and reduce your list perhaps use your Values List template and other list reduction methods

Importance

Assign weight of Importance for each objective in the Impact Rating Section

Usually use a simple 0–10 scale.

You can use any rating scale, as long as larger numbers are more important.

Assign Impact and Effort ratings

Impact and Effort Ratings

In the Impact and Effort ratings grids, use the dropdowns to choose from your team's chosen rating scale.

If you enter a period (.) — that means that your team has agreed that the value is zero.

If a cell is blank — that means that your team has not yet agreed upon a Rating value.

The scores for each column will auto-calculate:

Impact / Effort - Raw Score = Sum of (Impact * Importance)

Impact / Effort - Score - Adjusted = Calculation that sets the highest Raw Score as (10 * Max),
and then all other scores are a percentage of that highest score (rounded to the nearest whole number)

Easily Adjust your Scale

Use the slider controls near the chart to quickly adjust your Maximum values..

because none of your choices are THAT good, or THAT difficult

Try it

Use the slider controls, and see how easy it is to adjust the scale on your chart

Impact / Effort - Other Considerations

Optionally use these sections to itemize objective measures of Impact / Effort that don't fit your usual rating scale.

Impact Examples:

Expected Return On Investment (ROI) — measured in dollars

Yes, your rating scale section might also have a line item for 'ROI' with a 0-10 scale, but it might also be nice to quantify the dollar impacts of each proposed project.

Perhaps refer to linked spreadsheets with detailed cost & ROI analysis.

Time Savings — measured in minutes per shift

Yes, your rating scale section might also have a line item for 'Time Savings' with a 0-10 scale, but it might also be nice to quantify the time savings impacts for each proposed project.

Effort Examples:

Who? — which people or teams might lead each project

Yes, your rating scale section might also have a line item for 'Team Availability' with a 0-10 scale, but it might also be nice to clarify details of who might be needed for 'Leaders', 'Team Members', etc.

Specific Concerns

Yes, your rating scale section might also have a line item for 'Implementation Enthusiasm' with a 0-10 scale, but it might also be nice to clarify details of who might have concerns about what.

Apply chart data labels

Yoga bookends

Important: A dot will appear on the chart only after you have entered ALL of the required data elements for each row/column:

  1. Importance rating
  2. Impact rating
  3. Effort rating

Important: Data labels will appear next to the dots on the chart only after in the Systems2win menu in the Excel Ribbon bar, you select 'Apply Chart Labels'

Every time that you enter a new Alternative, or change the description of an Alternative..

you will click this button again.

Optional: Choose your desired level of detail for your chart labels

by using the dropdown list near the top of the page to select either:

  1. Number
  2. Description
  3. Both Number and Description

and then select the button again to 'Apply Chart Labels'

Tip: If you want your highest-rated alternative to have an Impact or Effort rating lower than 10, (because none of your alternatives are THAT good, or none are THAT difficult..) then you can optionally use the slider controls to adjust the 'Max' values.

Optional: If you want to temporarily change the format of your chart labels then you can use everything you know about how to format any Excel chart.

Perhaps change font size.. Move a label..

Keep in mind, however, that each time that you click the button to Apply Chart Labels ,chart label formats will revert to the default settings.

Evaluate your Alternatives

The Decision Matrix quadrant chart makes it easy to visually see where each alternative falls in the quadrants to Proceed, Investigate, Consider, or Kill, but your team will probably want to use your Impact Effort Matrix as just one element of a less mechanical overall decision-making process.

Facilitate dialog

Talk to each other.

Task Prioritization Matrix

Listen. (really listen)

Perhaps modify and improve upon (or combine) Alternatives.

Allow time for team members to think, ponder, reflect, and consider hansei questions.. before regathering to make final decisions.

Make decisions

Impact effort prioritisation matrix example

Our Priority Ranking

After some pleasant genteel discussion,

(or a scratch & claw cat fight.. depending on the nature of your team..)

record your decisions in the row for Our Priority Ranking.

#1 is your top priority

Matrix

Please note that your final Priority Ranking may or may not identically match the calculated Scores, because your team may take into consideration additional factors.

Make plans to implement your priorities

Once your decisions have been made..

your next step is to lay out plans for how to implement your priorities

What Is An Impact Effort Matrix

Templates that might be helpful for project planning might include any of the templates for project management

Socialize your decisions and plans

Like every Systems2win Excel template, you have the choice to print to either paper or PDF.

Notice that you have the choice to print either:

  1. Just the Summary section, or
  2. Both Summary and Detailed sections

Learn how to use the Systems2win Print Buttons that are common to many of your Systems2win templates

simple

How to use the simple

Decision Matrix template

The Decision Matrix Quadrant Chart templates (DecisionPICK.xlsx) is the more popular choice, but there are times when you might want to use the simple Decision Matrix template (DecisionSimple.xlsx)

Open your template the usual way

Find and open your template

Find and open your Decision Matrix template

Prioritization Matrix Excel

(DecisionPICK.xlsx)

Impact Effort Prioritisation Matrix Examples

in the same way that you find and open your other 150+ Systems2win templates.

Similarities with Decision Matrix Quadrant template

The simple Decision Matrix template (DecisionSimple.xlsx) is very similar to the Decision Matrix Quadrant Chart template (DecisionPICK.xlsx)

so the instructions are very similar to the instructions in the section above.

Differences

  1. There are no Effort ratings.

    There are only Impact ratings.

    You can, however, use some of the (unlimited) user-defined columns to consider factors that affect Effort.

  2. You can use any scale in the 'Max' field, you can specify any positive number,and the calculated ratings will automatically adjust to that scale.

    The default is 10.

    If you enter the number 100, then the rating scale will be from 0 to 100.

    Learning Experiment: Try it in your own workbook.

This Decision Matrix template and many other decision making tools

What Is A Prioritisation Matrix

come bundled with a lot of other useful Continuous Improvement tools

Six Sigma Prioritization Matrix

to empower every team leader