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Why The Impact Effort Prioritization Matrix Doesn’t Work



  • In 1979 behavioral psychologists Daniel Kahneman and Amos Tversky described the phenomenon they called Planning Fallacy.
  • In 2003, Kahneman and Lovallo extended the definition of Planning Fallacy to include the tendency to underestimate the time, costs, and risks of future actions and at the same time overestimate the benefits of the same actions.
  • Analyses of A/B experiments conducted independently by Microsoft, Netflix, Booking.com and other companies had shown that at best 1 in 3 ideas tested created any measurable positive results.
  • Your typical startup project will most likely yield 1-in-10 ratio or worse, slightly more mature companies can expect somewhat better odds.
  • some projects actually generate negative results — something that almost no development team ever considers. So, there’s an element of risk which is not reflected in the matrix.
  • Prioritization and experimentation are needed to find those few gems that are worth doing
  • break them into their parts and placing guesstimates on the subparts.
  • For bigger projects it’s often worthwhile doing some preliminary research: * Surveys * Smoke Tests — for example a “fake door” Facebook campaign. * User Interviews * MVPs
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