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Metrics for Business Agility

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Ali Cox

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What should your metrics tell you about your organization? They should tell you:

  • Did we succeed with what we did in the recent past?
  • Are we succeeding now?
  • Will we succeed in the future?

Traditional metrics often measure outputs, not outcomes. In an ‘agile world’, we need to understand if what we are doing is producing results and delivering value. If we don’t, we might not be able to keep up with the competition and may not survive. We need to focus on measurements that tell us the story of how we are doing now and in what direction we need to head. Let’s look at some metrics, and better yet, let’s look at the questions you might want to ask to get the best metrics for your organization. There are hundreds if not thousands of metrics to capture, but which ones will help your organization deliver value continuously and therefore be more successful?

Measuring the Wrong Thing

I’ve worked in companies that measure ‘productivity’. They captured metrics like:
  • How many hours did you work?
  • How many client hours could you bill?
  • How many pages of documentation did you build for them?
At one job, I was measured by how many minutes I billed in six-minute increments. I think I was more focused on figuring out what I did every six minutes than actually doing a good job for the customer! I worked in companies that didn’t care what I did as long as I billed hours and the client didn’t complain. I would like to think that I did a good job for that client and was of value, but to be honest now, that’s not really what I was trained to focus on. Body in seat, spitting out documentation was considered great. Many schools measure passing rates, test scores, utilization rates of classrooms, percentage of teachers that have masters’ degrees. These metrics are measuring outputs. What should they measure? Maybe the measurements should reflect results such as:
  • The percentage of their students who are placed into jobs
  • The students’ ability to get a job that pays back their tuition
  • Ability of the student to use what they learned at school in their jobs
If we are just measuring outputs, we may be producing a lot of ‘stuff’, but not producing what is needed by our customers to solve their problems or satisfy their needs.

Measurement for Value

What we want to measure is outcome, not output. Measuring outcomes will help us hone our organization to target production of the products and services that will satisfy, delight, and excite our customers! There are also some outcomes we can measure that tell us how well our teams work together and how happy and successful we are in our work and in working with others. We will look at business success, solution option and delivery success, and team and individual success.

Individual Success

Let’s start with team and individual success. If our people are unhappy, it’s very unlikely that they will be generating valuable outcomes. So, are we happy? A recent Forbes article cited a study that found that happy employees are around 20% more productive than unhappy employees. Outcomes are affected by this: salespeople that are happy were found to raise sales by around 37%. The stock prices for companies on the Fortune “100 Best Companies to Work For” between 1998 and 2005 rose 8% more than companies not on the list. That is pretty powerful. But how do we measure employee happiness? Well, we could ask them if they are happy! Try these methods to capture metrics:
  • Run surveys
  • Have a ‘happiness thermometer’ and track where employees fall on it every day
  • Elicit a Net Promoter Score

Team Success

To measure team success, we might survey teams on:
  • How well they feel they collaborate together
  • How often they huddle
  • How well they feel that they problem-solve together How well do they come to consensus on team decisions If they feel that their work is meaningful
Metrics that show us how well we are embracing agile practices and how well we work together can help us understand how successful our teams are. Typically, people engaged in successful teams are happier.

Solution Success

Other metrics that can eventually help us achieve valuable business outcomes revolve around solution option and solution delivery success. Solution option success means that we are selecting the solution options that enable the business to deliver value. Solution delivery success indicates if we are successfully developing and delivering those solutions. Metrics for solution option success help us measure if our solutions will enable the achievement of our desired business outcomes:
  • Is the solution being used?
  • Is it operating as expected?
  • Does the business recognize that the solution attributes to success?
Solution delivery success metrics might include:
  • Value points delivered per release
  • Customer lead times
  • Quality indices (or low defect rates)
  • Scalability
Solution option and delivery success indicators should all be geared toward producing solutions that are useful and wanted by our customers, whether internal or external. Our solutions solve problems, help our customers achieve success, help them save time or money, make our customers happy, even excited! If we have happy employees and we are delivering solutions efficiently and those solutions resolve problems, are used, are useful, then our business will succeed, right? You would think so, but we need to measure business success and maybe even agility so that our success will continue with changes in the market. What metrics can help us understand business value delivery and success?
  • Contribution margin – how do our products contribute to our profits? Number of stars on crowd-sourced forums
  • Increase in brand awareness
  • Customer satisfaction scores
  • Customer net promoter scores
  • Reduction in complaints
  • Adherence to regulations
  • Innovation achieved

Business Agility Metrics Worth Capturing

Metrics captured should be worth capturing. What’s worth capturing? Those metrics that help us make good business decisions, like solution option metrics. Those metrics that help us know if we are delivering solutions well, like solution success metrics. And those metrics that will help us know if our solutions are driving and delivering value, like business success metrics. Our Agile Project Metrics Template can help you visualize the metrics you need to capture, how you are going to calculate it, how you are going to obtain the metric, and how you will present or help your audience visualize it or tell a story with it. This template also includes an example:
  • Metric Name: Customer Lead Time
  • Metric (Calculation): Number of days from request to delivery. How to Obtain: using our Kanban, track the time from the point that the customer requests the product or service to the point in time that it is delivered.
  • How to Visualize: on the Kanban
Learn what metrics fit your organization with our Agile Metrics and Value Management class! Leave class with a plan around what metrics you need, why you need them, and how you will elicit and capture them.

Thank you!

– Ali

Editor’s Note: This blog post has been previously published by B2T on our previous website. Due to its popularity, Ali has updated its content to be more comprehensive and accurate for the state of today’s environment.

Ali Cox

LEAD EXPERT

Alison (Ali) Cox has experience since the mid-1980s in various areas, including business agility, business analysis, project methodology development and training, systems development (mainframe, client-server, and web), and telecommunication expense management. She began her career in the financial services area, and then moved into systems development for accounting systems.

Ali has lived through IT and operational initiatives from waterfall to implementing agile in her own small business, then helping other companies do the same through training and mentoring. She believes that having the small business mentality (everyone has to pitch in on everything) is the right kind of mindset for all organizations, no matter the size or industry.

Ali is the author of Business Analysis for Dummies, 2nd Edition. 

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