Measuring Value & Outcomes

In Part 1 of this series, we discussed three primary metrics of an Agile transformation: value, flow, and quality, aligned with the roles of scrum: PO, SM, and Dev Team, respectively. While these may be considered geek metrics, they do eventually align with ultimate business performance when financials are available months or quarters later. Furthermore, they remain somewhat abstracted from the reasons why organizations choose to implement Agile (see the graph below.) In this article, we explore the value & outcomes category of metrics to holistically steer an organization.

An Agile transformation is intended to build new business capabilities- to get things done faster, to improve product quality, to reduce risk, to improve predictability, and to improve productivity. Yet, many Agile transformations lack any plan for measuring success. Executives supporting Agile transformation programs often become frustrated with the lack of meaningful metrics. Meanwhile, practitioners debate the relevancy of metrics, often from a silo rather than an end-to-end perspective. Months into the transformation, executives wonder whether the program even merits continued funding. They struggle to pull together data after-the-fact. Because they didn’t have baseline measurements from the start of the transformation, it is hard to demonstrate progress. Often, any data that is freely available becomes the metric of focus.

A mentor of mine from twenty years ago recently asked: "Can Agile commit to long term commitments needed by executives to run their business?"  I answered with conviction that it certainly can, but when I went on to explain, I realized the answer is fairly complex. To simplify, if you prefer managing with data, you will love agile.

The Business Case for Business Agility

Cliché or Real? The world is changing around us at a faster and faster pace. Companies we hadn't even heard of a decade ago have become the centerpiece of our daily lives. The decadent luxury of one generation has become the standard of the next. Consumers and businesses alike now favor pay-per-use and “try before you buy” options. Information and services of yesteryear are now available on our Smartphones for the cost of just a few clicks or the “ad-free version” for a few dollars a month.

In Part 1 of this series, we addressed the value that Agile delivers in terms of the change in working capital from which many companies can benefit. In this post, we turn our attention to another key factor that CFOs must consider when evaluating Agility and its impact for the business related to de-risking the income stream and standing by the organization's fiduciary responsibility to its shareholders.

Agile. Delivery of business value incrementally with a minimal amount of development work-in-progress (inventory) with such a short cycle time between plan and delivery that changes in market, technology, and legislation are immediately responded to with near zero “excess,” near zero “obsolescence,” and less “working capital” (cash) needed to keep the engineering machine running.