We, from Knowledge21, believe that the Agile methodology has four domains that must be equally taken into consideration. We also believe that every digital transformation result must generate business results.
Here, in our blog, you will find other posts on product metrics that may be of interest. Today, let’s focus on the organizational domain: the domain that handles work distribution, organizational areas, ways of working, and efficiency.
All companies have workflows, and we must learn how to manage them. Manage work, not the worker. Many of the metrics mentioned in this post aim at improving the flow instead of analyzing individuals.
6 Basic metrics
My intention with this post is to help you out in getting started. Let’s jump into metrics with both feet, shall we?
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Lead Time
The first metric that I’d like to introduce to you, and for a good reason, is Lead Time, currently known as Customer Lead Time. It is the most agile efficiency metric available.
Not only is it easy to measure (low investment, yeah!), it guides us towards yielding more results from our work (high returns — double “yeah”!).
Lead Time is nothing but measuring the time between agreeing on a task with a client and delivering the product/service. According to David Anderson, creator of the Kanban Method, the Lead Time counts “from the [point of] commitment to the time at your customer gets value from there.”
How to measure?
For each of the items that you or your team commit to handling, log the start date. It will be the day on which both parties committed. Maybe you’ll go for a task log system or keep track of when an e-mail was answered, or even the minutes of the meeting in which you agreed to handle that item.
No matter how you choose to keep track, this will be your commitment point. Whenever you deliver the activity, record that date as well. This will be your delivery point. If you subtract the commitment point from the delivery point, you’ll have the Lead Time for that item.
Lead Time = Delivery Point – Commitment Point
In short: for each work item, keep track of the time elapsed between committing to a task and delivering it.
Why is it important?
By observing Lead Time variations among different activities, you may have many insights on how to improve your work routine. When you use Lead Time as a metric, it is easier to guide efforts by assessing the added value to the client. Additionally, it will become easier to discuss routines and even responsibilities more pragmatically.
Even if your company understands clients as internal clients, that is, committing to internal demands, we recommend you to take the entire flow into account. That means the moment in which your company committed to a real client until the point in which this item was delivered to that client.
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Throughput
The throughput is a metric that evaluates how many items a given area, team, or person can deliver in a period. It is like observing how many cars go by a particular crossroad or how many liters of water go through a pipe.
How to measure?
Define a period: weekly, biweekly, sprint, month, quarter. Within this period, how many items reached the delivery point? That’s right. It’s about quantity.
Why is it important?
Awareness of accomplishments matter. It’s about being able to realize, in a simple manner, how many work items were completed. This indicator provides an overview of accomplishments and conclusions.
A great way to leverage this indicator is by working with small items. When you do so, you will be able to deliver value more quickly and having better predictability, among others.
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Aging
Aging is a metric that considers “how old” the items currently being covered by the team are. It’s about observing for how much time a task had to wait before being tackled. It is a key indicator to balance the throughput and to measure the waiting time of your backlog items.
How to measure?
Log how much time elapsed between the task creation and the moment in which the team started working on it. No matter if the request was generated formally (that is, via official tools, such as generating a demand or a project) or informally (via an e-mail or a phone call), just log it.
In short: for each work item, keep track of the time elapsed between when a request was placed and when work on that task started.
Why is it important
A truly agile team is always working on items that deliver value. An old item may no longer be relevant for the client, and maybe there is no point in even handling it.
A team that is always working on old items may not be updating their backlog and validating new hypotheses. Additionally, they may not be learning new things about their product.
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Occupation rate
This indicator assesses how the team is working. Let’s go back to the example of the water running through a pipe. If the water has no pressure, there will be no flow, and the water will just sit in parts of the pipe. However, if the water has too much pressure, the pipe will inevitably break.
All by itself, overpressure is a point of attention. When it comes to creative work, however, high occupation rates may even lead to standstills. If everyone is working on many different items, costs associated with coordination and context change will skyrocket, and team productivity will drop.
How to measure?
This indicator is calculated based on the quantity of WIP (“Work In Progress”) items held by a team divided by the team’s capacity (aka “Limited WIP”).
With a Kanban board and clearly defined flow and capacity limits, this becomes easy. Just count how many items are in progress and divide that by the existing capacity.
Occupation rate = No. of WIP items / ΣWIP
In short: define a periodicity to log the total quantity of work-in-progress items and calculate some slack based on your limited WIP capacity.
Why is it important?
Working with high occupation rates leads to overload, which may lead to considerable problems, including losing stakeholders. Working way below the current occupation rate is bad, too, since it means “waste”. Put differently, the team could be yielding much more, but its capabilities are being underused.
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Incidents
Incidents are usually identified when something goes wrong in products or services delivered by a team. If we are talking about a development team, for instance, it may be about the amount of bugs. For a product/service team, the number of complaints. For a maintenance team, the number of tickets.
How to measure?
The idea behind this indicator is to log and follow the incidence of such events. Most companies will have one or more tools to keep track of that, such as bugtracking tools, complaint boxes or ombudsman reports.
This indicator must be associated with a specific time period so that the actions may be linked to their impacts (which may be immediate or not).
Why is it important?
Teams need to be accountable for what they yield. Let us think of a situation in which there is a project team and a maintenance team. In such cases, it is quite common that the project team does not mind quality too much. After all, it won’t be fixing the problems that it created, right? Accountability alert!
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ROI
Return on investment is a type of decision that we empirically make in our everyday lives: “Is the price good?”, “Isn’t it too expensive?” All those questions are on ROI. How much are we going to have to invest so as to ensure a certain benefit? Is it worth it?
As an indicator, this is the question that ROI aims at answering. Ok, ok, I won’t lie: it does smell like a business metric, but it is so precious that it is worth being mentioned in this post.
How to measure?
This indicator is composed of two factors, namely “return” and “investment”.
The investment may be measured directly in cash by considering how much is spent on items such as software & licenses acquisition, hiring third-party services, among others. But it is also possible to think of investment in terms of dedication. Example: 3 sprints from team X.
Returns may be measured in different ways, too, direct revenue being the most obvious one. But other factors play relevant roles, too, such as client acquisition, prevention, churn (the number of clients leaving us), or session time.
The idea is to create this simple equation:
ROI = return / investment
That said, the team may choose which variables will be the most relevant ones for ROI purposes.
In short: create a unique strategy to determine the return value for the items and another one to determine the investment.
For each work item, log the result of dividing the return by the investment.
Why is it important?
Besides the points mentioned above, the team may evaluate the ROI accumulated over a period and realize if their actions during that period brought high returns. Also, a team may compare its performance with itself over different periods.
Takeaway
Such indicators will help us have better insights about what to prioritize. They may also pinpoint leverage points for truly significant changes across the organization.
Metrics are critical in helping us make better decisions. As we say in our training, “true empowerment comes from metrics.”
