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Business Agility - Measuring and Investing in Growth

Vimal Pillai // April 28, 2021

Agile

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We are continuing the article series to explore successful agile adoptions, and this week we are looking at the value and measurements of success in an agile transformation. If you haven’t yet had a chance to read the other articles in the series, we invite you to explore those as well.

Business Agility – Getting Started  

Business Agility – What was step 2 again? 

Business Agility – Measuring and investing in growth <- You are here

Business Agility – Avoiding Chaos: Standards, Operations, and Guidance 

Business Agility – Keeping focus on the right things 

Business Agility – Been there, Done that… 

 

Key 4: Focus on Business Value, All of it

How does your company measure business health and how does your day to day impact that? This question leads to some great conversations, and not always in the direction you would expect. Can you answer this succinctly? When joining Improving, most of us couldn’t answer this. It is why we spend so much time teaching and explaining this. Understanding the ways that we measure business value is the first step in making a positive impact on this. The difficulty in answering this question is often tied to the size of a company, and the distance from the end customer of a specific team. When people lack the context and visibility to answer how they impact the health of the organization, we typically see them rely on their incentives to inform behavior.

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If our focus through guidance, leadership, and compensation is consistently pulled back to the short term, then we are highly unlikely to give time and attention to longer term work that may have significant return on investment. We see often that organizations get very good at their brand of firefighting, and often don’t concurrently get good at finding the arsonists. This is ultimately a short term optimization at the expense of long term concerns. Evidence of this type of problem can be seen and felt this through quality issues, continued low morale, retrospectives without action items, or recurring problems that are accepted as “unchangeable” or “unsolvable”.  

The opposite situation is similarly problematic. If our focus is on long-term results and never considers short term impacts, then we will likely grind the value out of the short term under the weight of all the investments and changes. Evidence of this side of the problem space can be seen in having a growing list of organizational changes that are never completed, change resistance because of the latest “fad” changes, or a lack of return on investment measures for programs. 

Many of us have found that there are several ways to battle these paired problems, but some of the most effective are included here. These tools help us to focus our time and energy where it will bring the most impact without allowing the urgent to always crowd out the important. We typically measure business value in 4 dimensions: Speed of Innovation/Speed to market, Customer satisfaction/Customer retention, Cost Reduction/Profitability expansion, Revenue Growth. These four areas give us a rounded view to be able to look at our program portfolio and find patterns. When we see almost exclusively cost reduction measures for the program, then we advise including protection for long term investment to ensure we don’t slip too far into short term focus. When we see almost exclusively customer satisfaction measures for the program, we advise including profitability or revenue growth metrics to ensure the customer happiness is worth the cost to achieve it. Each of these has a balancing effect when taken together.  

The last tool is one that we cannot over stress, and that is the art of work not done. When we look at the value of features (or projects, programs, portfolios, etc.), one of the key questions is “should we do this at all?”. The answer of yes is reserved for the best of the best ideas for one simple reason. Resources are finite and ideas are often more plentiful that our ability to implement them. When prioritizing we are called to compare the value, speed, and cost of the deliverable to make that call. An effective team is a trusted advisor to the product owner in this area, and collaboratively can have a huge impact on the value delivered. One of the most fulfilling experiences for a coach is having a team that works with their product owner to understand when they have provided the optimal amount of value before moving on to other deliverables.  

Key 5: Stay Empirical

The agile values are built on inspection and adaptation as an empirical foundation. As transformations and adoptions get larger the perceived cost of mistakes is higher, and the political fall-out of adjustment can be significant. The risk of not measuring and adjusting is one of slowly losing value and not noticing. If we can, as an organization, get better by 1%on a regular basis we could change the world. That is not an overstatement or hyperbole to make a point, but a statement of the compounding effect of change in an organization little wins made frequently. Continuously pursuing and achieving little gains can make a huge difference. Take for instance the following rates of change in a 1-year time frame:

1% better every day of the year – over 37x improvement in results 

1% better every weekday of the year – over 10x improvement in results 

1% better each week of the year – over 67% improvement in results 

1% better every other week of the year – over 29% improvement in results 

When we consider the staggering impact that this can have on organizations, it is a wonder that everyone isn’t focused here. Unfortunately, it is often because of the level of intent and systems thinking required to achieve and measure these types of gains consistently. We are going to explore the considerations of staying close to the empirical heart of agile.  

To measure the change to the organization, we must have something to measure against. This can be teams that are running or even teams that haven’t yet started adopting agile practices. We tend to focus this on several general areas that give us a picture of the overall state of the team. These areas are where we start measuring, but frequently we expand based on the data we are seeing in our measurements. If you are interested in the exact areas and measures that we use, please follow the contact outreach at the bottom of the article and we can send you a detailed summary. 

Work Complexity

  • We measure this so that we understand the work intake and level of unknowns in the system. Complexity can come in many forms; we primarily focus on the business needs and the systems in use. 
  • Over time we want to see the complexity of the systems reduce and the level of unknowns stabilize. 

Team 

  • Maturity in the team is measured across soft skills, hard skills, size, location, and motivation 
  • Each of these areas will vary for the team, and the coaching plan is tailor to the specific team with goals in each area. For more on this one, we dig in further in key 11. 

Customer 

  • Agile transformation includes growth and education for the customers that interact with the team as well. We measure both engagement level and authority to prioritize as a product owner. 
  • We want to see both measures raise and then stabilize over time.  

Organization 

  • We look at the leadership style, knowledge, management style, and oversight requirements for the organization. 
  • In each of these areas exceeding the boundary conditions because an impediment for the teams in that segment of the organization, and part of the implementation planning. 

*Disclaimer*
We are sure that there are more, different, better, adjusted measures that we could use. We use this as a starting point to give a baseline while we establish a cadence of feedback for the transformation and for the team leading it. 

Once we have a good baseline, the next step is to build an appropriate cadence for feedback. We want to measure frequently enough that we feel confident in the changes we are making, but not so often that the feedback becomes noise in the system. This is a tough balance to strike and is heavily dependent on the maturity of the teams involved. Therefore, our starting plan is scaled by maturity, with an assessment pre-engagement followed by 1,3,6-month measurement checks. Once the team achieves a health and stable state, we keep a 6-month check in cadence for assessing continued growth. 

Each of these measurement systems and areas of focus is meant to empower the team, coaches, and trainers to experiment and adjust. Limiting the number of active experiments that impact each team will allow us to isolate the changes that make an impact and continue to pursue the continual growth. 

If you are currently working agile, just starting the journey, or evaluating a move to agile ways of working, we would encourage you to read through this series. If you have specific questions, please reach out and we will strive to help with a no cost consultation. We are offering a free workshop on Agile Metrics where we will discuss Who are the customers for agile metrics in an organization? Which metrics have the highest potential to reinforce agile principles, focus on results, and improve decision quality? And more. If you are interested, please contacts us to set a date! 

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