A key challenge we see as organizations try to scale Agile is that there are disconnects between the team level, middle management and leadership in their understanding of value. Teams are fully Agile in their production and workflow, but their organization’s upper levels lag in how they communicate, report and budget regarding their new way of doing things. Leaders want to know how to quantify and measure value in an Agile operating environment.
Traditionally, milestones and KPIs were straightforward. As a need was identified,So the complete set of requirements necessary to meet that need were defined. If the requirements were satisfied, the budget allocated was not exceeded and the project was completed on time, it was considered successful. Notice that value wasn’t a part of the criteria.
Agile is focused on value delivery, which requires new methods of understanding, measuring and communicating success. Value is measured more easily for products targeted toward external customers. For example, if you deliver a new feature for a customer platform and customer utilization and engagement increases, there’s value. When it comes to products internal to the enterprise, measuring value is more difficult.
When measuring value in an Agile environment, it is important to see value as a point-in-time measurement that indicates the value you are delivering to customers and Stakeholders at the present time. If you think of the path toward achieving a Strategic Goal as a series of incremental steps, then measuring the value you are delivering at the current point in time helps you understand where you are in your journey.
Examples of key point-in-time value measures are Revenue per Employee, Customer Satisfaction and Employee Satisfaction.
Revenue per Employee
When you look at what your teams are producing, what’s the actual return on your investment (ROI)? Point-in-time ROI is rooted in Revenue-per-Employee or unit of worker input. If your teams implement a Zero-Defect Strategy to minimize rework, Revenue-per-Employee can increase significantly. Revenue-per-Employee indicates the value your teams are delivering today, which can be used to analyze trends and optimize value going forward.
Are customers happy and are they using your products? If they aren’t, why not? A Customer Satisfaction measure should include a mix of hard, quantitative measures of usage and behavior with soft, qualitative measures of attitudes, opinions and feelings about the product to indicate the value you are currently delivering. Current Customer Satisfaction measures help you understand the value customers are realizing and what you can do to improve.
The Agile Manifesto states that individuals and interactions are valued over processes and tools. Your employees are ultimately the producers of value. Engaged and productive employees are among the most significant assets your organization has and happy employees are more engaged and productive. The costs of onboarding, training and bringing new employees up-to-speed are significantly higher than keeping them happy.
Measures of current point-in-time Employee Satisfaction should include some mixture or index of hard, quantitative data such as complaints or grievances, voluntary turnover, and absenteeism with soft, qualitative measures of how employees perceive compensation, growth opportunities, stress levels and overall climate. Understanding Employee Satisfaction helps you quickly address issues and keep your teams happy, engaged, productive and optimally creating and delivering value.
A Shared Understanding of Value is Key
To truly bring value to your organization, you must be unified in your approach and in how you measure and understand outcomes at all organizational levels. The rapid changes we experience in today’s business environment requires rapid, value-based decisions. Organizations that have a shared understanding of the value they are delivering at the current point-in-time have a competitive advantage.