Agile Lagging to Leading Metric Path

Even in an Agile environment there is a benefit to applying measures to understand progress.  It can be tempting to apply the same iron triangle input metrics (based on cost, schedule, and scope) that may have been used in a more traditional mindset to Agile projects and initiatives.  Those, however, tend to be output related. Instead, I suggest removing all of those metrics and start with a clean slate. On the clean slate, first consider your outcomes.

An Agile mindset asks that you consider an outcome instead of output as a measure of success.  This means you should first start with understanding your desired outcomes for an initiative or project.  Within a business context of building products, one measure of success is an increase in revenue. Having a customer revenue metric helps you understand whether the products being built are increasing revenue upon release. While capturing revenue is a good starting point, it is a “lagging” indicator meaning you don’t recognize the evidence of revenue movement until after the release is in production and has been in the marketplace for a period of time.

To supplement a lagging measure, it is beneficial to have corresponding leading measures or indicators that provide you with visibility during creation to gauge if you are moving the product into a position of increased revenue. I call this framework the Lagging to Leading Metric Path.  This visibility is important because it provides input for making decisions as you move forward. Making the right decision leads to improved results. As you consider measures (or indicators), think about how they help you gain visibility and information for decisions in building a product that helps you lead toward an increase in revenue.

For a hopeful increase in customer revenue, what leading metrics can we put in place to ensure we are moving in the right direction?  Let’s say in this case that increased revenue is the hopeful lagging metric based on expected customer sales.  Examples of leading measures or indicators to achieve an outcome of this lagging metric for increased customer revenue include:

• Customers attending Sprint Review: a leading metric where you capture how many customers are actually attending the sprint review and how much feedback they give. This indicates engagement and interest. 
• Customer satisfaction from Sprint Review: a leading metric is capturing customer satisfaction from the functionality they viewed within the sprint review.  This indicates levels of satisfaction with the functionality as the product is being built. 
• Customer satisfaction of product usage: an indicator of the most recent release highlighting a level of satisfaction on the usage of the current product including commentary.   

When applying Agile to product development, the outcome that matters most are often represented by lagging metrics.  Therefore you will need leading indicators to ensure you are moving in the right direction, to provide visibility, and to help you with decision-making.   Within your own context, consider constructing a lagging to leading metric path so that you know you are moving in the right direction during your Agile journey.

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Note: the lagging to leading metric path really isn't specific to Agile and I would suggest applying this to an initiative or project aligning with any mindset, process, method, or practice of delivering value.

To read more about establishing an Agile Lagging to Leading Metric Path and Agile Measures of Success, consider reading Chapter 14 of Being Agile. 

Size Matters – using “size” instead of “estimate” on Agile projects

When I help teams implement Agile methods, I find that some folks have a hard time getting their head around “estimating” user stories (aka, requirements) using story points. When I get to the discussion of Sprint Planning where we are scrubbing stories (aka, requirements) as a team, I used to say it is now time to “estimate user stories”. I would emphasize the importance of having the whole team estimate the story together. I also tend to apply the planning poker technique where each team member has a physical or virtual set of cards with the Fibonacci sequence (aka, law of distribution) of numbers on them (e.g., 1, 2, 3, 5, 8, 13, 21, 34, 55, etc.). When it is time to estimate the user story, each team member selects a card from their deck relating to the story points they think reflects their estimate of the work which should include their notion of complexity and risk for that story.

When I educate folks on estimating user stories, some folks ask me to align the story point with days or hours. That’s when it occurred to me… I realized that when I use the word “estimate” it would make some (many?) folks think of the traditional estimation that uses “schedule” as a measure (e.g., hours, days, weeks, months, years). However, in Agile the intent is to size the amount of work based on the functionality you are building for that story. So in effect in Agile, “scope” is the measure of progress. This is when I realized that folks were often trying to apply a schedule measure because of their familiarity with traditional estimation when in fact, story points is meant to represent the size of the functionality we are building or the scope of the work including the amount of work + complexity + risk of that work. In other words, it was like comparing apples and oranges.

With this in mind, I strongly advocate that in Agile it is much more meaningful and appropriate to use the term “size” as the verb to measure the user stories since this relates to the amount of functionality you are building. This is more than just semantics. This takes us a step away from the traditional mindset where schedule is “king” and moves us to the more important focus of scope since to our customers, the functionality is what is valuable. Now make no mistake, there will be trades offs between schedule and scope, but working software that meets customer needs and provides them value is IMHO slightly more important (e.g., working software over schedule).

It is also important to note that a team’s sprint velocity is a representation of how much functionality can be delivered within a sprint. This is yet another reason why I encourage you to use the term “size” since sizing individual stories relates to the functionality you are building and the sprint velocity relates to how much total functionality is delivered in a sprint.

So if you are having trouble understanding or explaining the concept of estimating user stories, think in terms of the scope of functionality and consider using the term “size” instead of “estimation” to break from the traditional mindset of schedule. So maybe size does matter after all…