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. 

Agile Value Capture Metric - Are you spending your time Building Value?

When applying an Agile mindset, a team should consider the value of each task that they are working on.  Agile often brings value concepts into play and determining the value of tasks is one way to achieve this.  Is the task considered value-added or non-value-added.   Sometimes folks have a hard time wanting to separate tasks into value and non-value because it highlights the non-valued tasks folks are doing. However, if you really want to know, then you must do this (typically at the Product team level).  Sometimes the answer surprises people.   

Keep in mind that in Agile, value-added tasks refer to only those tasks that are directly related to building the product and that your customer values.  This would primarily include user stories and the attributes of this work related to the “done” criteria (e.g., incrementally designed, developed, built, tested, etc.) in order to complete the user story.  Remember, value is from the customer's perspective.  

On the other hand, non value-added tasks do not contribute directly to building the product.  There are tasks that are out-right of no value including administrative related tasks, writing status reports, all-hands and other status meetings.  There are tasks with no direct customer value but have benefit to quality including spending time on correcting defects, tasks related to technical debt, performing refactoring. Please understand, there are levels of internal value in doing these things and the goal is to make the value levels of the work transparent. 

A good practice in Agile (e.g., value capture metric) is to capture all related work or activity a team does in a sprint (as backlog items) to understand what are value-added tasks vs the other tasks that we do.  For each story or backlog item, assign it an attribute of either “value-added” or “non-value-added”.  You can track this on a sprint basis (or release basis) or trend it over time (from sprint to sprint).  This is a team-based metric so it is for the team's eyes only.  Below are some examples:

Chart 1: Value of work per Sprint (can be rolled up to the release level)

Chart 2: Value of work per Sprint (at the detailed level)

Chart 3: Value of work from Sprint to Sprint (Trend line)

The big advantage of this type of metric is that it helps you 1) be aware of the value and non value related work that your team is doing and then 2) it allows you to make adjustments if you want to get to a more value-added stream of work.  Also, an important caveat: this metric is a team-based metric and not meant to be shown to management.  It is for the team to see where their work is being spent.   

Whether you call it value and non-value work, the key is that much like the prioritization of the backlog, that you become aware of the priority of the various types of work that is occurring on your team. This metric also brings transparency to the types of 'work' where the team members are spending their time.  While this may force you to make some tough decisions (what is value-added and what is not), it will be worth it in the long run to get your team more productive and focused on the value-added work for your customers.  This can help you on your Agile journey!