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.

                    ------------------------------------------------------------------------
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’s Little Secret – It Makes You Money

Agile tends to be introduced at the team level and it’s the Agile teams who are expected to adopt Agile.   While there is various amounts of buy-in from management, some don’t seem to understand that it takes an organization to embrace Agile in order to gain the business benefits.  In other words, management has a strong role to play including adapting their behavior, embracing the Agile values and principles, and leading a culture change, in order to gain the business benefits of Agile.  It requires significant buy-in to achieve a culture change.  But this doesn’t always seem to happen. 

Some of this is not management’s fault.  Part of the issue is that Agile gets introduced to them is various ways – as a way to improve productivity, as a way to speed up development, as a way to increase quality, but in most of these cases, those introducing Agile to them fail to mention the significant buy-in they need to make.  While each of these ways have different levels of merit, it often doesn’t convey enough of a reason for management to motivate a change in their behavior and their organizational culture.    

   

How about changing the message?  Though there are many benefits for going Agile, it occurred to me that to get serious executive/senior management attention and buy-in to Agile is to give them a reason that is near and dear to their heart.  Explain to your management that Agile can increase revenue—in short, it can help them make money (or more of it).  In my experience, this gets them to actively listen, versus the passive listening they may exhibit when they think Agile is an engineering method or something the engineering team and others must do.

Yes, Agile can lead to an increase in customer sales, ergo an increase in revenue. This is all true if the organization is truly allowed to “be Agile”.  This means that teams continually demonstrate working software to customers and they are allowed to continually adapt their requirements to customer needs.  Then teams can more closely align with what customers find as valuable.  The more value customers see in your products, the more likely they will buy (or buy more).  Maybe, just maybe, if you convey that Agile can make them more money, they will listen and buy-in to what it really takes.