Agile Work requires that we align our perception of reality in order to understand each other and do work that is considered valuable by everyone. One very blunt and seemingly simple way to do this is with metrics. But metrics need to be in context and that is the part that is hard to get right. Does your organization get it right?
Having a Goal
The point of Agile Work is to get stuff done. Sound simple? It is, but it requires that you actually have a goal. Ideally a single goal. That goal forms the basis for your work and is the target towards which you drive yourself and your organization. For most corporations, that goal is related to either revenue, profit or market share. For most non-profit organizations, that goal is related to helping some group. For communities, the goal is usually related to growth or relationships. For individuals… well, it really depends on you.
There has been much written about goal setting. Here are a few quick interesting links:
The Goal by Eliyahu Goldratt
Be Excellent: Goal Setting Study from 2005
Success Through Goal-Setting
Built to Last : Successful Habits of Visionary Companies by Jim Collins
If you are working with many people in a team, an organization or a community, goal setting is a bit more complicated. There are many techniques for finding goals, gaining consensus and acting upon those goals. Brainstorming methods, doing off-sites, getting business or strategic coaching, and using various decision-making processes will all help.
Improve Against Your Goal
Once you have a goal, the next obvious thing to do is to start to move towards it. That motion must be planned and there are many ways to do this. In Agile Work methods, adaptive planning is the method most commonly used. If your goal is farther than your horizon of predictability, or if your goal somehow represents a moving target, then adaptive planning is a necessity. The specific steps you take towards your goal create an opportunity to inspect and adapt. In order to inspect your progress towards your goal, you need some way of measuring where you are and where your goal is.
One True Metric
Since your single goal is your most important destination, and since all your work should be to get towards that goal, you should only have one thing to measure. At this point, it helps to give a couple of examples.
If my goal is to drive from Toronto to San Francisco, all I really care about is estimated time to arrival. This allows me to call my friends and say things like: “Hi Jesse, I’m going to be in San Francisco at about 3pm tomorrow.” I can find a value for estimated time to arrival if I can estimate my speed, my current road distance from San Francisco, and how much time I will take stopped for breaks. This single value is all I really care about.
For a large commercial organization, finding the single measurement, the One True Metric, can be more complex. Profit is not always the best measurement, all by itself. Usually, a better metric is profit per something. In Good to Great: Why Some Companies Make the Leap… and Others Don’t by Jim Collins, there is a note of the economic denominator used by Nucor: profit per ton of finished steel. This is Nucor’s One True Metric.
It is often claimed that metrics drive behavior. In reality, there are a large number of factors which drive behavior and metrics are only a small part of that environment. Nevertheless, if you are missing good metrics, your chances of having desirable behavior are lower.
The One True Metric, by being single, simple and universal to your organization, can have a large effect on behavior.
Once you have the One True Metric in place, then what? Well, the obvious first step is to start measuring it immediately. Each measurement of the One True Metric should be no farther from the others than your organizations Horizon of Predictability. The results of this measurement must be published far and wide in your organization to every human being who works there either management or labor, employee or contractor, full-time or part-time, day shift or night shift, on-site or off-shore. Absolutely everyone should be constantly aware of this metric.
Contextual Temporary Metrics
With everyone in the organization hyper-aware of the One True Metric, you can then begin to use contextual temporary metrics to help understand details or troubls spots. These “CTMs” are qualitatively different from your One True Metric: they are used only for a short time and only in a very limited context. Two examples of CTMs are Time to Obstacle Removal and Obstacles Removed per Iteration.
Like the above example metrics, there are three important questions that must be answered about any CTM:
– Why Use This CTM?
– When to Use This CTM?
– When to Stop Using This CTM?
Every contextual temporary metric must be aligned with the One True Metric so that a good result with the CTM will not cause a bad result for the One True Metric. It is critical to understand that good results with CTMs don’t guarantee good results with the One True Metric. All CTMs can be gamed; people can produce good results against the metric while doing something that isn’t really valuable or is possibly harmful.
At some organizations, people are measured by how busy they are: their utilization levels. There are many reasons this is a bad idea, and here is one story of the consequences.
An organization I worked at decided that the larger the percentage of time that people worked, the more cost effective the organization would become. Labor was a primary cost for this organization. In order to make this idea stick, people were punished and rewarded based on their utilization rates. If you were 50% utilized, you were out the door, and if you were 100% utilized, you were lauded. But management noticed three problems:
1) it started to take a really long time to get projects done
2) people were working on several projects simultaneously
3) it was very hard to find people available for new projects
Further digging revealed that people were making up projects to fill in their time! Measuring utilization had turned into a disaster.
The improper use of metrics can cause no end of subtle problems. By using proper goal setting combined with the establishment of One True Metric and contextual temporary metrics, an organization can become aligned to its purpose and efficient at executing on that purpose.
See also: Appropriate Metrics.