Agile software measurement, governance, and portfolio management

© 1993-2018 Scrum.org, All Rights Reserved
©1993 – 2018 Scrum.org All Rights Reserved@ScrumDotOrg
Kurt Bittner
1
30 November 2018
Gatineau-Ottawa Agile Tour 2018
Funding, Measurement,
and Governance for Agile
Leaders
©1993 – 2018 Scrum.org All Rights Reserved
Team A: 100 story points/Sprint
Team B: 90 story points/Sprint
Assuming equal point scales,
which one delivers more value?
A quiz:

How do we know if our money
is well-spent?
The essential question:
©1993 – 2018 Scrum.org All Rights Reserved 4
One typical approach…

http://www.weblogbahamas.com/.a/6a00d8341c9ce753ef
022ad3949bc6200d-600wi
And another…
And another…
Cost
Scope Time

Output
≠
Value
What’s wrong with these measures?
Activity
≠
Value
What’s wrong with these measures?

Most “output” does not deliver value
Source: http://www.exp-platform.com/Documents/2015%20Online%20Controlled%20Experiments_EncyclopediaOfMLDM.pdf
Improves
outcomes
Does
nothing
Makes
things
worse
How do we know if our money
is well-spent?

Success
=
Delivering Value
Ability
to
Innovate
(A2I)
A balance of measures gives a truer picture of success
Un-
realized
Value
(UV)
Current
Value
(CV)
Time-to-
Market
(T2M)
Value
Market Value
Organizational
Capability

Ability
to
Innovate
(A2I)
Un-
realized
Value
(UV)
Current
Value
(CV)
Time-to-
Market
(T2M)
Value
Market Value
Organizational
Capability
Current Value (CV)
Key Value Area
reveals the value that the organization delivers to customers,
today.
Goal: to maximize the value that an organization delivers to
customers and stakeholders at the present time; it considers
only what exists right now, not what it might do in the future.
Questions:
• How happy are customers today? Is their happiness
improving or declining?
• How happy are employees? Is their happiness improving or
declining?
• How happy are investors and other stakeholders? Is their
happiness improving or declining?

• Usage Index
• Transaction abandon rate
• App reviews
• Support calls and email
complaints
• Cars in parking lot after hours
• …
15
Example measures - Current Value
• Employee Satisfaction (NPS)
• Customer Satisfaction (NPS)
• Revenue per Employee
• Product Cost Ratio
• …
Indirect measures Direct measures
How do you know if a feature delivers value?
Adapted from Gothelf and Seiden: Lean UX
We believe [doing this] for [these
people] will achieve [this outcome] We
will know that this is true when we see
[this measurement] changed
Feature
Persona
Outcome
Measure

Ability
to
Innovate
(A2I)
Un-
realized
Value
(UV)
Current
Value
(CV)
Time-to-
Market
(T2M)
Value
Market Value
Organizational
Capability
Time to Market (T2M)
Key Value Area
the organization’s ability to quickly deliver new
capabilities, services, or products.
Goal: to minimize the amount of time it takes for
the organization to deliver value.
Questions:
• How fast can the organization learn from new
experiments?
• How fast can you learn from new information and
adapt?
• How fast can you deliver new value to customers?

• Frequency of Build Success
• Build pass/fail trends
• Release Stabilization trends
• Decision Latency
• …
19
T2M - Example measures
• Cycle Time
• Release Frequency
• Lead Time
• Time to Learn
• On-product Index
• MTTR
• …
Indirect Measures Direct Measures
Ability
to
Innovate
(A2I)
Un-
realized
Value
(UV)
Current
Value
(CV)
Time-to-
Market
(T2M)
Value
Market Value
Organizational
Capability

Ability to Innovate (A2I)
Key Value Area
the ability of a product development organization
to deliver new capabilities that might better meet
customer needs.
Goal: to maximize the organization’s ability to
deliver new capabilities and innovative solutions.
Questions:
• What prevents the organization from delivering
new value?
• What prevents customers or users from
benefiting from that innovation?
• Technical Debt trends
• Architectural Coupling
• Defect trends
• Production incident trends
• Downtime trends
• Number of active branches, time
spent merging
• Time spent context-switching
• Velocity trends
• …
22
A2I - Example measures
• Installed Version Index
• Negative Usage Index
• Innovation Rate
• On Product Index
• …
Indirect measures Direct Measures

Ability
to
Innovate
(A2I)
Un-
realized
Value
(UV)
Current
Value
(CV)
Time-to-
Market
(T2M)
Value
Market Value
Organizational
Capability
The potential future value that could be realized if the
organization was able to perfectly meet the needs of
all potential customers.
Goal: to maximize the value that the organization
realizes from a product over time.
Questions:
• Can any additional money be made in this market?
• Is it worth the effort and risk to pursue further
returns in this market?
• Should further investments be made to capture
additional Unrealized Value?
24
Unrealized Value (UV)
Key Value Area

25
Identifying Opportunities
Current Experience
Desired Outcome
Satisfaction
Gap
Opportunity
(Unrealized Value)
=
Value of Closing
Satisfaction Gap
Persona
• Relative competitor
weaknesses
• Market Share trends
• …
26
UV - Example measures
• Customer satisfaction gaps
• Identified and validated
opportunities
• …
Indirect Measures Direct Measures

So where should you spend your money?
Unrealized Value
Fund
“Increment”
(Sprint, Release, Team, or Product)
Opportunity
Backlog
Satisfaction
Gaps
Deliver
Adapt
Build
MeasureLearn
Inspect
A
2I
UV CV
T2
M
A
2I
UV CV
T2
M
3 Funding Horizons
28
Horizon 3
Envision, Explore
Horizon 2
Exploit, Scale
Horizon 1
Sustain, Retire
1 year 5 years
Paul Hobcraft (2010), building on The Alchemy of Growth, by Baghai, Coley, & White, 1999

Horizon 1: Sustain, Retire
29
1 year 5 years
60% of portfolio
Critical questions
• Is there unrealized value
in the market?
• “Will additional
investment drive growth
and profitability?”
• “What needs to be done
to protect or support the
business?”
Critical measures
• UV: Market share
• CV: Profitability, revenue
• A2I: Efficiency
Horizon 3: Envision, Explore
1 year 5 years
10% of portfolio
Critical questions
• “What are the unmet
customer outcomes?”
• “Can we create solutions
that will improve
outcomes?”
• “Can we create solutions
that customers will
love?”
Critical measures
• CV: Improvements in
customer satisfaction gaps
• Not concerned with
profitability, yet.

Horizon 2: Exploit, Scale
31
1 year 5 years
30% of portfolio
Critical questions
• “Can the business be
profitable, and how
much?”
• “Is business
worthwhile? Is it
sustainable?”
• “Can the business
scale?”
Critical measures
• UV: Growing market share
• UV: Potential for market
leadership
• UV: Potential for profitability
What to Fund?
Low
Solution
Certainty
Team Autonomy/Trust
High
Low High
Fund Releases
Fund Products
Fund Sprints
Horizon 3
Horizon 2
Horizon 1

Team A: 100 story points/Sprint
Team B: 90 story points/Sprint
Assuming equal point scales,
which one delivers more value?
A quiz:
• Success = value delivered not
output produced or activity
expended.
• Use a holistic view to improve
results.
• Maximize learning to become
wiser and stronger.
• Start from where you are and
improve.
34
Closing

Where to learn more
https://www.Scrum.org/resources/evidence-based-management
Professional Scrum at Scrum.org
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Leads
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Thank You!
37

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