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![A Measure of Success
Cutter Sr. Consultant Helen Pukszta
“I recently asked a colleague [CIO] whether he would
prefer to deliver a project somewhat late and over-budget
but rich with business benefits or one that is on-time and
under-budget but of scant value to the business. He
thought it was a tough call, and then went for the on-time
scenario. Delivering on-time and within budget is part of his
IT department’s performance metrics. Chasing after the
elusive business value, over which he thought he had little
control anyway, is not.”](https://image.slidesharecdn.com/measurementinacontinuousworldv1-140408004358-phpapp01/85/Measurement-in-a-Continuous-World-Jim-Highsmith-3-320.jpg)
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Measurement in a Continuous World - Jim Highsmith
The document discusses how organizations can better measure their performance and focus on outcomes rather than metrics alone. It advocates for a holistic, multi-dimensional approach to evaluation that considers factors like business value, quality, and adaptability over time. Specifically, it recommends that organizations: 1) Measure outcomes like business benefits rather than just metrics like time and budget. 2) View performance evaluation holistically instead of focusing on a few narrow metrics. 3) Focus on both performance and organizational "health" to be most successful. 4) Continually learn and evolve to stay relevant through adaptive leadership.
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Measurement in a Continuous World - Jim Highsmith
- 1. Measurement in aContinuous World: How the modern organization takes it's own pulse Jim Highsmith Executive Consultant
- 2. 0 10 20 30 40 50 60 70 80 90 100 1 2 34 5 Iterations Stories Planned Revised Completed Velocity is Killing Agility! 2
- 3. A Measure ofSuccess Cutter Sr. Consultant Helen Pukszta “I recently asked a colleague [CIO] whether he would prefer to deliver a project somewhat late and over-budget but rich with business benefits or one that is on-time and under-budget but of scant value to the business. He thought it was a tough call, and then went for the on-time scenario. Delivering on-time and within budget is part of his IT department’s performance metrics. Chasing after the elusive business value, over which he thought he had little control anyway, is not.”
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- 5. Dysfunctional Measurement Systems Step1: Measurement system installed. Step 2: Performance tends to improve while people figure out the system. Step 3: People, under pressure, focus on measurement goals rather than outcomes. (Always a disconnect between the desired outcome and the measurement. Example: (1) productivity; lines of code. (2) productivity; velocity Step 4: Time Metric Desired Outcome Performance measurement Source: Rob Austin, Measuring and Managing Performance in Organizations
- 6. Facing the Future “Perhapsthe most important question facing leaders today is this: How do you build an organization that performs flawlessly and evolves rapidly, one that delivers sterling results today and changes fast enough to be relevant tomorrow?” Beyond Performance: How Great Organizations Build Ultimate Competitive Advantage, Scott Keller & Colin Price (McKinsey & Co.)
- 7. Battleground of theFuture Enterprise (Adaptive Leadership) TalentCustomers Shareholders/ Financial Markets Purpose Do Agile Be Agile
- 8. How Important isHealth (Being)? ¨ “Organizations that focused on performance AND health simultaneously ¨ were nearly twice as successful as those that focused on health alone, ¨ and nearly three times as successful as those that focused on performance alone.”
- 9. Extensive Beyond PerformanceResearch ¨ Surveys: 600,000 respondents, 500 companies ¨ 6,800 CEO’s & senior executives ¨ Reviews: 900 books & academic journals ¨ Personal interviews: 30 CEO’s ¨ Data from: >100 McKinsey clients
- 10. Multi-dimensional and Holistic “Performanceevaluation is a holistic assessment of delivery and behaviour.” TW Live Presentation, Bjarte Bogsnes, Vice President, Performance Management Development, Statoil; Chairman, Beyond Budgeting Round Table Europe
- 11. Multi-dimensional and Holistic “Youget a lot of negative behavior when you have narrow metrics that really don’t represent the complexity of the business. Instead we ask our associates to view performance holistically, versus focusing on a few specific variables.” --CEO of Gore, in What Matters Now, Gary Hamel
- 13. Creating a ValueFocused Culture ¨ Inspire around a value-based vision ¨ Make Value Visible ¤ Define a common currency and language ¤ $ @ portfolio, value points @ feature level ¨ Craft a Value Framework ¤ Value drivers ¤ Portfolio, Projects, Release, Feature, Iteration ¨ Make Value Actionable ¤ Everyone accountable for value outcomes ¤ Assemble a lightweight toolkit
- 14. The Agile Triangle Value (ReleasableProduct) Quality (Reliable, Adaptable Product) Constraints (cost, schedule, scope)
- 15. Enterprise Value Contributions EVCs Purpose Ultimate Reason Social Action Learning& Adapting Profitability Faster to Market Reduce WIP Be Continuous Increased Revenue Open New Markets Facebook Purpose: “To make the world more open and connected.”
- 16. Value Dials ¨ Purpose ¤ Reduction in specific target diseases (health care organization) ¤ % profit spent on social responsibility ¨ Financials ¤ Headcount Reduction (# of H/C reduced or avoided) x (Average burden rate for region & job type) ¤ Headcount Turnover ¤ Risk Avoidance (Value of risk) x (Probability of occurrence) ¤ Time-To-Market (Value of increased market segment share) x (# weeks accelerated to market) ¨ Learning and Adapting ¤ New practices initiated this quarter ¤ …
- 17. Value Calculation Framework ValueCost Portfolio Financial Business Case (NPV/IRR) Portfolio T-Shirt Sizing Project Same as above Inception - Revised Cost Estimate Iterative Development - Monthly Forecast Capability Decision Making Sweet Spot Where we want to start/continue to make better informed Value Engineering Decisions ROI = Value/CostFeature Story MoSCoW or other prioritization method Story Points (3,5,8) Value Cost Portfolio Financial Business Case (NPV/IRR) Portfolio T-Shirt Sizing Project Same as above Inception - Revised Cost Estimate Iterative Development - Monthly Forecast Capability Decision Making Sweet Spot Where we want to start/continue to make better informed Value Engineering Decisions ROI = Value/CostFeature Story MoSCoW or other prioritization method Story Points (3,5,8) Top Down – Allocation of Value Bottoms Up – Calculation of Cost We need to understand both Value and Cost at the Capability/Feature level. Source: Pat Reed
- 18. Value Point Assignmentand Allocation NPV = $5 million “Sales Increase” 5,000 Value Points …allocation of Value Points across Capabilities and Features… Feature A (35%) NPV = $---K “Customer Experience” 250 Value Points Feature B (30%) Feature C (15%) Feature D (20%) Feature A (25%) Feature B (50%) Feature C (25%) Feature A (10%) Feature B (25%) Feature C (40%) Feature D (5%) Feature E (20%) Feature A (35%) Feature B (45%) Feature C (20%) Feature A (60%) Feature B (20%) Feature C (20%) NPV = $---K “Other” 150 Value Points Project A: NPV = $5 million Value Points get allocated across all Capabilities and Features based upon their relationship to individual Business Value Dials Capability A (25%) Capability B (40%) Capability C (35%) Capability D (100%) Capability D (100%) Source: Pat Reed
- 19. Features with ValuePoints As a sales associate, the ability to calculate the total amount of the sale. C-5 As a sales executive, the ability to view all sales by product type, geographic region, and sales associate. C-8 As a sales supervisor, the ability to Verify the adequacy of the Customer’s Credit Rating. C-3V-13 V-11 V-2 Feature Points are a calculation of cost. Value Points are an allocation of revenue.
- 20. Reporting Differently (Reportcourtesy Jeff DeLuca) Physical Design (33) Apr 2001 JM Hubbing (20) Apr 2001 JM Satisfy Transport Item (16) Feb 2001 JM Route through Bearer System (25) Feb 2001 JM Protected Route (8) Apr 2001 JM Retest Trail Diversity (18) Apr 2001 CA Save Trail Design (10) Apr 2001 PS A-Z One Hop (14) Dec 2000 PS A-Z 2 Hops (21) Dec 2000 PS A-Z Multiple Hops (22) Dec 2000 PS Establish Pathing (19) Dec 2000 PS Comply with Diversity Constraints (13) Mar 2001 PS Establish Cost (7) Dec 2000 PS Select Bearer System (7) Dec 2000 PS Logical Bearer Systems (13) Apr 2001 PS Establish Products and Models (9) Oct 2000 JM Explode Design Model (19) Feb 2001 JM Establish Diversity Levels (19) Oct 2000 PS Generate Constraints (20) Dec 2000 LT Check Constraints for A Pathing Point (13) Jan 2001 LT Capture Details (17) Dec 2000 PS Generate and Track Site Events (16) Apr 2001 JM Generate and Resolve Order Activities (13) Mar 2001 JM Run Autodesign (24) Apr 2001 JM Establish Product (12) Oct 2000 PS Establish Product Attributes (15) Nov 2000 PS Establish Product Attribute Groups (12) Nov 2000 PS Establish Templates (7) Dec 2000 PS Establish Autodesign Mapping (6) Dec 2000 PS Protection (4) Mar 2001 PS Autodesign Transport Shortfall (14) Apr 2001 JM Establish Site (11) Oct 2000 LT Establish Node (14) Oct 2000 LT Establish Network Element (9) Oct 2000 LT Establish Equipment (15) Dec 2000 LT Establish Design Items For Models (26) Oct 2000 JM KEY: Work In Progress Attention Full Completion Progress Bar Establish Product Catalog (PC) Establish Network Arrangement (NW) Establish Order (OM)Establish Diversity (DV)Establish Design Product (DP) Inter-System Pathing (XP) Intra-System Pathing (SP) System Selection (SS) Establish Trails (TR) Establish User (11) Nov 2000 JM Users (UM) Establish CIX Trail Design (15) Dec 2000 CA Lookup CI Trail Design (23) Apr 2001 LT 100% 100% 100% 100% 100% 100% 100%42% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%89% 89% 1% 100% 100% 1% 0% 0%
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- 22. Quality Issues (technical) ¨ Code quality ¨ Design quality ¨ Automated testing ¨ Technical debt reduction ¨ Blah, blah, blah is what your business partners hear!
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- 25. What if? 25 Features CycleTime Business Outcome Business Outcome
- 26. The Consequences ofWaterfall MaintainPlan, Develop, Build, Test, Release 12+/- months Hundreds of features Serial Development Weeks Few Features Serial Development Feedback from poor quality is long term Consequences of low quality difficult to determine
- 27. Agile & ContinuousDelivery Milestone 1 R1 R2 R3 … Feedback is immediate, a matter of weeks. Consequences of low technical quality are easier to determine. Goal Not Features, but Continuous Stream of Value! 3-6 mths Weekly Releases Milestone 2 R1 R2 R3 … 3-6 mths Milestone 3 R1 R2 R3 … 3-6 mths
- 28. Summary 28 ¨ A singlerelease instance (waterfall) encourages trading off quality for features. ¨ Aggregate releases over time encourage a business trade off of features or cycle time ¨ Aggregate releases show that high quality increases feature delivery and reduces cycle time
- 29. Cycle Times ¨ Feature/Story—releasefrom backlog to deploy ¨ Release Frequency—how often features are deployed
- 31. 31 Principle/ Practice Management team embraced? Notso hot Barely started Making progress Extremely well Adapting to Changes Exploring, not planning Engaging & inspiring staff Riding paradoxes Do You Evaluate Yourself?
- 32. Do you doManagement Retrospectives? 32
- 33. Sample 360 Profile(Agility Consulting)
- 34. Intangibles Year Intangible %Tangible % 1982 38 62 1992 62 38 2000 85 15 Impact of Intangibles on Market ValueHow Leaders Build Value, Ulrich & Smallwood Intangibles assets are not reflected on Balance Sheets. Intangibles are reflected in Market Capitalization. 34
- 35. “The competitive advantageof the twenty-first century is increasingly derived from hard-to-copy intangible assets such as company culture and leadership effectiveness.” –Keller & Price
- 36. More Information ¨ Whitepaper: “Adaptive Leadership: Accelerating Enterprise Agility,” Jim Highsmith, Available on www.thoughtWorks.com. ¨ My blog: www.jimhighsmith.com. ¨ Twitter: @jimhighsmith 36