Unlocking Organisational Agility: Key product metrics every business leader should measureDate posted: 24th July 2023
In today’s rapidly evolving business landscape, characterised by entrants of newer players into established business domains, changing users’ needs and new technology being introduced at a pace faster than most organisations can keep up with organisational agility is a critical capability for success.
Leaders are often interested in understanding the impact of adopting agile ways of working and in this post, we explore five key metrics that help business leaders track improvement across teams and products across the organisation. These metrics are great indicators to pave the way for innovation, resilience, and sustained growth.
Release Frequency: A measure of how often an organisation releases updates to its product(s) is one of the primary indicators of an organisation has developed its business agility capabilities. Agile frameworks such as Scrum help organisations to release value frequently to users; before a product is ever built, the value that the product brings to its target users is assumed and organisations validate the assumptions when the product is eventually released to the customer. An organisation with increased release frequency potentially collects user feedback more frequently from its users.
The organisation should aim to increase the release frequency for its products over time; a higher release frequency enhances business agility by enabling faster innovation, responsiveness to customer needs, and adaptability to market changes. There are a number of factors that we might consider to increase the release frequency for its products:
Investment into continuous integration/deployment capabilities
Automated Functional and non-functional testing.
Improved Product Management capabilities including capturing and analyzing user feedback.
Creating cross-functional teams as part of organization design efforts.
Incidents per period: Product teams are accountable for delivering usable products to their customers and incidents, when they occur, take away from the usability of your products. Incidents refer to product downtime, product crashes, and undetected defects in the product among many others. Leaders should encourage and support the product team to reduce the number of incidents that users experience per period. Organisations should invest in technical capabilities that help capture these sorts of issues automatically from logs and in addition a medium for users to report such issues.
Organisations buy a lot of customer goodwill if these issues can be detected and rectified before these issues are visible to users. To ensure that a product remains valuable to its users, the incidents per period should trend lower over time. Some factors that could help decrease their Incidents per period include:
Capturing technical debt as first-class product backlog items.
Increased automated tests around features that are prone to incidents.
The product team’s commitment to reducing technical debt over a period of time.
Improved analytical capabilities in user logs to spot potential issues.
Lead Time: Product development is complex. Complex implies that there is no direct relationship between cause and action [Ref: Cynefin framework]. In simpler terms, there are no guarantees that the assumptions that the product team will make in building the product will be the reality. As a result, the sooner an organisation can implement its ideas and put the product in the hands of a user, the earlier the assumed value of the product can be validated. Building a product is expensive and until a product is released to its users, the budget expended up till that point could be likened to “unsold inventory” as in the case of traditional business.
Lead time is the elapsed time from idea to working product in the hand of the customer; often times product team finds it easier to measure the cycle time, which is the elapsed from when a task is in progress to the product in the hand of the customer. Cycle time can be measured in place of Lead Time but ultimately the product team should improve their backlog management system to capture Lead Time.
It is worth pointing out that effort to increase the release frequency should reduce the lead time; however, measuring and visualising the lead time provides additional value in it own right.
Factors that improve Lead Time include:
Reducing and eventually eliminating any wait times in the system
Helping to limit work in progress.
Automating testing and deployments.
Employee Happiness Index: In our work with clients, we have observed that Leaders do not pay enough attention to a very important metric; which is one that measures the happiness levels of the people that actually get work done. It seems that Leaders over time assume that employees that do not show visible signs of unhappiness must definitely be happy and our work has shown that this is definitely not the case
Employees that are not happy at work with decreasing levels of morale are not able to deliver valuable products that users love. In a recent organisation transformation engagement where we noticed that employee morale was tanking, the leaders had asked the team to increase release frequency and lower cycle time but the teams could not improve these metrics without a buy-in from the leaders to make certain decisions that involved investing in automation and restructuring the teams. The leaders also assumed that it was easy for the teams to improve. The only way we were able to get leaders to engage was after we ran the teams through an employee happiness survey, which came back with negative scores. We were able to co-create a number of initiatives with the product teams including
Ways of working that provided autonomy and purpose for the teams.
Leader commitment to provide funding for the infrastructural changes to reduce cycle time and increase release frequency.
Increasing psychological safety within the team.
Engaged and Happy employees are more likely to embrace change, contribute innovative ideas, and collaborate effectively, thereby fuelling your organisation's agility and success.
Customer Satisfaction: It takes a lot of work to build products that deliver value continually to their users and organisation that are able to build valuable products could expect customer satisfaction to improve over time.
The 4 other metrics – Release Frequency, Incidents per period, Lead Time and Employee Happiness all contribute to improving customer satisfaction. There are a number of techniques that have been used to measure customer satisfaction including Net Promoter Score (NPS) and Customer Churn rate. Alternatively, the product team could consider the deployment of telemetry that provides information on the behaviours of users within the product.
Customer Satisfaction metrics provide valuable insights into how the product meets and exceeds customer expectations. By actively listening to your customers and adapting your products, services, and experiences accordingly, the product team fosters loyalty, builds long-lasting relationships, and stays ahead in a competitive market.
At ValueHut, our agile consultants and coaches have over 20 years of experience helping organisations develop Organisational Agility Capabilities and we measure our outcomes based on improvement on these five foundational metrics. Every engagement begins with a conversation with us, contact us today for a no-fee conversation.