What is the Most Important Agile KPI?

This post first appeared on the StarCIO blog, Social, Agile, and Transformation

I'm asked this question on selecting agile KPIs all the time from leaders.

Some want to try measuring agile methodologies with the same project management measurements that worked for them in the past, while others are trying to establish some oversight on a process that they don' fully understand. Other motivations include benchmarking productivity, quality, and other metrics across multiple agile teams.

You can already see there are some good and bad motivations, some approaches that better align to agile principles and others that carryover from command and control cultures. But agile teams want to improve and leaders overseeing larger agile organizations must demonstrate the impact of process investments and transformations. Metrics and KPIs can be a very good tool to show progress, drive process improvements, emphasize desired behaviors, and drive broader cultural changes.

So yes, selecting KPIs is important and smart, but they are not a one-size-fits-all answer to aligning the organization.

And that's why there are plenty of opinions published on agile KPIs.SAFe has over twenty categories of metrics, and there are several common scrum metrics. If you want to stick to what your tools provide out-of-the-box, then Jira has five metrics you won't hate, and Azure DevOps has Azure Board Reports. Other good reads include 19 ideas to help improve agile KPIs, this article on CIO.com on measuring agile success, these tips from the Agile Alliance on measuring agile success, and the PMI's metrics for agile projects.

How to Simplify the Definition and Selection of Agile KPIs

While some of these metrics and KPIs are important and useful, there's a lot to choose from. Some of these metrics focus on quality, timeliness, and productivity, but don't have correlations to business value and impact. And agile teams facing different operational challenges should choose different metrics to focus on, so for example, teams with a history of inconsistent velocity should track velocity metric and aim to stabilize it.

So when faced with this question, I try to simplify it for leaders. First, I align on terminology, then I ask them to focus on selecting a minimal number of KPIs that drive performance and behaviors. Just like every team should review metrics that will help them improve their practices, organizations should do the same with KPIs. Then I help simplify this for them,

And if you read through this post, you'll learn more about the one KPI that I believe applies to just about all agile teams regardless of frameworks being used and overall maturity.

Define Agile KPIs by Aligning on Terminology

But first, let's set some terminology. I separate out three different objectives and related measurements.

• Business impacts are driven by an aggregate of organization activity (sales, marketing, product, technology delivery, devops, data/analytics, etc.), market conditions, and other external factors. Business impacts should be measured, but they are the end result of some activities that the organization controls, and others that they do not fully control. In other words, business impacts don't always easily correlate to any one department's work, so, I advise measuring them independently and used to align the organization on vision, customer, strategy, and priorities.

• KPIs are best designed when the scope of the organization's activities (including its vendors/partners) are mainly responsible for producing impacts. They are often leading indicators of business impacts and should be normalized across an organization, department, or teams working together on aligned business objectives.

• Metrics often measure how a team is performing on a single process objective such as productivity, timeliness, quality, safety, customer satisfaction, team happiness, and innovation. An agile team might hold a retrospective where they recognize they've released low-quality code and select a metric to help drive improvements. For this reason, I prefer that teams self organize and choose their metrics. I ask them to inform their leadership what metrics they are focusing on and report on their status.

While these definitions may not be standard ones, I find they resonate with both leaders and team members. And of course, we're seeking mutual understanding, alignment, collaboration, and culture change, so how we define and utilize Business Impacts, KPIs, and Metrics is vital.

In my workshops and advisory programs, I provide guidelines drilling into these categories and helping leaders align on the best ones for their organizations. I believe that every organization is different and must decide what practices to standardize and where to empower self-organizing teams. My programs aim to simplify, accelerate, align, and form a consensus.

Can Organizations Pick One Agile KPI to Start?

But allow me to simplify even further. Yes!!

In episode 12 of 5 Minutes with @NYIke I share one KPI that most organizations can and should apply. It requires some process alignment and definition to start, but then the KPI can be improved on as the organization's agile practice matures.

It starts by formally defining a feature, which I do more directly in this post, What is a Feature and in the StarCIO Agile Planner course. The KPI measures the number of features delivered per quarter, and more experienced teams add more constraints, conditions, and success criteria that specify which features to include in the measurements

More details in the video below!

StarCIO’s Transformation Services

Join

the Driving Digital Community

Signup for *free* access to white papers and the Driving Digital Newsletter

Our White Papers