NeuEon Insights / Business & IT Strategy, Business & Technology Agility

How To Measure The Business Impact Of Your Agile Transformation

Demonstrating Agile’s benefits to your organization is key to driving progress on an Agile transformation. It inspires people to get on board, opening their minds and making them more receptive to change — which is important for those who are new to Agile. It can also provide the information needed to guide continuous improvement, solidify cultural changes and maintain alignment between business and technical organizations. This can propel transformation forward more quickly and enable the business to gain its benefits sooner.

Metrics, however, are challenging: People don’t generally like being measured and will often change behaviors to meet the goals for which they’re being rewarded. Teams operate in different ways, which can make it hard to roll up meaningful information. And each metric comes with the overhead needed to track it; sometimes the value doesn’t justify the effort.

So, how can leaders overcome challenges to establish meaningful measures of Agile’s impact on their businesses? Here are four best practices I find helpful as the CEO of a company that offers Agile transformation services.

1. Focus on three categories.

Agile should generally drive benefits in three key areas.

  • Delivery performance: The organization should look for improved productivity fueled by faster velocity, higher quality and less rework. It should also work to gain highly coveted predictability — the knowledge that teams can reliably deliver working solutions at an agile pace. These metrics are largely quantifiable, and technology solutions ranging from spreadsheets to business intelligence solutions are plentiful to support their collection and reporting.
  • Business results: An important goal of Agile is faster value delivery. Sales, revenue, time to market and market share are prevalent, high-level metrics to watch, as are more granular measures like website traffic or conversions. Many companies also measure customer satisfaction, often using a net promoter score (NPS) or online surveys. Business results metrics are usually of most importance to managers and other leaders but should be tied to delivery performance measurements to help teams connect their work to the bigger picture.
  • Team and organizational health: In most organizations, I’ve found that Agile approaches can induce positive cultural change by prioritizing people, teams and collaboration. As Agile teams work together, they should work to become more efficient and effective. People should become more engaged, be comfortable in their roles and feel valued. As Agile permeates the company, those cultural changes should as well. Understanding how Agile is improving the health and well-being of teams and the organization as a whole is essential to measuring its benefits and driving adoption.

2. Identify the metrics that matter.

When most companies I work with begin deploying Agile, they think their goals are clear because they’re documented in a mission statement and communicated across the organization. Mission-statement-level goals, however, are lofty and often difficult to measure. They’re tangible to the C-suite but aren’t easily translated to the teams doing the work — who may be motivated differently. As John Doerr conveys in his recent book about the goal-setting system of objectives and key results (OKRs), you need to “measure what matters” and make it relate to each individual on the team.

What do the people at each level value? What do they view as efficiency, effectiveness and mastery? Identify their goals and the questions you need to answer to know you’re moving toward them to drive out the metrics that matter for them. Seek to use a blend of hard and soft measures. Hard measurements — for example, the story points software developers use to estimate the level of effort required to complete a request — tend to be relatively easy to measure. Softer metrics, like team culture, are more difficult, but they’re equally important. Balance both to paint a complete picture.

Finally, the best metrics are often specific to your organization. If you report and reward people on value, measure it. If you care about defect rates, measure them. Agile methodologies offer a variety of “out of the box” metrics, but that doesn’t mean you have to use them all. Tailoring them to fit your culture can make them more accepted and understood.

3. Align metrics across organizational levels.

At one of the companies I worked with, management wanted to understand overall road map progress, but teams were tracking detailed velocity metrics that didn’t align to road map goals. The CEO often acknowledged he wasn’t clear about what they were working on. The communication channel between product teams and management was misaligned, and it took months to establish a common set of metrics to measure overall progress.

Establish alignment between the metrics at each organizational level so teams can see how they’re contributing to the strategic business goals and the C-suite has visibility into progress and outcomes through a cumulative (and common) view. Be specific and clear in your definitions, and communicate them to make sure everyone is on the same page.

4. Measure before, during and after transformation.

While projects have beginning and end dates, transformation never really ends. Measuring before the transformation is about establishing baselines. It’s the stake in the ground before you begin a particular project or another effort that you’ll measure changes against. Measuring during transformation keeps delivery work on track and provides visibility to inform potential changes in direction. It can also motivate delivery teams as benefits are realized. And measuring “post-transformation” is key to knowing whether your organization has not only reached a more optimized state but whether it is staying there. It also provides a view of how teams and the organization can continuously improve.

Keep in mind that some metrics that are helpful before or during transformation may not be relevant afterward. And some metrics used post-transformation don’t make sense beforehand but still need to be set up initially. Measuring business value, for example, is difficult during transformation because not everyone will be measuring it the same way. Post-transformation, however, I believe business value should become a standard measurement across the entire company.

In the end, in an Agile transformation, the old adage applies: You can’t manage what you can’t measure. These four best practices will help you put metrics that matter in place to measure Agile’s benefits and accelerate adoption.

Need help with your agile transformation? Contact us today.