Lean MetricsMeasuring and Driving Change

Scan Agile · Miika Kuha and Karoliina Luoto · 8 March 2016

Karoliina Luoto and Miika KuhaConsultant for Agile coaching and consultingFocus: customer workBefore: product owner, collaboration strategist, communications specialist

Change agent’s right handLeanifying software development

Consultant for Lean, way of working, enterprise mobilityBefore: Process owner, product owner, enterprise mobility consultant, product designer, industrial designer

Gut feeling for trendsoften differs from measured data

• Photo: Tara Chill, Flickr

It’s good to look at metricsWhile keeping your eyes open

• Photo: NATS Press Office, Flickr

Just remember To also keep your eyes open

Picture from ”Antifragile” by N.N.Taleb

Think of your own project.Do you have metrics for the right direction?What are they like?

Metrics levels

Change in business environment

Customer understanding

Current Operating Model

Change Implementation Progress

Continuous improvement and

learning

CxO

VP

BO

PO

Development

Mature business Startup

CxO

Development

!

Current operating model

Alignment within levelsCurrent operating model

BO

BO

!

Resource optimization

Flow optimization

Change in business environment

Customer understanding

Current operating model

Change Implementation Progress

Continuous improvement and learning

Where, in what context

To whom

How

What is improved next

How to keep improving

Measurement frame

Change in business environment

Customer understanding

Current operating model

Change Implementation Progress

Continuous improvement and learning

So, to metrics

Business environment Our market share is bigger than competitors, are we good?

Market %

A B C D E F

Evolution

Visib

ility

to th

e cu

stom

er

Based on Simon Wardley’s Value Chain Mapping

Genesis Custom build Product Commodity

Customer specific services

Concrete

Manual House building

Value chain mapping current stateConstruction industryCustomer

3D printing

Printed House

KnowledgeSub contracted building

1

23

Business environmentMetric tool 1: Desired Value Chain position

Model the value chain you are part of – identify what competitors are doing, what technologies and other enablers are merging

Metric: How close you are on your target, what to do next to achieve the target, when to set new target?

What are your capabilities to improve your business opportunities? What is the one metric that reveals best if you have taken the desired spot?

Change in business environment

Customer understanding

Current operating model

Change Implementation Progress

Continuous improvement and learning

Customer expectation almost there?

Customer understandingMetric tool 1: Net Promoter Score

Talk to the customer – really, go and talk to the customer

Metric: How likely you would recommend the product to a friend? (0 no way – 10 most certainly)

Change in business environment

Customer understanding

Current operating model

Change Implementation Progress

Continuous improvement and learning

Process measurementwe get 97% positive fb, good enough?

Positive score?

Yes No

Current operating modelMetric tool 1: Process Cycle Efficiency

There are many possible measurement points – instead of measuring output, take metric that forces you to take end to end customer view

CVA CVA CVA CVA CVA CVA CVA

NVA NVA NVA NVA NVANVA NVANVA

Current operating modelMetric tool 1: Process Cycle Efficiency

Metric: Process Cycle Efficiency

PCE =Customer Value-added TimeCycle Time

CVA CVA CVA CVA CVA CVA CVA

NVA NVA NVA NVA NVANVA NVANVA

• Map the Value Stream & understand the customer• How much is the Cycle Time?• How much there is Customer Value Add time?

Change in business environment

Customer understanding

Current operating model

Change Implementation Progress

Continuous improvement and learning

Change implementation progress = How much gets done?

Amou

nt o

f cha

nge

effor

t

Cadences87654321

160

120

80

40

Now at

Prognosis

Wholebacklog

Change implementation progressMetric tool 1: Implemented value

Agile methods often focus on measuring the amount of change effort, when the real question is the value of itSimple metric: make customers play value poker on planned changes and then track progress based on value points

Discussion while playingBrings out the reasoning

Photo: Play Among Friends Paf, Flickr

Value trackingto see value for changes

Can be added as a layer to any task management tool

Change implementation progressMetric tool 2: Adoption figures

Percent of people using the new process / system regularly

A new process or software is not implemented before it is part of its users’ daily routines

Change implementation progressMetric tool 2: Adoption figures

New kickoffAltered liftoffOther

Example: 5 % of new projects use the project kickoff process

Change in business environment

Customer understanding

Current operating model

Change Implementation Progress

Continuous improvement and learning

Continuous improvement Are we doing it?

Yes.We have a retrospective / operations review once a cadence.Ok, is that continuous improvement?

Continuous improvement and learning Metric tool: Easing pains

1. Example metric: Uncompleted orders reduced from 32 % to 15 % of purchases

Continuous learning is happening when you 1) get out experiments which get 2) implemented and 3) analyzed for learnings Amount is not the thing, targeting biggest pain points is Simple metric: Are our biggest problems getting easier?

Continuous improvement and learning Metric tool: Easing pains

2-3 months

We talked about metrics for different levels

Change in business environment

Customer understanding

Current Operating Model

Change Implementation Progress

Continuous improvement and

learning

Desired Value Chain positionNet Promoter Score

Process Cycle EfficiencyImplemented value

Easing pains

Adoption figures

What to do next?

1. Understand what to target first, how to measure it meaning full way and how to sustain it

Change in business environment

Customer understanding

Current Operating Model

Change Implementation Progress

Continuous improvement and

learning

1

2

3

2. Then understand what are the needed connections supporting & enabling, on other levels and how to measure and sustain them

3. Get the enforcement to drive the new metrics into daily management system

To keep movingis more important than the path you take

• Photo: qwrrty, Flickr

Questions? Comments?Codento.fi

Miika Kuha · Karoliina Luoto · @codento · @totoroki