Measurement in a Continuous World - Jim Highsmith
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Transcript of Measurement in a Continuous World - Jim Highsmith
Measurement in a Continuous World: How the modern organization takes it's
own pulse
Jim Highsmith Executive Consultant
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1 2 3 4 5
Iterations
Stories Planned
RevisedCompleted
Velocity is Killing Agility! 2
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.”
Mixed Messages
Be Flexible Conform to
Plan
Dysfunctional Measurement Systems
Step 1: 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
Facing the Future
“Perhaps the 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.)
Battleground of the Future
Enterprise (Adaptive
Leadership) Talent Customers
Shareholders/Financial Markets
Purpose
Do Agile Be Agile
How Important is Health (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.”
Extensive Beyond Performance Research
¨ 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
Multi-dimensional and Holistic
“Performance evaluation 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
Multi-dimensional and Holistic
“You get 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
Creating a Value Focused 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
The Agile Triangle
Value (Releasable Product)
Quality (Reliable, Adaptable Product)
Constraints (cost, schedule, scope)
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.”
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
¤ …
Value Calculation Framework
Value Cost
Portfolio Financial Business Case (NPV/IRR) Portfolio T-Shirt Sizing
Project Same as aboveInception - Revised Cost Estimate
Iterative Development - Monthly Forecast
Capability Decision Making Sweet SpotWhere 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 aboveInception - Revised Cost Estimate
Iterative Development - Monthly Forecast
Capability Decision Making Sweet SpotWhere 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
Value Point Assignment and 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
Features with Value Points
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-3 V-13
V-11
V-2
Feature Points are a calculation of cost. Value Points are an allocation of revenue.
Reporting Differently (Report courtesy 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%
Is Quality really
important?
Quality Issues (technical)
¨ Code quality ¨ Design quality ¨ Automated testing ¨ Technical debt reduction
¨ Blah, blah, blah is what your business partners hear!
Historical Dilemma
Features Quality
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Business
Outcome Technical Outcome
What if? 24
Features ?
Business Outcome
Business Outcome
What if? 25
Features Cycle Time
Business Outcome
Business Outcome
The Consequences of Waterfall
Maintain Plan, 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
Agile & Continuous Delivery
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
Summary 28
¨ A single release 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
Cycle Times
¨ Feature/Story—release from backlog to deploy ¨ Release Frequency—how often features are
deployed
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Principle/ Practice
Management team embraced?
Not so hot
Barely started
Making progress
Extremely well
Adapting to Changes Exploring, not planning Engaging & inspiring staff Riding paradoxes
Do You Evaluate Yourself?
Do you do Management Retrospectives? 32
Sample 360 Profile (Agility Consulting)
Intangibles
Year Intangible % Tangible %
1982 38 62
1992 62 38
2000 85 15
Impact of Intangibles on Market Value How Leaders Build Value, Ulrich & Smallwood
Intangibles assets are not reflected on Balance Sheets. Intangibles are reflected in Market Capitalization.
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“The competitive advantage of the twenty-first century is increasingly derived from hard-to-copy intangible assets such as company culture and leadership effectiveness.” –Keller & Price
More Information
¨ White paper: “Adaptive Leadership: Accelerating Enterprise Agility,” Jim Highsmith, Available on www.thoughtWorks.com.
¨ My blog: www.jimhighsmith.com.
¨ Twitter: @jimhighsmith
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