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 departments 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) TalentCustomers 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 CEOs & senior executives Reviews: 900 books & academic journals Personal interviews: 30 CEOs 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 dont 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 above Inception - Revised Cost Estimate Iterative Development - Monthly Forecast Capability Decision Making Sweet Spot Where 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 above Inception - Revised Cost Estimate Iterative Development - Monthly Forecast Capability Decision Making Sweet Spot Where 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 Customers Credit Rating. C-3V-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 23 Business Outcome Technical Outco