When it comes to business planning, it might seem like setting key goals and using the right metrics to measure them would be simple enough for companies to implement, yet many struggle to find meaningful outcome-based metrics for software delivery. Struggling to find a clear-cut view of key objectives that drive toward larger, organizational goals is a common issue that many IT and technology leaders face. What is the best way to set and measure key results for your software portfolio? How do you make sure that these are both meaningful to the business and actionable for your technology teams?
Enter OKRs. For those who are unfamiliar, the acronym, “OKRs,” stands for objectives and key results and they have proven to become an effective way for many technology companies to reach aspirational and qualitative goals by defining their quantitative key results. Typically, teams will come together to set the OKRs for the whole organization every quarter. Once set, the product, IT and technical organizations decide on the specific themes, initiatives and product discovery activities they will pursue to achieve the key results. OKRs are particularly useful for growing organizations because they can cascade things down from top to bottom without overloading any teams or employees. Today, as more and more companies try to adopt an OKR-based management model, many are finding that it’s much more complicated than it seems. It can also be quite difficult to define key results that provide fast and meaningful feedback connecting the work of Agile and DevOps teams to the business and customer.
Value Stream Management
Value Stream Management (VSM) has grown to become a key practice for many businesses, due to its focus on increasing the flow of business value from customer request to customer delivery. However, for software delivery organizations, key indicators of product value can be quite difficult to measure in a short period of time. While IT teams frequently produce many metrics regularly, quite often they measure the process and not the outcome. Indicators of product value can be anything from better customer conversions, improved net promoter scores, increased revenue and stronger retention/reduced churn. To successfully measure these could take multiple quarters, however with a more rapid loop of customer feedback, organizations can quickly receive the information they need to correct any bottlenecks slowing down their software delivery process.
Organizations need the ability to measure things end-to-end, to understand how value flows and where it is constrained, and most importantly, to correlate those metrics with desired business outcomes.
Adopting Flow Metrics as part of your OKRs enables exactly the kind of fast feedback and leading indicators needed to connect the work of technology teams to business results. For example, reducing Flow Time (ie, time to market) can be set as a KR for a team who is improving their Agile and DevOps practices. Setting a 20% in Flow Time can help focus an entire value stream on getting more value in the hands of customers faster and align everyone around this goal. A Flow Time OKR needs to be connected to a longer-term business OKR, such as customer retention or Net Promoter Score (NPS). The Flow Time OKR will provide fast feedback on how much more value is getting to customers’ hands. Over time that should increase the business OKR, assuming that the right things are being delivered to the customer. Together, these create a flywheel that allows you to measure both leading and lagging indicators of value delivery. Similar KRs can be set with the other Flow Metrics, i.e., Flow Velocity, Flow Efficiency and Flow Load.
In order to relieve the bottlenecks that are slowing software delivery down and impacting business results, organizations can implement an approach incorporating OKRs in tandem with Flow Metrics. By generating insights directly from the software delivery toolchain, organizations can deliver more value to the business by learning to measure the right things and using that data to make better decisions.
Based on this picture, you can calibrate your value streams accordingly––allocate more resources, set priorities, change workflows and modify tooling––until you achieve the desired correlation between Flow Metrics and business results.
The attached picture is attributed to Freepik.com.