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Measuring the success of Agile transformation: 5 essential metrics

Undergoing Agile transformation is a big decision for any company, requiring significant investment in time, resources, and manpower. As with any major business initiative, it's essential to track progress and measure success to ensure that the transformation is delivering the expected benefits. However, the goal of Agile transformation should not be merely to become Agile for the sake of it, but rather to solve specific problems and help the company achieve its business outcomes. It's important to note that Agile transformation does not guarantee instant success or revenue growth, and the process itself can lead to a temporary drop in outcomes. In this post, I will explore five approaches to measuring the success of Agile transformation, with a focus on outcomes as the key measure of success.

#1 Business outcomes

To measure the success of Agile transformation, it's essential to establish a clear understanding of the difference between outputs and outcomes. Outputs are the tangible results of the work done by an Agile team, such as code, documentation, and test cases. While these outputs are necessary for achieving outcomes, they do not, in themselves, guarantee success. Outcomes, on the other hand, are the ultimate business value generated by the outputs. For example, delivering a new feature may be an output, but the outcome is the increased customer satisfaction and revenue that result from the feature.
Before embarking on Agile transformation, it's crucial to establish outcome goals that align with the company's strategic objectives. These goals should be specific, measurable, achievable, relevant, and time-bound (SMART). For instance, if the company aims to increase its market share, a SMART goal could be to achieve a 10% increase in market share within the next two years by delivering high-quality products and services that meet customers' needs.
It's also essential to remember that Agile transformation is not a quick fix, and it takes time to see significant results. In general, it takes around 8-12 weeks to establish a fully functioning Agile team, with all team members trained and empowered to work collaboratively and deliver value. After that, it may take between three and 12 months for the team to start delivering business value regularly. However, the timeframe may vary depending on the complexity of the company's products, the size of the organization, and the industry's competitiveness.

#2 OKRs

OKRs (Objectives and Key Results) have gained popularity in recent years. OKRs are a framework for tracking the relationship between objectives (the major business outcomes a company wants to achieve) and key results (the outputs, KPIs, or supporting business outcomes that indicate progress toward those objectives). For example, a company might set an objective to increase customer satisfaction by 10% and track the key results of Net Promoter Score, customer retention rate, and product ratings.
Tracking key results helps teams determine whether they are making progress toward achieving business goals. While it may take a long time to achieve the desired outcomes, tracking key results regularly provides early indicators of success or signals the need to adjust strategy.
OKRs can be set at different levels within an organization, from the overall company down to individual teams. They can be established on a yearly basis, then broken down into quarterly or even monthly objectives. This approach allows for a more detailed focus on achieving business outcomes and ensures that teams remain aligned with the company's overall strategic objectives.
Some organizations set up specific OKRs for their Agile transformation to track progress and ensure that Agile methodologies are driving the desired outcomes. For example, a company might set an objective to increase the speed of product delivery and track the key results of cycle time, lead time, and defect rate.

#3 Speed to market

While focusing on business outcomes is crucial for measuring the success of Agile transformation, it's also important to track output metrics in the short term. However, selecting the right metrics is key as you don't want to end up chasing the wrong targets. Velocity metrics (how much work a team produces over a given period of time) should be used with caution since "doing more work" or "doing work faster" is not necessarily the objective of Agile. Agile aims to help teams work smarter, focus on the right goals, delight customers, and reduce waste.
If you need to track output metrics, consider measuring speed to market or cycle time (for software teams). Speed to market refers to the time it takes from the initial idea to getting the product on the shelves or pushing the code to production. This metric does not tell you whether the product or code is good, but it does tell you whether you are becoming more efficient in getting things done. By tracking this metric, you can ensure that your teams are delivering value to customers more quickly and with less waste, ultimately driving better business outcomes.

#4 Teams' health

Team health is an important supporting metric to track during Agile transformation. While it's not a goal on its own, it can help you understand whether you're moving in the right direction or not. To measure team health, it's important to establish a baseline before Agile transformation. You can use a questionnaire to scan each team's health before, during, and after the transformation. At Agile Apothecary, we offer a free Team Barometer tool that can help you with this.
It's important to keep in mind that if Agile transformation goes well, you'll see improvements in team health. However, teams often go through Tuckman's stages of forming, storming, norming, and performing, which can impact their health. It's normal to see a drop in results during the storming phase, as teams work through conflicts and establish their ways of working. But as they move into the norming and performing phases, you should see improvements in team health and productivity.
When establishing the baseline, it's important to be mindful of the Dunning-Kruger effect. This effect refers to the tendency of people with limited knowledge or expertise in a subject to overestimate their ability and performance. In the context of Agile transformation, this means that people who are not familiar with Agile might think that they are already very Agile, leading to skewed baseline results. It's important to educate and inform all team members about Agile to minimize the impact of the Dunning-Kruger effect.

#5 Individual satisfaction and motivation

Tracking individual satisfaction and motivation is crucial because it is the people who drive the success of Agile transformation. As Agile values individuals and interactions over processes and tools, it is important to ensure that team members feel engaged and motivated. Agile encourages teams to collaborate, communicate, and experiment to find the best solutions, and this can lead to increased job satisfaction and motivation.
Measuring individual satisfaction and motivation can be done through surveys, one-on-one conversations, and other feedback mechanisms. It is important to ensure that individuals feel safe and comfortable to share their opinions without fear of negative repercussions. A good indicator of psychological safety is when team members feel that they can voice their opinions, are not scared of failure, and are willing to experiment.
However, it is important to note that change can be difficult for some people, and it is not uncommon to see a temporary drop in satisfaction levels during the early stages of Agile transformation. It is important to continue to communicate with team members, listen to their concerns, and work together to address any issues that arise. Ultimately, focusing on individual satisfaction and motivation can lead to a more engaged and productive workforce, which is key to achieving business outcomes.
In conclusion, tracking the success of Agile transformation is crucial, but it's not an easy task. It requires monitoring a number of metrics, including business outcomes, OKRs, speed to market, team health, and individual satisfaction and motivation. While immediate growth shouldn't be expected in the early stages, having a clear goal and success metrics in mind will allow you to be Agile about Agile transformation and make adjustments if necessary. By using these metrics, organizations can assess their progress, make data-driven decisions, and stay on track towards their desired outcomes.
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