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9 agile KPIs that executives should know

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Agile methods used to be exclusively for managing software projects. Today, agile is much more. Agile is a philosophy for managing a digital organization. As a result, not only team leaders, but also senior executives and management are turning to agile development metrics to evaluate processes and results. It's no wonder, then, that entrepreneur David R. Skok says:

“Great companies are almost always run by great management teams. And great management teams know that the only way to improve a process is to start by measuring it. "

For team leaders, it is obvious which KPIs they need in order to measure employee satisfaction and performance. For senior executives, however, many of these KPIs are of limited use. 

After all, they usually want to measure successes that occur at a higher level. But what are successes for senior executives and management? And what agile KPIs do they need to measure these successes? I'll show you which target metrics senior executives are interested in and which 9 agile metrics they can use to evaluate them - whether you're working in the Scaled Agile Framework SAFe®, the Large Scale Scrum LeSS Framework, or other contexts.

 

What are agile metrics?

Agile metrics are quantifiable parameters that measure the success of agile projects and organizations. These can be, for example

  • Productivity,
  • Progress,
  • Quality of work,
  • Performance of teams and
  • Well-being of teams.

They help Servant Leaders, Senior Project Managers and Management identify the strengths and weaknesses within projects and organizations. This way, they can better leverage their strengths and fix impediments or problems.In other words, agile KPIs help you deliver better results, strengthen the work culture, and ultimately increase the success of the organization.

 

Why are agile metrics even important?

Agile metrics help your company deliver the right product to the right place at the right time. To do this, KPIs don't just check timing and quality of work. They also help teams manage themselves. As a result, they are critical to business success.

 

Why are agile metrics for management important?

The significance of agile metrics for management depends primarily on the goals they pursue and the meaning they derive from the metrics used. 

Basically, management is more interested in the actual value realized for the company than the value delivered by the team. In most organizations, this actual realized value for the company is based on an improved competitive advantage. 

This is usually measured in financial terms. In other words, value realized for a company is reflected in an increase

  • in sales, 
  • in company valuation or
  • in the user base.

In practice, this means that senior executives should take a close look at the agile development metrics that have a direct or at least indirect relationship to how the company can benefit in the end.

So which agile metrics in action are particularly suitable for management and senior management to read out an actual realized value for the organization? Basically, the four factors

  • Productivity,
  • Quality,
  • Customer value and
  • Corporate culture

have a direct or at least indirect influence on how much value can be created for a company. So which agile metrics in action can measure these four factors?

Before we get into the KPIs, a quick note: We're currently developing a crisp online video trainingthat will help you avoid 7 critical mistakes in an agile transformation. We've worked with Release Train Engineers, Agile Coaches, and Scaled Agile Framework Consultants to produce the exciting results. Just sign up in the form and we will inform you about our online training as soon as it is ready.

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Common mistakes with agile metrics for management

Even though this article introduces 9 metrics - one of the most common mistakes in agile transformations is to measure too many agile metrics. So you should get to know as many scrum metrics for management as possible - but then consider which ones are right for you. 

By the way, this article here explores the question of which is perhaps the most important agile metric. But now for the 9 agile metrics for management.

 

9 agile metrics for management

These KPIs can be particularly meaningful for senior executives, senior project management and management:

 

1. Epic and Release Burndown

Epic and Release Burndown focuses on the big picture of a project. It monitors progress across many small tasks towards an epic. You can read this out via Epic and Release Burndown charts. These are often generated automatically by tools like Jira or similar.

Source: Agile Metrics: The 15 That Actually Matter for Success – Plutora.com

The KPI Epic and Release Burndown is primarily a metric that says something about the productivity of teams. This has a decisive influence on when a product is finished. For a product to have the highest possible customer value, it must be launched at the right time. Only then can your organization benefit from it. 

 

2. Cumulative Flow Diagram

The Cumulative Flow Diagram shows how consistent the workflow is in teams. The X-axis represents the time and the Y-axis the number of issues. This way you can see the number of tasks in the backlog in relation to the time left.

The goal should be a chart that flows from left to right. If a "band" narrows, it means that the throughput is higher than the input rate. If the band widens, the capacity of the workflow is greater than required. Put simply, you can analyze where bottlenecks exist in projects and where there is free potential. 

Source: Agile Metrics: The 15 That Actually Matter for Success – Plutora.com

Similar to Epic and Release Burndown , the Cumulative Flow Diagram is a metric you can use to measure team productivity. 

 

3. Value Delivered

The Value Delivered is the customer value of a requirement in euros or points. To measure this, you first assign a value to each requirement (or customer request / feature). The implementation of functions or features with a high value should be given a high priority. If the chart shows an upward trend, projects are on the right track. If the diagram shows a downward trend, functions with a low value are implemented first and foremost.

Source: Agile Metrics: The 15 That Actually Matter for Success – Plutora.com

This KPI gives you insight into whether critical features are getting the attention they deserve based on their importance. The Value Delivered is therefore useful if you want to ensure the highest possible customer value. This has a direct impact on whether the final product can generate high value for your organization.

 

4. Net Promoter Score

The Net Promoter Score measures how willing customers are to recommend a product to others. The score has an index ranging from -100 to 100. It thus has a high correlation with customer value. This makes the agile KPI particularly meaningful for management.

 

5. Escaped defects

Escaped defects provide an indication of how many defects a software has when a release goes into production. In other words, the KPI assesses the quality of the software in its raw form. The relationship to customer value is only indirect here. However, the more errors can be corrected beforehand, the fewer errors the finished product will have. This means that the final customer value is higher. 

 

6. Top-box customer satisfaction

The Top-box customer satisfaction measures customer loyalty and customer lifetime value at a specific point in time. The KPI assumes that only highly satisfied customers (5 out of 5 points on a satisfaction scale) are loyal. In this context, loyal means that customers would buy something again, pay more for it, and recommend the product to others. The KPI therefore also reveals how high the customer value of a product is.

 

7. Usage Index

The Usage index shows you which features are actually used by customers and to what extent. This makes the key figure particularly meaningful when you want to evaluate the customer value of a product. 

 

8. Psychological safety

The agile KPI or psychological construct psychological safety indicates the probability that employees openly communicate their opinions and ideas within the company. This is critical to uncovering flaws in the product or approach, exploiting free potential, and ultimately launching a better product. From my psychological perspective, I can say that "psychological safety" is very closely related to "learning" - and "learning" in turn is related to "innovation capability". 

 

9. Employee satisfaction

The employee satisfaction indicator reveals how satisfied employees are with their work. The corporate culture has a decisive influence on satisfaction. It determines how comfortable employees feel, how they approach their tasks and whether they have room to create innovations.This has a major influence on the quality of products and thus on the competitive advantage your company can gain. 

 

Agile metrics for management - Conclusion 

When senior executives and management evaluate the right agile development metrics, they can determine which results generate real value for the organization. To help you choose the right metrics, we asked ourselves in the article  "25 agile KPIs at a glance" what actually makes a good agile KPI - and whether perhaps a single metric is enough to measure progress.

If you want to develop your organization effectively, you should take a look at our free eBook. In it, we introduce you to 12 team workshops from a psychological perspective. Feel free to take a look!

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