Before we dive into Output Vs Outcome-Based Agile Metrics, let us understand what is meant by output-based and outcome-based metrics. Output-Based metrics measure the amount of work completed whereas Outcome-Based metrics measure the value delivered by the completed work.
Output-Based Agile Metrics
Metrics that measure how much work was completed in a given duration are said to be output-based. For example, the number of user stories completed in a Program Increment (PI) or an iteration measures the number of tickets completed in a specified duration. Other examples are:
- Number of features completed in a Program Increment
- Number of story points completed in a Program Increment
- Number of story points completed in a sprint or an iteration
Such metrics can be easily gamed and do not provide any value-add. For example, Team A delivers 6 user stories whereas Team B delivers 12 user stories. This metric does not signify that Team B has better productivity than Team A.
Let’s assume Team A delivers 40 story points and Team B delivers 20 story points. Do you think Team A is a better performing team than Team B? Well, a team’s velocity does not provide insight into a team’s performance. Team A might have inflated their story point estimates or they might be working on user stories that do not deliver a potentially shippable product increment or bring any business value.
Measuring the amount of work done is an Agile anti-pattern and should be avoided. It does not provide any value and may encourage Agile anti-patterns such that teams write tasks as user stories, create unnecessary user stories that do not bring any business value, and inflate story point estimates.
Outcome-Based Agile Metrics
Metrics that measure the outcome or the end-value delivered by the completed work are said to be outcome-based. For example, the business value delivered is an outcome-based metric that measures the amount of business value delivered by a unit of work during a specific duration. Let’s discuss how to measure the business value for an EPIC, Feature, or User Story.
How to Measure the Business Value
Measure the delivered business value at an EPIC or a Feature level, rather than at a User Story level. Think in terms of:
- Will this EPIC or Feature enable you to sell more units?
- Will this EPIC or Feature allow you or your organization to make more profit?
- Will this EPIC or Feature enable reduced operating costs for your business?
- Will this EPIC or Feature enable a new capability for your end-users?
- Will this EPIC or Feature reduce the manual effort for your team or end-users?
- Does this EPIC or Feature enable your organization to compete in the market?
- Does this EPIC or Feature allow to refine hypotheses about the market?
- Is this EPIC or Feature required to stay compliant with regulations?
Many EPICs or Features provide little to no value or aren’t actually desired by end-users. It’s important to prioritize the work effectively to deliver more business value. There are many ways to measure the business value like comparing the cost of delay, calculating Return On Investment (ROI), calculating revenues and expenses each month (Cash-Flow analysis), calculating Net Present Value (NPV), Planning Poker, and more. I suggest working with your business sponsors and:
- Find Key Value Indicators (KVIs) for your product that you can measure at each Product Increment (PI) boundary.
- Think about both qualitative and quantitative value indicators.
- Review your KVIs regularly and revise as needed.
One of the simpler methods is to leverage the Planning Poker game and relatively estimate the business value for an EPIC or a Feature with your product stakeholders.
If you are interested to learn about other Outcome-Based Agile Metrics, enroll in my Udemy Course, Agile Metrics: Elevate Team Agility with Scrum Reporting.
You may be interested in my published courses and books as outlined below:
Also, check out these articles…
- Agile Anti-Patterns For Remote Teams
- Virtual PI Planning
- Leadership Agility: What You Need to Know
- Will OKRs Rule the World?
- Enterprise Agility – Expectations Vs Reality
- Agile and Lean Methodologies – Same or Different?
- Expert Agile Tips and Techniques
- Scrum and Kanban: Same or Different? Which one is better?
- How to Measure Kanban Throughput?
- What are the 12 Agile Principles? Learn, Apply, and Be Agile!