The Key Perfomance Indicators(KPI)/Measurable Objectives setting process triggers the discussion as to whether the way KPI’s are done within a company adds or destroys value. A key plank of a lean-agile approach is systems thinking i.e. focus on optimising the whole end-2-end process, not the individual parts which are KPI’s often do. Deming, who you might say is father of this way of thinking, was specifically against the way to do KPIs. Number 12 in his 14 key principles is:
Remove barriers that rob people in management and in engineering of their right to pride of workmanship. This means, inter alia, abolishment of the annual or merit rating and of management by objective
Enough! It’s easy to criticize KPIs – it’s better to improve. Here’s a summary of the usual suspects and how they can be improved upon.
|Variable||Typical measure||Usual outcome||Alternative measures|
|Time||Delivering on a predicted date||Incentivises hidden time buffers and slower delivery||Maximise speed in getting to the point where value starts to be realised|
|Scope||Delivering all of the originally predicted scope||Incentivises gold plating and discourages exploitation of learning.||Minimize size of work packages to maximize both learning and early release of value|
|Cost||Delivering at or below a predicted development cost||Incentivises hidden cost contingencies, pushing costs up.||Maximize value delivered (trade development cost against the opportunity cost of delay)|
|Quality||Delivering changes with zero downtime and no errors||Fear of change. Overinvestment in testing and documentation.||Shorten feedback cycles at many levels (coding, defects…)|
In short, the suggestion is that by over-focussing on the typical measures in the table above, we get a pipeline which is slow, expensive and wasteful. Explore the alternative measures instead!
Perhaps the table above can be used for inspiration when setting KPIs in your team?