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Measurable Outcomes

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A measurable outcome (MO) is a class of performance indicator specifically aligned to Customer Value. MO's address the problems associated with Objectives and Key Results[1] (OKRs) and Key Performance Indicators[2] (KPIs). It is widely acknowledged that traditional KPIs can be 'gamed' by those that are asked to deliver them. This is highlighted in the quote by Eli Goldratt, “Tell me how you measure me, and I will tell you how I will behave. If you measure me in an illogical way… do not complain about illogical behaviour…”, Essentially, if you measure people on things other than customer value don't expect teams to deliver customer value.

MO's aim to address the inherent problems of focusing on KPIs as a measure of success. The focus should be on customer value from the whole system (See Systems Theory[3]) and to ensure alignment to the needs and wants of the customer. This, however, should be balanced with the vision and direction of the organisation and/or programme responsible for the project.

From an OKR perspective, MO's address the command and control top-down definition of success which conflicts with the Agile principles of collaboration and customer feedback.

Short History of KPIs and Measuring Value

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  • 221-265AD Wei Dynasty use KPIs to measure the effectiveness of the Royal Family members.[4][5]
  • 1200's Financial performance of a Venetian sailing expedition measured[6]
  • Early 1800s Robert Owen used KPIs to measure an individual's effectiveness in cotton mills.[7]
  • 1900s, the military started using KPIs to measure individuals
  • 1970s Tom Gilb [8]introduces the idea of measuring value to the customer
  • 1983 Objectives and key results (OKRs) proposed by Andy Grove
  • 1990s Corporate KPIs revolution starts, looking at organisational performance rather than individual performance—Balanced Scorecards introduced by Kaplan and Norton.
  • 2000s Google sees excellent results from the OKR framework, focusing staff on key outcomes as defined by management.
  • 2010 Measurable Outcomes experiments start in corporate environments to address the command and control style of KPIs and OKRs. It's not clear if there is a single individual that initially coined the term Measurable Outcomes.
  • 2013 Measurable Outcomes formally introduced as part of Agile and Digital Transformation.[9]
  • 2023 UK Labour Opposition leader Kier Starmer [10]sites Measurable Outcomes[11][12] as a key tool for their election manifesto.

Key Benefits of Measurable Outcomes

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  1. MO's focus on customer value not vanity[13] KPIs.
  2. MO's agreed by management, the team and the customer.
  3. Aligns a team to the vision of an organisation, programme and/or product.
  4. Provides clarity on 'why' the product is important and what success looks like.
  5. Allows a team to be empowered to make micro-decisions based on the constraints of the MO
  6. Motivates teams to a common goal.
  7. Used to align an Agile requirements/user story backlog. it is suggested 30%-45% of all requirements are not wanted or used by a customer, MO's minimise this waste
  8. Measurement methods are agreed by the whole team including the customer, this drives the commitment of the team.

Types of Measurable Outcome

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  • Primary - These are high level outcomes that often are linked to overall strategy eg Net Promoter Score (NPS[14])
  • Secondary - These support the Primary MO's, and often indirectly influence multiple MOs. e.g. improve the user experience of a mobile app.
  • Tangible - These provide specific and more easily measurable outcomes. e.g. increased user base.
  • Non Tangible - These are not so easy to measure e.g. User experience, or happiness.

The Measurable Outcome Formula[15]

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  1. Name: What to call it – A simple statement with a verb + noun phrase, such as increase checkout conversion rate or minimize report creation time. The verb is typically the direction of improvement and the noun is the subject of improvement. Keep it brief and to the point. For example, Reduce the number of Customer Change requests by 30%.
  2. Scale: What to measure - The unit of measurement, like inches on a ruler. Examples include percentage of successful sales or seconds to create a report.
  3. Method: How to measure - How and when to measure, such as with a daily web analytics report. Be specific so there is no confusion on the source of the measurement, including who is responsible for gathering and publishing the data and how often. It is important to establish a data point of truth that the team agrees is accurate.
  4. Baseline: Where to start - Your current level and the starting point for comparing measurements against, such as 11% conversion rate or average of 25 customer change request per quarter.
  5. Target: What is success – The desired success level in absolute or relative terms, such as response time less than 1 second or 30% conversion rate by Q4. May include a target date that clarifies by when the target is expected. This is agreed by the delivery team rather than being dictated by management.

Applying MOs to requirements and Agile backlogs

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The backlog is the responsibility of a Product Owner and by association the Product Owner is responsible for ensuring that all items that are worked on align to and relevant MO.

Each user story in the backlog will indicate the total value for an MO the story will deliver.

The technique of Cost of Delay (COD[16]) or at least, Weighted Shortest Job First (WSJF[17]) should be applied to each user story and used to define each stories priority and hence the order they are delivered.

Problems

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In practice, the effort of creating Measurable Outcomes required careful facilitation to ensure there is a balanced view and the teams responsible for delivering the value are not forced into accepting targets that aren't agreed to.

Teams need to integrate the MO approach into their daily routine and this can take time to become, as with Agile in general, it is a mindset change.

Management needs to adopt MOs as the primary measurement of success, otherwise, the team will revert to whatever requirement is communicated to them

See also

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References

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  1. ^ "OKR", Wikipedia, 2019-02-13, retrieved 2019-02-19
  2. ^ "Performance indicator", Wikipedia, 2019-02-19, retrieved 2019-02-19
  3. ^ "Systems theory", Wikipedia, 2019-01-28, retrieved 2019-02-19
  4. ^ "History of Performance Management".
  5. ^ Banner & Cooke, 1984, Coens & Jenkins, 2000
  6. ^ Lebas, 1995
  7. ^ Banner & Cooke, 1984; Wiese & Buckley 1998
  8. ^ "Tom Gilb", Wikipedia, 2019-01-31, retrieved 2019-02-19
  9. ^ Kumoco 2013.
  10. ^ "Keir Starmer", Wikipedia, 2023-02-21, retrieved 2023-02-23
  11. ^ Reuters (2023-02-23). "Eyeing power, Labour pledges five 'missions' to fix UK's biggest problems". Reuters. Retrieved 2023-02-23. {{cite news}}: |last= has generic name (help)
  12. ^ "Keir Starmer unveils Labour's five missions for the country". BBC News. 2023-02-23. Retrieved 2023-02-23.
  13. ^ "The definition of vanity metrics".
  14. ^ "Net Promoter", Wikipedia, 2019-02-19, retrieved 2019-02-20
  15. ^ "Mobius Loop - Measurable Outcomes".
  16. ^ "Cost of delay", Wikipedia, 2018-11-12, retrieved 2019-02-19
  17. ^ "WSJF – Scaled Agile Framework". Retrieved 2019-02-19.
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