Shifting focus from tracking productivity to delivering customer value

Recently, I was asked a number of questions about the topic of productivity versus value delivery. Here are my thoughts.

1. Why is it important to manage the value output to customers as a key focus?

Customer Satisfaction and Loyalty — Providing value to customers is the key ingredient for satisfying their needs, which in turn increases customer loyalty. When customers feel they are getting value from a product or service, they are more likely to return and make repeat purchases. Additionally, satisfied customers are more likely to recommend your business to others, leading to positive word-of-mouth marketing and increased sales.

Competitive Advantage — In today’s crowded marketplace, businesses need to differentiate themselves from their competitors. By providing more value to customers, businesses can stand out and gain a competitive advantage. Customers are more likely to choose a business that offers better value over its competitors, leading to increased market share and profitability.

Improved employee morale and engagement — When businesses focus on delivering value to customers, they are also indirectly investing in their employees. Engaging employees directly in understanding the value of their work to customers, often leads to increased motivation levels. A positive side effect is reduced staff turnover rates, higher productivity, better quality products and a stronger sense of commitment to the business.

2. What are common mistakes that organisations make when managing people, their output and perceived productivity levels?

Focusing on quantity — One common mistake is to overemphasise the importance of the quantity of output rather than the quality. This mostly leads to people rushing their work and sacrificing quality in order to meet targets. Most people I have met take pride in doing good work, rather than churning out half-baked solutions. While the “get more” strategy may serve in the short term, it will likely lead to dissatisfied customers and negative impacts on the business’s reputation in the long run.

Micromanaging — Another mistake is micromanaging employees, which can stifle creativity and innovation. This is especially true in knowledge work. When knowledge workers feel that their every move is being watched and scrutinised, they become demotivated and are less likely to take risks or come up with new ideas. I often hear managers talking about how frustrated they are that their people don’t take ownership. Ownership is not possible within a micromanagement regime.

Focus on individual performance — People do what you measure. Rewarding employees for acts of heroism serves to undermine the culture of collaboration which is so desperately needed to ensure that businesses keep innovating. In addition, the impact of constant evaluation on an individual often leads to increased levels of burnout, absenteeism and ironically decreased or unsustainable performance.

3. How could I shift the focus of the organisation to quality and valuable outcomes?

Ask, “Why are we doing this?” — by the time a team is working on delivering something (expensive), it is assumed that the work is the most valuable thing that could be worked on right now. This assumption is often wrong. In a world where demand almost always outweighs capacity, we must be selective over what work is finished next. Questioning the validity of work at all levels (programme, project, epic, feature, task) with a preference for the larger work requests can help to expose sub-optimal decisions around value.

Define clear measurable outcomes — Outcomes define the “what, why and how much”, but not so much the “how”. Good outcomes are inspirational, objectively measurable, and horizon-bound. The work of strategy is to set meaningful direction. Having clear, measurable direction in place in the form of long-term, mid-term and short-term horizon outcomes, assists in providing context for the work being undertaken, as well as allowing for early and often detection of progress towards the goal.

Let strategy determine the work to be done — Given clear measurable outcomes, we can derive the work to be done in order to achieve them. This means that the work is explicitly linked to a higher-order measurable outcome. The thing with knowledge work is that there is not one correct way to solve a problem. Some solutions can produce better results than others. We want the best outcome possible, with the least amount of output possible. This will increase ROI. Create explicit feedback loops to measure the desired outcome while building the product or enhancing a service.

Avoid starting more than we can finish — A good way to understand delivery capacity is to measure how much is being delivered. For example, if your organisation delivers “product features”, take note of how many product features are being delivered per month or per quarter. This represents the delivery rate of your work system. If you’re delivering 10 features per month, resist the urge to start more than 10 new features per month. This will create more focus within delivery teams, less context switching and typically results in better quality delivery. A consequence of working in this way is that the delivery rate goes up. Who would have thought? “start less, deliver more!”. Starting work costs money. Finishing work makes money. Stop starting and start finishing.

Sequence work with value in mind — Demand typically exceeds sustainable capacity. An observable side-effect is that new requests queue up ahead of delivery. This “inbox” should be managed and sorted with extreme care. We want to make sure that requests that cross the line into the constrained delivery system represent the best bang for buck. Using a scheduling method like “cost of delay” is a great way to make trade-off decisions across larger work items while representing value and urgency. This can help you make better decisions, especially where multiple stakeholders are involved.

4. Why is it important for us to know the real output of their resources and delivery?

Unless you’re in the business of laying bricks, the output of resources (or as I like to say, “people”) should be far from your mind. Hopefully, the days of measuring software developers by how many LOCs (lines of code) they produce in a day are over. If that’s the measure, guess what, you’ll end up with a lot of lines of code, but there is no evidence to suggest that more code equates to more value for the customer. The customer doesn’t care how much code was written, but rather that the resulting product solves their needs effectively.

I like the word “product” because in most cases, it requires numerous people representing multiple skills, spanning multiple teams to create a product. To quote Russell Ackoff, “A system is not equal to the sum of its parts, but the product of its interactions”. What we really need to measure is how effective the collective people and their interactions are at delivering increments of value to their customers. These value increments often have titles such as initiatives, projects or features.

Knowing the delivery rate of these value items is crucial information for “tuning” the processes that bind people in an organisation in the delivery of value. We can, in addition, extrapolate statistical forecasts that provide valuable insights into when specific items will be delivered or how many items will be delivered by a specific date.

Essentially, without knowledge of our delivery rate, we’re flying blindly towards burnout and at best, delivering but not improving.

5. How can we become better at understanding the true business output?

Understand your language of delivery — Every industry and organisation has its own set of terminologies, acronyms, and jargon that are commonly used when speaking about delivery items. Understanding the language specific to your business allows for clear and precise communication among team members, departments, and stakeholders. It ensures that everyone is on the same page and avoids misunderstandings or misinterpretations. When everyone in the organisation understands the language of delivery, collaboration becomes more efficient. Team members can communicate ideas, requirements, and feedback effectively, enabling smooth workflow and coordination. It promotes a shared understanding of goals, objectives, and processes, fostering a collaborative and more productive work environment. Important: “do NOT define this language in isolation and tell people what it is!”. True understanding of the terminology comes through co-creation.

Visualise the work in flight — With an understanding of the types of value items, spend quality time with people involved in delivery to map out the value-creation steps of each type of work. This serves to further align people on “how” each work item is delivered, which checkpoints exist and who is involved at each step. Make this process visible on a board and populate it with all the work items in flight. Seeing where each work item is within the process enables rich conversations about how to keep the work flowing, remove blockers and select the best items to finish next. This can be done at all levels, strategic (outcomes and initiatives), coordination (e.g. projects and features) and operational (user stories and tasks).

Choose what you want to improve — Once work is visible, the delivery challenges become clearer. Typically, there are a large number of varied systemic issues with how we deliver. It can be overwhelming figuring out where to start. The key word here is “systemic”, meaning that resolving one problem is likely to have an impact on other problems, or creating new problems. In environments like this, it is advisable to be selective about where to focus our improvement efforts. Get good at truly solving issues, one at a time, and testing the impact on the system.

Measure to improve — A fundamental part of improvement is measurement. Don’t measure everything! Rather, measure what you want to improve. The most common challenge I hear about in delivery systems is “We’re not delivering fast enough!” In these cases I like to ask the questions, “What type of items are not fast enough? How are you measuring speed? What value would you provide for fast enough?” If we’re clear that we want to improve delivery speed of Features, we need to first get clear on the measurement. For instance are we talking about time from feature request until delivery to the market, or number of features delivered per month? While related, these are significantly different problems to solve for. Also consider what could be adversely affected if we were to only emphasise speed and define a counter-measure. For example we don’t want quality to decrease in favour of speed. Measure both, make tweaks to your process and check the results.

6. How can this impact the business positively

Being deliberate and methodical about deriving what is worked on from meaningful and clearly articulated strategy means that we are more likely to be working on the right things at the right time. Additionally this creates much needed context and purpose for the people involved in delivery with the added benefit of increasing employee morale and quality of solutions for customers. Happy employees and happy customers is what we’re all about!

Making visible the progress of the work in flight together with systemic delivery metrics enables meaningful conversation about the management of the work as well as improving our system of delivering value to customers. Satisfying our customers by decreasing our time to market and increasing our product quality while working at a sustainable pace is an achievable utopic outcome if we are deliberate about using the correct methods and making the right improvements at all levels in our organisation. We will see the results on the bottom line!