Understanding Business Agility Metrics – Outcomes, Flow, and Competency

In today’s business environment, organizations must be able to quickly respond to market changes and emerging opportunities with innovative, digitally-enabled solutions. This is the essence of business agility. But how do we measure progress towards this goal and identify areas for improvement? The Scaled Agile Framework (SAFe) provides a comprehensive approach to measuring business agility across three key domains: Outcomes, Flow, and Competency.

In this blog post, we’ll take an in-depth look at each of these measurement domains and explore how they support the ultimate objective of business agility.

The Business Agility Value Stream:

Before diving into the specifics of each measurement domain, it’s important to understand the context in which they operate. SAFe’s Business Agility Value Stream visualizes the steps needed to achieve true business agility, from identifying market opportunities to delivering innovative solutions that meet customer needs. The three measurement domains of Outcomes, Flow, and Competency support this process by providing insights that enable better decision-making and continuous improvement.

Measuring Outcomes:

The Outcomes measurement domain focuses on determining whether the solutions delivered by the development organization are meeting the needs of customers and the business. This includes both external considerations like revenue growth and customer retention, as well as internal factors such as employee engagement.  

Key Performance Indicators (KPIs) are one way to measure outcomes at the portfolio level. These are specific, quantifiable measures of business results for each value stream. The exact KPIs used will depend on the organization’s specific context and goals. For example, an eCommerce company might track customer conversion rate, while a microchip manufacturer would focus on different metrics. 

In addition to KPIs, SAFe portfolios also measure progress towards strategic goals using Objectives and Key Results (OKRs). While KPIs represent ongoing health metrics, OKRs define specific outcomes the portfolio is working to achieve, usually measured quarterly. Creating aligned OKRs at different levels of the organization, from portfolio to value stream to Agile Release Train (ART), helps ensure everyone is working towards the same strategic objectives.

Employee engagement is another key outcome metric, as it has a significant impact on productivity, quality, and innovation. Organizations may measure this through annual surveys or tools like Employee Net Promoter Score (eNPS). The results should then inform initiatives to boost engagement.

At the team and ART level, iteration goals and Program Increment (PI) objectives are used to ensure efforts are aligned with customer and business needs. Defining effective outcome metrics requires close collaboration between development teams and their business partners.

Measuring Flow:

The Flow measurement domain assesses how efficiently the organization delivers value to customers. SAFe applies the five metrics from Mik Kersten’s Flow Framework here: Distribution, Velocity, Time, Load and Efficiency. A sixth metric, Flow Predictability, is added to evaluate execution against planned objectives.

Flow Distribution measures the balance and type of work (e.g. features vs. maintenance vs. risk reduction) moving through the system over time. Flow Velocity tracks the number and size of work items like stories or features completed in a given timeframe. Flow Time captures the total time from when work is started to when it’s completed and delivered to the customer. Cumulative Flow Diagrams are used to monitor Flow Load, or the total amount of work in progress at different process stages. Flow Efficiency compares time spent on value-adding vs. non-value-adding activities, with the goal of reducing wait times and bottlenecks.

Finally, the Flow Predictability metric measures how reliably teams and ARTs meet their committed PI objectives, which is crucial for the business to plan effectively. The ART Predictability Measure compares actual vs. planned business value delivered each PI.

DevOps is a key area where flow metrics are applied to track software delivery performance. The four DORA metrics (Deployment Frequency, Lead Time for Changes, Time to Restore Service, and Change Failure Rate) adapt flow metrics like velocity and time to this specific context. An efficient DevOps pipeline is essential to the overall flow of value delivery.

Measuring Competency: 

Achieving business agility requires organizations to develop proficiency in the seven core competencies defined by SAFe:

1.Team and Technical Agility

2.Agile Product Delivery

3.Enterprise Solution Delivery

4.Lean Portfolio Management

5.Organizational Agility

6.Continuous Learning Culture

7.Lean-Agile Leadership

The SAFe Business Agility assessment allows portfolio stakeholders to evaluate overall progress towards the ultimate goal of business agility. Individual SAFe core competency assessments then enable teams and ARTs to identify strengths and weaknesses in the specific technical, process, and leadership capabilities needed to support that top-level objective.

These assessments follow a four-step process of planning, execution, analysis and action to drive continuous improvement. Online tools available to SAFe community members also enable benchmarking against industry peers.

For organizations pursuing DevOps transformations, the SAFe DevOps Health Radar provides a targeted assessment to evaluate maturity across the five dimensions of the continuous delivery pipeline. 

Success Factors for Effective Measurement:

To get the most value from the Measure and Grow approach, organizations need more than just the right metrics. Measurements must be combined with other discovery tools like direct observation (Gemba) of the value creation process. Metrics should be applied selectively to support specific decisions, not just collected for their own sake. And leaders must be aware of the impact metrics can have on behavior, taking care not to drive unintended consequences or misuse.

Perhaps most importantly, measurement is not an end in itself – metrics must be carefully interpreted in context to yield actionable insights. SAFe’s core values of transparency and alignment are essential to create an environment where the facts are always friendly and measurable progress towards business agility is everyone’s shared goal.

Conclusion:

The Scaled Agile Framework provides a structured yet flexible approach for enterprises to assess their current state and track improvement initiatives across the three critical domains of Outcomes, Flow, and Competency. By setting appropriate KPIs and OKRs, optimizing the flow of value delivery, and developing key capabilities, organizations can measurably progress towards the crucial goal of business agility. 

The Measure and Grow techniques described here provide the tools and insights needed to strategically direct that evolution while empowering teams with the autonomy to deliver innovative solutions faster. Of course, this is a continuous journey – there is no fixed end state. The practices and metrics used to guide the journey will need to evolve as the business environment changes. But equipped with the comprehensive guidance of the Scaled Agile Framework, organizations can confidently take the next steps towards business agility no matter where they are starting from today.