The right way for businesses to measure digital outcomes

Throughout his many years spent helping businesses drive successful digital transformations, Mik Kersten has noticed a pattern: When companies don’t measure how much value they’re delivering and understand how it translates to business outcomes, things can go terribly wrong. 

Kersten, the CEO of Tasktop Technologies and author of the bestselling Project to Product, spoke about the importance of measuring digital outcomes at Pendo’s Guide: The Digital Adoption Summit. In doing so, he shared some sobering statistics about how the failure to measure well can negatively impact business results. 

For example, Kersten shared that his recent research showed that across large enterprise-level companies, only 8% of what Agile software teams plan ends up getting completed. “We’ve got a massive disconnect between all the ideas that are in the organization of how to deliver better outcomes to customers or our staff through software, and what’s actually being delivered,” he said. Another alarming statistic: 20% of planned new software features are canceled after code for them has already been written. 

You are what you measure, and only by focusing on the right metrics can companies translate their efforts into real results.

A framework to understand how you’re creating value

If businesses want to drive better digital outcomes, they have to measure those outcomes and how they get to them in the right way. That means understanding their value streams—the set of steps they take to add value to their customers or employees—and the way that teams are executing them.

Kersten spoke about the Flow Framework® as a methodology to optimize these value streams and guide teams toward better business results. (For a full explanation of the framework, watch Kersten’s full talk below.) 

In essence, every value stream comprises a flow of work, and that flow can be measured by several key metrics. The first of these is flow velocity, or the amount of features a team can produce in a given time period. Flow time, on the other hand, measures the time it takes to complete a feature or other initiative within a value stream from start to finish. It includes both the time a team is actively working on the item and the “wait time” it consumes due to bottlenecks and other delays. “We know the more we shorten flow time, the quicker we can iterate,” Kersten explained. Using tactics like AB testing can be a great way to speed up the feedback loop and help shorten flow time.

Flow efficiency looks at the ratio of time spent actively working on a feature to total flow time.  Spending too much time in a “wait state” is “the kiss of death in any value stream,” Kersten warned. Another kiss of death is having too many items in progress, both active and pending—measured by flow load. “What we’ve learned empirically through studying enterprise organizations is that there is overload in almost every large organization out there,” Kersten explained. For them, “overly high flow load—too much work in progress—is the main issue slowing things down.”

See the full flow of work in all its complexity

Ultimately, Kersten explained, “value stream networks, the size of organizations, the dependencies between teams, and the software architecture” together make for a “very complex, dynamic system.” What something like the Flow Framework® does is to make those complexities visible so that companies can better answer key questions: “Are we improving? Or did we just make a mistake? Did this not produce a result? Did this set of features not actually drive the outcome that we wanted?” Only by understanding the full flow of work in all its complexity can companies take the right steps to optimize their outcomes.

To learn more about how companies can better measure digital outcomes, watch the full Guide session below: