Understanding the Flow Metrics
“Managing IT without flow metrics… is like managing a cloud infrastructure without a mechanism for measuring the cost of electricity and computer power.”
— Mik Kersten, Project to Product
Measuring End-to-End Flow
The core premise of the Flow Framework is the need to measure the end-to-end flow of business value and what results it produces. Flow Metrics measure the flow of business value through all the activities involved in producing business value through a software value stream.
The correlation of Flow Metrics to business outcomes determine the outcomes of your investments and highlight flow and feedback cycles that are too slow to achieve the market responsiveness and competitiveness you seek.
However, if we measure only a subset of the flow, such as the time it takes for developers to complete an Agile “user story” or the time it takes to deploy code changes, we can only optimize a segment of the value stream.
The Flow Metrics
Flow Metrics, as defined in the Flow Framework®, provide a clear indication of whether value stream flow is sufficient to support targeted business outcomes (like revenue, cost, customer satisfaction and employee engagement).
Flow Metrics measure the rate of business value delivery for software products through the lens of your customers, whether internal or external.
The Flow Framework® defines four Flow Metrics for measuring product value streams:
Flow Velocity gauges whether value delivery is accelerating. Flow Velocity is the number of Flow Items completed over a particular period of time.
Flow Time measures time to market. Flow Time measures the time elapsed from ‘work start’ to ‘work complete’ on a given Flow Item, including both active and wait times.
Flow Efficiency identifies waste in a value stream. Flow Efficiency is the ratio of active time out of the total Flow Time.
Flow Load monitors over and under-utilization of value streams, which can lead to reduced productivity. Flow Load measures the number of Flow Items currently in progress (active or waiting) within a particular value stream.
In addition to the four Flow Metrics, Flow Distribution illustrates the tradeoffs between Flow Items in a reporting period. Flow Distribution measures the distribution of the four Flow Items — Features, Defects, Risks and Debts — in your value stream’s delivery.
Value streams should target appropriate distributions for their lifecycle stage, e.g. products in their innovation and growth stage require high feature distribution, favoring new business capabilities over other Flow Items.
A Flow Item is a unit of business value pulled by a stakeholder through a product’s value stream.
Measuring Value Delivery with Flow Items
To pull value, a customer must be able to see that value and be willing to exchange some economic unit for it (time or money). Four flow items constitute a unit of business value pulled by a stakeholder through a product’s value stream, and they are: features, defects, risks and debts.
Work that naturally spans many people and teams within a value stream can be characterized as applying to one of these items. All work that flows in a software value stream is characterized by one—and only one—of the flow items. And Flow Metrics are measured for each of these flow items and all of them collectively.
Agile & DevOps Transformations Need Flow Metrics
A company’s approach to transforming, modernizing and continuously improving software delivery will always involve several methodologies (like Agile), movements (like DevOps), practices (like Lean) and scaling frameworks such as SAFe, LeSS and Nexus.
Flow metrics provide a business- and customer-centric view of what flows across the entire software delivery process, regardless of the methodologies you use. They provide a simple, high-level view of the effect of your Agile and DevOps transformations on business results.
The Scaled Agile Framework (SAFe®) describes three measurement domains for measuring business agility and how well the organization is progressing toward the portfolio, large solution, ART, and Agile team’s business and technical objectives. The three domains are outcomes, competency and flow.
As a flow-based system, SAFe® recommends using the five value stream metrics in the Flow Framework created by Mik Kersten, plus a sixth metric called Flow Predictability.
Incorporating Flow Metrics in OKRs
Many organizations currently use OKRs — Objectives and Key Results — to drive desired business outcomes. Yet while it’s pretty straightforward to set KRs for business results, it’s proven much more difficult to cascade them to software delivery teams. Business KRs are not meaningful enough to help technology teams and individuals prioritize and improve their daily work. That is where Flow Metrics, or value stream metrics can help.
Flow Metrics can be used as KRs that measure end-to-end value delivery, tied to actual capacity. Improvements to flow will enable the organization to achieve targeted business results, hence Value Stream OKRs focused on accelerating flow will motivate teams to apply resources to their bottlenecks.
Unlike business KRs, which measure outcomes — and are thus lagging, Flow Metrics track value stream improvement — and are thus leading indicators.