It is more important to know whether we are trending upward or downward — are we becoming better craftspeople, or are we trading away the quality of our code for expediency which will eventually cause us to have to work much more slowly.
Poorly managed code makes delivery hazardous and painful. Note that there is a flaw in measuring only the most-recently changed files. Sometimes there is a file that needs to be improved, but it is such a horrible mess that the entire programming staff avoids touching it for fear of breaking it.
Escaped Defects are defects which have made it through the process without being noticed, and have been uncovered in the field. Escaped defects cost us time in customer support, in management, in reputation, and in tracking and prioritizing. Even more important is the learning that comes from root-cause analysis. Rapid ad-hoc fixing of bugs will keep the trend high, but reduce the count. Truly learning the root cause will change the way we produce software, making it safer to release code to customers.
Any internal metrics are going to tell us how we are doing the work, but the real question is how our work changes the world.
Likewise, how does our work affect customer service and technical support? How easy is it to manage our software in operations? If we have a separate testing or certification group for FDA or Security then how easily can they do setup, test, and teardown? How about our salespeople? What could we do that makes the system easier to sell, demo, or explain?
If you use chartering for your projects, you will have a roster of your project community. For all the roles identified in that community, how do they see your product?
How is it trending? Is it better every release than the release before? Is it becoming ever more useful? Whether you use the planguage to set measurable goals, or use user surveys and feedback mechanisms, you will be interested in how profitable or helpful people find the use of your software. Otherwise, why bother writing it? We have discussed a few kinds of metrics that we can use to gauge the effectiveness of a team at pleasing the project community, improving their own processes, and managing their source code.
By watching the trends on some of these measures, we feel confident you will be able to identify and implement meaningful changes. Please join us in the comments with any stories supporting or dissenting, so that we may learn and improve rapidly! These categories do not have comparable off-line substitutes, and many people consider them essential for work and everyday life. When we asked participants how much they would need to be compensated to give up an entire category of digital goods, we found that the amount was higher than the sum of the value of individual applications in it.
That makes sense, since goods within a category are often substitutes for one another. Consumers value some digital categories more than others. Search engines, email, and maps, for example, have no comparable off-line substitutes, propelling them to the top of the list.
To put the economic contributions of digital goods in perspective, we find that including the consumer surplus value of just one digital good—Facebook—in GDP would have added an average of 0. GDP growth from through During this period, GDP rose by an average of 1. Clearly, GDP has been substantially underestimated over that time.
With a bit of additional data gathering, changes in GDP-B could be estimated regularly and released alongside quarterly or annual GDP updates. Macroeconomic indicators can be precisely measured, but they tell only part of the story. Well-being metrics convey a truer picture of how consumers are doing, but they are more subjective. By considering an array of measures, including our GDP-B metric, policy makers, regulators, and investors can establish a better foundation for decision making.
Our method has two important limitations. We will need to include far more goods and conduct more online choice experiments for each to get a more accurate assessment of the full contribution that free goods make to the economy. Second, like traditional GDP, our measure does not capture some of the potential negative externalities associated with goods and services, including online platforms.
Several studies suggest that social media platforms can lead to addictive behavior and that internet use and smartphones may have a negative impact on happiness and mental health. Others have argued that some digital goods are damaging to social cohesion or political discourse or impose costs on consumers in the form of lost privacy. For now, our GDP-B metric captures only the personal benefits and costs associated with goods, as assessed perhaps imperfectly by the participants in our online choice experiments, not the social costs and benefits.
We are working on addressing those limitations, as are others. For example, researchers have developed a range of useful methods to quantify subjective aspects of well-being, including happiness and life satisfaction.
On a spectrum ranging from traditional macroeconomic indicators such as GDP and productivity, which tend to be very precise, to well-being indicators such as happiness, which are often coarser, our GDP-B metric lies somewhere in the middle. GDP-B strikes a balance between those extremes. We can count Google hits , but they are hardly a proxy for reputation.
The number of friends one has on a social network is no measure of the value of friends. In business, the emphasis naturally lands on the kind of value that can be set by a market. Good judgment is another important virtue — if not the most important one as Aristotle thought. Like love, it so far defies measurement.
But we ignore it as a critical factor in organizational life at our peril. Laurence Prusak consults to enterprises on matters of knowledge management, learning, and organizational development. These systems would include the measures that are strategically important, but those measures alone are insufficient for effectively managing operations. For developing operational measures, I recommend the approach and model given in my book Operational Performance Measurement: Increasing Total Productivity.
The model is also consistent with TQM and Six Sigma methodologies that contain many specialized techniques for measuring and managing processes. Becoming familiar with the Baldrige Criteria for Performance Excellence is also recommended.
Since it outlines general management best practices, it provides a very helpful perspective on what a well-managed company should be measuring, as well as what it should be doing. Cascading measures. With some exceptions, such as market share, what you measure at the top is what must be measured at all levels. However, the specific measures will change with every function and organizational level because managers doing different jobs need different information to make different decisions.
The same methodologies used to develop measures at the corporate level can be used to cascade the measures down to front-line managers, supervisors, and employees. However, as you go down the organization chart, the focus is on operations or processes. Strategy is incorporated into operational measures by giving more weight to the measures that are strategically important. This communicates strategy to all employees by translating it into operational terms — a primary objective of the Balanced Scorecard.
Implementing performance measures. Determining what to measure can take considerable effort, but it will probably be less than one-third of the total effort required to implement an efficient and effective measurement system. Data collection and processing systems will have to be implemented to produce the measures; everyone will have to be trained in using the systems and measures; and as the measures are used, some problems are sure to be identified that will require changes to the system.
Using performance measures requires managers and employees to change the way they think and act. For most people, this is relatively easy, but for some, changing old beliefs and habits is very difficult. Overcoming such problems requires strong leadership to provide appropriate direction and support. The best measurement system in the world will yield few benefits if the right knowledge, skills, abilities, and values are not developed in a company. Developing and implementing effective measurement systems requires leadership, commitment, and hard work.
Some investment is required, but it is small relative to the key benefits of a well-designed and implemented measurement system:. If all of your managers can readily answer those questions about their areas of responsibility and support their answers with objective numbers, your company has the performance measures it needs.
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