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Performance Hacking with Velocity

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If you want to work in an agile company, ask one question, “Do you measure velocity and if so, how do you use it?” If 75% of American companies use agile and 20% of those are reasonably proficient, then this single question will help you find one of the 15% you want to work for.

People give up on agile, often because their expectations for an autonomous, purposeful working environment are high, and quickly dashed. These individuals can be outspoken and permanently and turned off by their experience. Others luck onto one of the 15%—and their expectations are met. Rather than picking an employer by throwing darts at a board, assess their usage of velocity.

The “practice of giving the appearance of effective leadership by delivering on particular metrics, without delivering real performance,” has been the labeled “Performance Hacking” an appropriate label also for velocity. The label and explanation come from an intriguing article in the summer 2023 MIT Sloan Management Review, “Cashing out Excellence,” by Robert D. Austin, Robert H. Hayes, and Richard L. Nolan.

Wall Street-driven performance hackers prioritize short-term financial gains over long-term sustainability and resilience (including the ability to adapt quickly). Major transformation initiatives, that impact short-term financial results, are rejected. Innovation dwindles. Remember General Electric, 1980’s titan of the business world? GE went from a component of the Dow Jones Industrial Average to being de-listed from the New York Stock Exchange due to the performance hacking of Jack Welch. For years Welch was touted as a management wonder-kind, and his destructive style lives on.

Most measurement systems are doomed to failure describes the essence of Rob Austin’s book, Measuring and Managing Performance in Organizations (Austin, 1996). Austin defines measurement dysfunction as measuring something to get a particular result, but the actual results are the exact opposite. In knowledge and innovation work, productivity metrics are dysfunctional.

While the article focuses on corporate-level strategy, the term works just as well for measures like lines-of-code (traditional development) and velocity (agile development). I first wrote about the problems with measuring velocity in a 2011 blog post titled “Velocity is Killing Agility.” The overwhelming response crashed my website. Fast forward to today. A velocity search yields article after article about the problems using velocity. Yes, there are valid uses of velocity for capacity planning and use within a suite of flow metrics. But using velocity in any of its forms for individual or team performance comparisons is dysfunctional. That’s why you ask a two-pronged question: “Do you use velocity, and if so how?”

So why aren’t managers and executives listening to this avalanche of criticism? Because much of the business world is still stuck in a short-term performance hacking mindset—deliver today and short-change tomorrow. Signs that you can look for to help decide if a particular organization is a short-term performance hacker:

  • Business executives obsess over short-term financial results and include excessive stock buy-backs.
  • Business executives play it safe, focusing on operational costs reductions rather than transformations needed for the future.
  • IT executives and managers obsess about “productivity” rather than “value” measures.
  • IT executives and managers use velocity to assess team and individual performance.

I think agile began its rise to prominence due to Vision and Inspiration. The vision was to build better software (products, etc.) and engaging (and fun) workplaces. People found inspiration in the Manifesto’s Vision.  We have drained the Vision and Inspiration arguing about Scrum vs XP vs Agile 2 vs…. Agility may be the cornerstone of surviving and thriving in our turbulent times, so let’s put our energy into rejuvenating the agile/agility Vision and Inspiration.

Performance hacking can kill that vision. The last sentence in the “Cashing out Excellence” article poses an ominous threat, “One thing is certain: If this problem is left unfixed and continues to fester…executives will leave “behind hollowed-out businesses that are incapable of providing the products, services, and desirable jobs that are desperately needed.”

Let’s stop the vision killing. Let’s enhance the vision. Assessing an organization’s usage of velocity is a simple first step in the process of finding the ideal ones to work and grow with.

©2023 by Jim Highsmith