In 2001, as the dot com bubble burst, a Proxicom executive called an urgent meeting. Standing on a desk in front of us, he said we needed to cut expenses, analysts cared about more than just revenue now... Huh? The execs had focused on revenue, not profitability? Yes, it was the momentum stock era, but hadn’t they seen this coming?
Shortly thereafter, Proxicom was sold for $422 million, followed by rounds of layoffs, and then resold later for (a rumored) $44 million. I’m sure Compaq was grateful they lost out on the initial bidding war.
Why is this story important? Because I see companies repeating it today by focusing on the wrong metrics. Which one metric can cause the most issues and lead to poor decision making? Utilization.
Utilization is not a proxy for productivity or value, yet when implementing Jira Align it is one of the first metrics managers often ask to see. Why? Because it is what managers were taught/told to focus on. After all, people are expensive, so we need to get every bit of work out of them, don’t we? No, not if your goal is to deliver value that generates sustainable profits. Keeping people 100% utilized impedes value flow (and innovation).
Focusing on value flow (and certain other key metrics) increases profitability. Yet increasing value flow requires reduced utilization for many people and resources. This appears to be a contradiction but isn’t if we look at the theory of constraints as explained in the classic book The Goal by Goldratt and expanded on in the more recent book Velocity by Goldratt’s Institute and co-author, Jeff Cox. Think bottleneck.
Simply put, in any development process there will be a constraint or bottleneck. Trying to solve for a single constraint moves the bottleneck elsewhere in the process. It is best to focus on the output desired - value flow - and build buffer into the entire system. Developing any product follows the same logic, with potentially dozens of teams and cross-team dependencies.
Jira Align measures and visualizes the flow of value through your company; while it can report on utilization it is not a metric that matters for most organizations. Furthermore, this can have a negative impact to morale and drive the wrong behaviors throughout an organization.
Many Jira Align views are tied to measuring flow in various forms, as well as the value outcomes of that flow process. Stories and story points accepted are flow, not value, measures. The value measures tie to the features, portfolio epics, and objectives completed and the associated key results and value metrics related to each.
Jira Align is a critical part of a larger ecosystem, especially as the focus shifts to outcomes - value delivered. If an organization focuses on utilization, you may already be behind in mindset and metrics focus, like Blockbuster Video was with Netflix.
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