February 13, 2017

The Arc-E-Tect's Predictions for 2017 - KVI and KPI [6/10]

The Arc-E-Tect's Prediction on KVI and KPI

It's 2017, meaning 2016 is a done deal, and most of my predictions for 2016 I made about a year ago and never got around documenting in any form have proven to be absolutely bogus. Which leads me to come up with my predictions for 2017 and properly document them. So continue your effort reading this post and hopefully you'll enjoy reading them. Unfortunately we'll have to wait for about a year to find out to what extent I got it all right, but for now, ...Key Value Indicators.

Why KVI's? Why Key Value Indicators? Because we all work to increase our business' value. Empowerment and autonomy of teams invalidates the role of KPI's and instead teams are judged by the value they create and not the costs that they incur.

KVI in, KPI out

Forget about performance. Performance, in the end, means nothing when it comes to an organisation’s bottomline. What matters is value. However you want to cut it, unless value is created, it’s not worth the effort. And by value being created I mean that the difference between cost and benefit increases.
So unless a KPI is expressed in terms of how much value is being created, it’s highly questionable to judge a team or an individual by this KPI. In fact, if you take LEAN seriously, you should be aware that in many situations it will be the case that no performance will create more value than some or a lot of performance. In many cases, KPI’s will result in the creation of waste, of shelved products.

So what we will see in 2017 is that teams as well as individuals will be judged not by their performance but by the value they create. By KVI’s instead of KPI’s. This will be in conjunction with an increased level of autonomy and a management style that revolves around empowerment. There will be a framework, an architecture defined by principles, defining the boundaries within which a team can operate freely such that they will be able to meet and exceed the agreed upon value that will be created by them.

A key aspect in this whole new way of thinking lies in the fact that we start thinking in terms of products instead of projects and that teams will be held responsible for these products from cradle to grave. Product Owners, DevOps and Product Teams are the new trends in 2017 and that allows us to drop the questionable KPI in favor or the real metric: KVI.

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