Management 3.0 - setting product development metrics with impact
Are you responsible for digital product design and development? If so, you’ll know that one of the key challenges is monitoring and understanding the progress being made – are you achieving your goals or not? But which measures will give you the answer? Management 3.0 metrics focus on the systems and environment in place to support the development process. They provide actionable data that helps you drive a project to a successful outcome. In this article, we look at what Management 3.0 is and the basic principles of setting up reliable metrics.
Table of contents
What is Management 3.0
Management 3.0 is an approach based on the premise that instead of managing people we should manage systems, thus creating an environment in which employees such as knowledge workers feel more engaged and achieve better results.
Traditionally, metrics and KPIs have been an indispensable part of management. It seems quite logical that managers want to measure performance in order to see whether everything is going according to plan, business units they are in charge of are on the right track, targets are met and strategies executed.
Is there anything wrong with this approach? Well, apparently there is. The problem with metrics applied in this mode is that they’re not exactly actionable as it’s relatively easy, and extremely tempting, to game the system and receive rewards that are linked to the numbers being monitored. And then we run the risk of looking at numbers that are sheer vanity metrics which don’t lead to real improvement
According to Jurgen Appelo, the founder of the Management 3.0 approach and author of “Managing for Happiness” there are some principles which make metrics more reliable, especially in measuring aspects of work that are less quantifiable.
Formulated management 3.0 principles
1. Measure for a purpose
Any measurements should be linked to a bigger purpose, metrics should not be designed for their own sake. Without measuring the organization’s progress toward a goal it’s impossible to determine where people should put their efforts and what will bring the best results. There should be a system enabling everyone to set and measure their objectives, and it should be transparent.
2. Shrink the unknown
As measuring relatively vague aspects of work such as employees’ happiness or engagement is virtually impossible, it’s important to look at various contributing parameters that can be combined to make the numbers more objective and reliable. Several imperfect metrics can reduce the unknown.
3. Seek to improve
The main idea behind measuring performance or any other aspects of work is to empirically inspect and adapt. There are countless things we can track these days, but the key is to look at the important indices, those that can actually contribute to change or indicate movement in the right direction. Measurement should lead to improvement, otherwise the process becomes useless.
4. Delight all stakeholders
While designing metrics and then collecting and analyzing data, it’s important to remember that all stakeholders should be satisfied and their interests at least taken into consideration. Work should be measured from multiple perspectives as there are many different interdependent factors and groups that must be included in the wider picture.
5. Distrust all numbers
Even though numbers seem the most objective measure, there are multiple biases that might be difficult to escape completely. That’s why any numbers should be treated with a healthy dose of skepticism.
6. Set imprecise targets
As counterintuitive as it may sound, while the direction should be clear, targets should be imprecise. This is especially important when setting goals for others. If they know their targets, they’ll work towards them and lose sight of the bigger picture.
7. Own your metrics
According to the Management 3.0 principles everybody should be accountable for their own metrics to increase the sense of ownership and commitment. Employees should set their own objectives, aim to improve, and monitor their progress towards these goals.
When an individual takes ownership of a particular area or an OKR they feel more responsible for taking action and evaluating their own productivity. If, on the other hand, goals are imposed by managers and progress tracked by them, employees are only motivated by fear and a willingness to please the boss, not to achieve the goal itself.
8. Don’t connect metrics to rewards
If people are rewarded for the things being measured they’re tempted to game the system in order to receive the reward. While bonuses may be motivating in the short term, they may kill intrinsic motivation and the need to set truly meaningful objectives. On the other hand, decoupling rewards from metrics makes people focus on improvement for its own sake. It’s even worse when rewards are related to individual performance, not team results.
9. Promote values and transparency
For product development metrics to be reliable and actionable they need to be supported by commonly agreed and upheld values. In order to discourage people from cheating themselves and the system all numbers and data should be transparently shared.
If, for example, new product development metrics referring to particular Scrum teams (predictability, sprint goal achievement, team morale, etc.) are shared in one place and are available to everybody at the company, in a healthy culture they can become a good starting point for discussion. It’s worth pointing out that in a very competitive culture with low trust, where bad performance is instantly punished and people are held accountable for things they have limited influence over, it might have quite the opposite effect.
10. Visualize and humanize
Bare numbers are neither attractive nor easy to follow. Presenting data in a visually attractive form will encourage people to inspect it, and hopefully also act upon it. Even simple color-coding for spreadsheet cells might be a good starting point.
11. Measure early and often
Measurements should be made on a regular basis; inspecting numbers often gives people a chance to see any deviations or anomalies and intervene before the risk arises, thus becoming difficult to mitigate.
12. Try something else
From time to time metrics should be replaced with some other measurement method. This lets employees and managers escape routine and see the situation from another angle.
Management 3.0 principles for effective metrics
A famous quote attributed to Peter Drucker says: “you can’t manage what you can’t measure”. The question is, however, what we want to manage and whether everything that matters can be measured. It’s also important to remember that if metrics are used for the purpose of controlling people they have a huge impact on their long-term motivation and paradoxically also affect their ability to achieve audacious organizational goals. If, however, people use product development metrics to look at their own performance, or preferably at the performance of their teams, they can track progress and look for solutions to the problems that are quickly and transparently identified.
Share this article:
