Lean Metrics — The Essential Measurements of Improvement

Get serious about your data

When it comes down to measuring and analytics, there are two quotes by W. Edwards Deming (well one is his for sure and the other one is arguably his as well) I really love. I believe that they encapsulate pretty accurate the philosophy behind having metrics in the first place:

“You can’t manage what you don’t measure.”

and

“In God we trust, all others bring data.”

Let’s take a look behind the buzzy words of these quotes.

FIRST, measure what you would like to manage. Don’t try measuring everything — it will bring you only headaches and analysis paralysis. Think minimalism when it comes to how many KPIs you have.

SECOND, data beats every argument. It’s ok sometimes to have discussions that are not data backed, but for all of the important decisions try extracting data to support them.

Lean Metrics

Lean as a tool for improvement has several goals:

• Map and specify value stream
• Ensure that value “flows”
• Ensure that customers “pull” the value from the system
• Eliminate wasteful activities
• Pursue perfection — kaizen (we love this part so much we wrote a whole post about it)

In the next section you will learn the metrics that Lean provides. They focus exactly on supporting the Lean goals. As you will notice some of them are also used in other methods.

So, let’s dive in.

Created vs. Finished

Created vs. Finishes is really straightforward metric. It tracks how many tasks you have created over a given period, and how many you were able to complete.

Best case scenario the coefficient between created and finished will be equal to 1. However, this case is highly unlikely. Most of the times the coefficient varies but it is ok within a certain range (+/- 5 to 10%).

This metric will help you determine whether you have more demand than you can serve or the opposite, you finish work at a faster rate than it enters the flow. As with everything the key is in the balance. Created vs. Finished is a good starting point and can easily be tracked without having specialized software or system in place. Just export or count a number of tasks created and finished over the same period and make a chart in Google Sheets or similar tool to compare.

Work-in-Progress

Work-In-Progress or WIP is at the core of Lean. Tracking WIP is essential for understanding better the dynamics of the system, so we know when something is broken. As we already wrote in one of our previous posts (Laser focus your team using Work-In-Progress limits) limiting the number of tasks the team works on will ensure that they are completed faster. Also when minimize the WIP we tend to pick more careful what to work on next and make better decisions.

Tracking WIP could be both quite easy and kind of tricky. It depends on the way you tackle it. One way to track how many tasks are currently worked on. However, if the granularity of the tasks is not comparable this approach could lead you to wrong conclusions (having too big and too small tasks in one project). We solved that with Swip, so I would advise you to use it to ensure compatible task size.

Monitoring the level of WIP over time is really useful to notice trends. The end goal is to try keep amount of WIP as low as possible to ensure faster time to completion.

Lead time

Lead time is defined as:

The total time it takes a given task, to progress from the beginning of the workflow to its end.

There are several segments of the lead time that are useful:

• Average lead time
• Lead time for specific task
• Mean lead time
• Lead time extremums

This is an extremely useful metric to have in place. You can use it to know how much time it will take to develop a specific feature or to track what’s the average time it takes to close a deal. The implications are vast and multidisciplinary.

Cycle time

While Lead time focuses on the total time from start to finish, Cycle time measures a specific stage or part of the process. The example above outlines a full development workflow and the time spent by a task in the three stages below the green line would provide the cycle time for these columns. It’s up to you what exactly to measure. I would recommend starting with tracking the whole workflow at first. so you can pinpoint places where work takes more time than it supposed to.

It’s up to you what exactly to measure. I would recommend starting with tracking the whole workflow at first so you can pinpoint places where work takes more time than it supposed to.

Lead time = SUM(Cycle times)

Lead time gives a great overview of the performance of the process. Cycle time, on the other hand, helps you find out at which exact steps in your workflow you can improve.

Monitoring the right steps in your process could be an eye-opener for many teams and businesses.

What’s next?

The eager Lean practitioners are probably thinking “Guys, you just scratched the surface…”. And they will be right. There are so many other powerful metrics to be examined. If we are to collect them all in one place, that will turn into an e-book. Hmm, not such a bad idea huh…

Make sure to try what you’ve learned with your existing projects. Do it for a couple of weeks and you will notice the trends right away. Expect for some ideas to arise on the matter of improving the lagging parts.

Use the comments below to post any questions you may have.

And don’t forget that sharing is caring! Happy swipping :)

Originally appeared on Swip.