Introduction Questions

1. In which way are the metrics motivating the team to work smarter?

2. Which three customers are really more successful because of using the product?

What is a Good KVI?

Gordon Ramsay is world famous for his cooking skills, books, films, and above all restaurant-consultancy skills. I spent hours watching the series Hell’s Kitchen in which he helps restaurants to be successful again. He works with restaurants that provide poor quality, have customers walk away, are losing money, or for other reasons almost have to close their doors. In the course of a few days, he ensures that the restaurants can be successful again. Gordon saves many restaurant owners from bankruptcy, and they are very grateful to him. What makes him so unique and successful? Besides being an excellent chef and being able to coach people well (in my opinion), there is his unique skill that helps him to turn restaurants around again and again: he is focused on the needs of the customers who come to eat. As a result, he can make the restaurant a unique and popular place, and customers are happy to pay for that. This is how Gordon creates a customer impact that delivers value for the restaurant. It sounds easy, but in real life this is hard. There are so many things that blur the focus on the customer impact.

The basis of a successful restaurant is still relatively simple: delicious food, a full stomach, and a good atmosphere for a suitable price. His strength is to make these general concepts applicable to a specific restaurant because how he creates the positive customer impact for a restaurant is different every time. What is delicious food now? What is a good atmosphere for that neighborhood? What is a reasonable price for these guests? Gordon designs different recipes, a different restaurant format, and other prices depending on the specific situation. That makes him very agile: he is able to answer the client’s needs each time. This allows him to respond to the specific situation, competition, target group, atmosphere, employees’ capabilities, and much more. So every time, he creates a profitable formula. Many companies can learn from this—really focus on the basic needs of the customer, deliver impact, and turn that into value for the company. These three steps must be taken in order to craft a good KVI.

In Three Steps to a First KVI

So how do you develop and find a good KVI? Not by telling the people the new metric. This is often the traditional way of doing it, which isn’t likely to support ownership, understanding, and collaboration. The new way is to co-create the metric. Together with a few people and a workshop, the first KVI is discovered. After a few months, this first version can be improved with new insight and experience.

The crafting of a good KVI consists of three steps that can be done in a workshop that is usually two to four hours. The steps in this workshop are as follows:

Step 1: Create a clear customer impact.

Step 2: Visualize how this creates value for the company.

Step 3: Define a metric that increases the focus on the customer.

Step 1: Create Clear Customer Impact

It starts with clarifying the customer impact for this situation. Clarify how the customer benefits by using the products or services. Does it give them a certain gain? For example, they are faster or happier, can realize their ambitions faster, or are more successful in a different way. Or does it relieve a certain pain? Does it help the customer spend less time on certain tasks, run less risk, or have less stress or hassle? The team members indirectly deliver a positive impact to their users by creating and improving products and services that are beneficial for them. Although the solutions may have changed and probably will change more quickly the next era, the underlying customer impact hasn’t changed a bit. The way the customer impact is delivered is changing more and more quickly, but the underlying gains and pains hardly change.

I give two examples to explain this. The products and services around watching films at home have changed enormously in recent years. We do not go to a video store to rent videos; instead, we stream videos online from the couch. We watch Netflix and YouTube, we pause live TV, we easily record films from TV, and we watch movies in the park with the tablet—all examples of new products and services. The need for watching films for relaxation, romance, or whatever reason has not changed in recent years. The customer impact is and remains watching a movie. It is only that this customer impact is fulfilled in a totally different way. Blockbuster filed for bankruptcy in 2010³ not because the underlying customer impact changed but because other companies could deliver the same customer impact easier and cheaper. Blockbuster probably steered on KPIs like the number of movies rented or the number of subscribers. Companies like Netflix and YouTube steer on KVIs like the number of movies actually watched. Because no matter what new technologies might surface in the future, we consumers continue to have the underlying need to relax and watch a movie. Successful companies are able to continue to respond to the stable needs of watching films with the help of new technologies and improved services.

3. https://www.forbes.com/sites/gregsatell/2014/09/05/a-look-back-at-why-blockbuster-really-failed-andwhy-it-didnt-have-to

Here is another example. Cars are bought for convenience, a feeling of freedom, cargo space, status, safety, or for taking a trip over the holidays. Various car brands profile themselves with a specific customer impact in their marketing campaigns, brochures, and appearance to be distinctive. Over the years, cars have changed and improved tremendously. New technologies, improved engines, and all kinds of other changes have made cars safer, faster, more economical, or easier. But the underlying needs of consumers have remained largely the same.

It is therefore important to focus on the customer impact. This is a key factor for teams in the dynamic market. But how does this customer impact generate money for the company, and does it contribute to continuity?

Step 2: Visualize the Tangible Value for the Company

If the customer’s impact is clear, it can be made concrete how this brings value to the company. In this step, the entire business process is visualized: from harvesting new ideas and improvements to sketching solutions, building the best ideas, and gathering feedback from actual users. The self-managing agile teams need insight on this overall process and their role in it. Collectively, they brainstorm on how increasing the customer impact increases the value for the company. This value can only be optimized by collectively collaborating, sharing insights, and improving on feedback between all the teams involved. Is more food on the plate improving the value? Probably not. Improving the experience of the restaurant guests is more likely to improve the value. Is building more features in an app improving the value? Probably not; building those features that increase the DAU is more likely.

Table 1.1 presents some examples of the relationship between what teams do and the value for the company.

	Do	Products and Services	Customer impact	Value
Restaurant	Cook, serve, clean, welcome, handle reservations	Meals	Filled stomach, relaxation, romance for a fair price.	Very happy and satisfied customers pay. Next they are ambassadors for the company.
Car manufacture	Designing and making car parts and mounting them to a car	Working cars	Faster from A to B. Or: status, luxury, safety.
Clothing manufacture	With cloth and other materials, design and build cloths	Cloth like trousers, blouses, and pants	Warm and neat. Or also: status, ego, first impression, luxury, or safety.

Agile teams that have to continuously implement improvements must be innovative and have to work smarter. They can only do this if they have a clear picture of the complete process of value creation.

Step 3: Choose a Metric to Measure Value

If it is known how the work of the team increases the customer’s impact and how this provides value for the company, the KVI can be chosen in the third step. Determining this metric is often a creative process, whereby it helps to combine the ideas of various employees into a concrete KVI. Often in this process, several KVIs are tried out for several months in order to make the KVI better and better.

How Do I Know We Have An Inspiring KVI?

Finding an inspiring KVI is also complex. It’s a discovery. The first KVI is often not the right one, but setting a draft KVI and just experimenting with it is often the only way to find a better one. An inspirational KVI generates energy, motivates out-of-the-box thinking, and drives synergy. Sketching ideas and working with a certain KVI for several months will give the feedback and learnings to improve. This is the so-called loop to discover the proper KVI.

But how does one know if they have found the right KVI? Experimenting and brainstorming with teams and customers on the following five Is results in practical guidelines for creating inspirational KVIs.

The 5×I for Inspirational KVIs

The 5×I (five Is) for inspirational KVIs include the following:

• Influence. The teams feel that they can influence the metric.

• Insight. The metric is tangible and visual. Team members update the metric themselves and are eager to know the latest numbers.

• Ideas. The metric causes ideas to thrive. It stimulates out-of-the-box thinking. Teams have a list of ideas, innovations, and disruptive features to improve.

• Intent. The intent behind the metric is also clear. The team members can explain the purpose or mission behind what they want to achieve.

• Impact. It focuses on the customer, and it can be explained to the customers or users that it serves them.

Pitfalls When Choosing and Using KVIs

Pitfalls when choosing and using KVIs include the following:

• No feedback on choices made this week. A KVI that is only measured a few times a year is not a good KVI because the choices today or this week are not reflected in the figures. This gives the team no insight to increase their self-management.

• No influence. Note that the team can influence the KVI. Some companies work with the wrong KVI, namely, the profit made. This clearly indicates the overall purpose and makes it measurable. However, the profit depends on many things, such as strategic depreciation and other accounting details. Often it is better to work with a margin calculation. Make it easy to calculate the margin of the different products and services, and use this as the KVI for the team.

• Management dashboard only. If the managers are only using the metric to know how the teams are doing, they know less than half the story. There could be all kinds of reasons why the KVI goes up and down, and these reasons are key lessons for the teams and the rest of the organization. Just associating the declining KVI with underperformance of the teams is the mindset of a noncomplex environment. There are numerous unknowns, dependencies, and external factors that influence the KVI. That’s the beauty of it. Because only with the proactive brainpower, experience, and talents of everybody can we continuously find ways to positively influence the KVI. That makes it exciting, fun, and challenging. Talk with the teams and don’t judge the numbers.

• Waiting for the best possible KVI. After studying the customer impact and how that brings value to the company, a superb KVI can be found. But if it takes weeks or months to implement it and to gather enough data to track the KVI, it’s probably still a bad KVI. A better way is to work with an existing metric and start gathering experience and learnings while the uber-KVI is implemented.

How Do I Give Inspiring Goals?

Often because the teams are part of the journey of finding the KVIs, they probably already feel connected with the goals. But not everybody was part of that journey. And as time passes, other people join. Therefore, successful leaders repeatedly ensure that the goals are clear and still inspiring. They know that inspiring goals are crucial because the job of the teams is often challenging. When searching for solutions, implementing improvements, and exceeding customer expectations, a lot of things are expected from the agile teams. It often takes a lot of energy and perseverance to achieve these goals. It is no longer about carrying out daily activities from 9 to 5, but about continuing to look for solutions creatively and searching elsewhere if these solutions initially do not work or when feedback from the customers is harsh.

But how do you ensure that these goals are inspiring? Over the years, I have been able to meet several inspiring agile leaders. They know how to get people moving, working together in teams and overcoming obstacles together. How do they do that? I have interviewed, observed, and had heart-to-heart chats with several agile leaders. Being inspiring is not a trick; true inspiration is about authenticity and vulnerability.

In addition, I discovered a few things that these successful agile leaders have in common when they speak to large or small groups:

1. Dream. They have a passion, an inspiring vision. They can explain their vision in such a way that it becomes very tangible and relatable. This gives the teams the trust and the energy to go for it.

2. Customer focus. This dream is not internal to the company but oriented toward the customer. The focus is on what teams can mean to customers and how they can have a positive impact.

3. Vulnerability. Agile leaders show courage by being vulnerable to large groups. They indicate that they can’t do it themselves and that they do not have all the answers. They are imperfect, and they make mistakes. But they act not out of uncertainty, but out of authenticity.

4. Exploration. They do not present a detailed plan, but a voyage of discovery and exploration. They outline in their own words that it is too complex and unpredictable to know what exactly is needed to be successful. They can’t give any guarantees about what exactly is going to happen or how it will look in detail. The call is to help each other and not to go for self-interest or short-term solutions.

5. Pain. They are honest about the effort and the pain it will cost in the coming period. It will not be an easy path, and setbacks are part of it.

In many cases it came down to courage. Agile leaders could have postponed the change, continuing to do what they always did. That would have led to less risk and pain in the short run. But they stuck their necks out and chose to inspire. They wanted to turn around the way customers were served and the way the talents and opportunities of employees were utilized. This ultimately led to a change that yielded more than just company results. In many cases, employees started to believe in themselves, and customers were satisfied with the products and services supplied.

It is the agile leader’s job to ensure that each team has that clear and inspiring focus on what they need to achieve. In practice, this means ensuring that the team understands why products and services are of interest to customers and how this generates value for the company.