Beyond the anecdote: True drivers of digital-delivery performance

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Organizations crossed all sectors are nether expanding unit to create worth and present results. From navigating nan world pandemic and hybrid activity environment, to managing proviso concatenation disruptions and inflation, nan winners of tomorrow will beryllium nan organizations that harness nan powerfulness of exertion to accommodate to changing environments. Our observations show that organizations that are agile, put successful talent, foster a beardown civilization of craftsmanship, and person deployed nan latest engineering practices thrust amended integer outcomes—typically seeing up to 27 percent gains successful efficiency, customer satisfaction, worker engagement, and operational capacity arsenic organizations activity to worth complete conscionable doing work. However, knowing precisely what drives capacity is difficult, and nan manufacture is afloat of anecdotal “silver bullets.”

McKinsey has been researching what drives agility and related capacity outcomes for much than 5 years, collecting self-reported information for complete 1,700 teams from astir 75 organizations crossed nan globe. Here our investigation looks astatine 48 practices grouped into 19 capacity levers wrong strategy, structure, group practices and culture, process, and exertion to thief america understand what drives team-level capacity beyond earthy squad talent crossed integer leaders.

Our study shows that 23 percent of capacity tin beryllium explained based connected observable practice, pinch nan remainder driven by dimensions that are harder to quantify and power for, specified arsenic nan talent of nan team, nan types of projects, and more. However, focusing connected these controllable variables tin make nan quality betwixt an institution that struggles and 1 that outperforms competitors.

Improvements successful definite organizational practices person a disproportionate effect connected circumstantial capacity outcomes.

Interestingly, though beardown practices thief crossed each dimensions, definite practices person disproportionate effect connected circumstantial dimensions. For example, arsenic seen successful Exhibit 1, a beardown and mature exertion infrastructure and architecture has a disproportionate effect connected velocity but is little applicable for squad effectiveness. This variety betwixt nan effect of practices allows america to place nan levers that are astir influential for each capacity result that tin past beryllium coordinated to attraction connected achieving circumstantial goals depending connected priorities, wrong nan discourse of wide improvement.

How does your statement fare crossed these dimensions? Our investigation dives into really isolating circumstantial factors tin amended capacity arsenic defined by an organization’s priorities.

Speed. Reducing nan clip it takes to bring ideas and innovations to marketplace and adapting to nan changing situation are captious successful today’s progressively volatile market. Speed successful package transportation gets products, features, and services to marketplace much quickly and tin beryllium measured pinch a number of metrics, including nan following:

  1. Release frequency. How often do you execute releases into accumulation wrong your team?
  2. Lead clip to deploy. On average, really agelong does it return for codification to beryllium deployed successful accumulation aft codification commit?
  3. Lead clip to delivery. On average, really agelong does it return to recognize a prioritized business thought of mean complexity (including support and funding)?
Of nan 19 capacity levers, 4 person a statistically important narration pinch squad speed.

By moving a linear regression from nan 1,700 teams’ self-reported data, we were capable to find which capacity levers person a statistically important affirmative narration (95 percent confidence) pinch each measured capacity outcome. Throughout nan article, these exhibits convey nan capabilities pinch a statistically important affirmative narration for nan applicable result arsenic good arsenic nan quality successful scores betwixt nan apical quartile and bottommost quartile of teams for that peculiar outcome. The illustration supra illustrates nan 4 capabilities that person a statistically important affirmative narration pinch velocity (the mean of merchandise frequency, lead clip to develop, and lead clip to deploy scores) arsenic good arsenic really nan fastest teams (top performers, which were successful nan apical quartile for speed) performed connected each of these dimensions compared to slower teams (bottom performers, which were successful nan bottommost quartile for speed). Values for capabilities correspond self-reported study responses, pinch higher values representing amended performance. Different capacity levers tin beryllium pulled, depending connected nan desired outcome, to execute improvements.

In this illustration (Exhibit 2), linear regression study highlights nan value of respective factors that importantly amended organizational speed. In particular, method support for package teams plays an outsized role, which is not astonishing fixed that transportation teams often walk a 3rd of their clip managing environments, deploying code, communicating pinch others, and tending to related activities that tin beryllium successfully automated pinch nan correct method foundations. The apical drivers of velocity are arsenic follows:

An agile aviator astatine a financial services customer showed that having nan correct collaboration exertion enabled teams to meaningfully amended work value and customer satisfaction. In this case, nan squad leveraged nan correct supporting systems and tools, including group chat applications, integer whiteboards, and surface sharing to velocity up rumor solution from weeks to hours.

  1. IT infrastructure and operations: Highly productized and automated IT infrastructure allows teams to self-provision and negociate environments automatically (within minutes) and reduces nan labour of IT operational activities.
  2. Roles and responsibilities: Roles that are standardized, broad, and empowered debar delays related to connection and coordination. Specifically, empowered merchandise owners/managers and method leads supported by an engineering unit pinch wide full-stack capabilities.
  3. Supporting systems and tools: Easy-to-use and wide adopted supporting systems and tools, elemental exertion changes to nan transportation pipeline, and connection and readying devices tin materially amended speed.
  4. Focus connected nan customer: Placing customers first and interacting pinch them regularly motivates nan squad to region obstacles and attraction connected simplicity. At large, users want elemental systems, and nan much organizations interact pinch those customers, nan easier it is to debar characteristic complexity, which bloats and delays improvement efforts.

The bottommost line: Companies looking to summation their velocity should double down connected IT infrastructure/automation, intelligibly specify roles and responsibilities, guarantee entree to supporting systems and tools, and stress nan customer passim their organizations.

Productivity. Increasing nan clip that teams allocate for activity and speeding up nan gait of activity is different cardinal extremity of agile—stop discussing and commencement doing! We measurement productivity successful nan pursuing ways:

  • Productive time. What is nan proportionality of productive clip wrong nan team? Productive clip excludes meetings, rework, fixing incidents/defects, and truthful on.
  • Velocity. What has been nan mean velocity per full-time balanced (FTE) percent summation since nan commencement of agile take (that is, nan percent summation successful existent velocity per FTE versus mean velocity per FTE of nan first 3 months)?
Higher maturity crossed 5 capacity levers has a statistically important affirmative narration pinch squad productivity.

In Exhibit 3, our regression study shows nan value of structural, process, and group factors to region unnecessary clash and support squad productivity. The apical drivers of productivity are arsenic follows:

At a logistics client, we saw that merchandise owners who built person relationships done unfastened speech pinch cardinal members of offshore-development teams were capable to much efficaciously pass nan merchandise imagination and requirements and complete their features 4 times faster.

  1. Workforce size and location model: Right-sized, strategically located teams facilitate nan travel of accusation and activity while minimizing friction. While nan caller past has taught america that distant teams tin nutrient akin (and impressive) outcomes to those of colocated teams, we find that squad setup needs to beryllium cautiously designed to approximate in-person communication, including aforesaid clip zones, due tools, and ample opportunities to beryllium successful nan aforesaid room. This setup tin minimize handover time, trim nan number of meetings, and trim down connected rework, arsenic teams tin amended understand tasks and debar errors that stem from miscommunication aliases misinterpretation.
  2. Team processes: It is intuitive that harmonized squad processes (including effective agile ceremonies, a beardown merchandise roadmap, and a azygous backlog), coupled pinch an ingrained civilization of continuous betterment and sharing champion practices, support squad productivity. Establishing a clear operating exemplary gives teams a clear position of what is coming adjacent and optimizes nan number of meetings. Building a cleanable backlog besides provides clarity complete priorities and reduces nan request for rework.
  3. Reporting structure: Creating a reporting structure that supports squad autonomy, organizes teams astir personification journeys, ensures teams person nan required skills wrong their group, and fosters beardown communities of believe minimizes cross-team limitations and enables teams to activity toward their objectives pinch little administrative effort.
  4. Talent management: Organizations that prioritize talent management by coaching, building capabilities, and rewarding individuals let teams to beryllium much productive.
  5. Informal networks and communication: When individuals are encouraged to grow their informal networks and entree information, they consciousness connected to nan remainder of nan business and tin easy collaborate pinch others (no silos). This openness (sometimes referred to arsenic “radical transparency” aliases “shared consciousness”) reduces nan request for time-intensive meetings and increases nan clip that individuals person disposable to activity connected achieving their goals.

The bottommost line: To amended productivity, companies will request to create an effective location exemplary and wide structure, institutionalize squad and capacity processes that unleash talent, and leverage nan sweeping powerfulness of informal networks.

Quality. Many of our clients attraction connected expanding nan value of their teams’ output. We measurement value by looking astatine nan following:

  • Change nonaccomplishment rate. What stock of releases person either resulted successful degraded work aliases subsequently required remediation complete nan past quarter?
  • Mean clip to retrieve (MTTR). On average, really agelong does it return to retrieve from severity 1 and 2 incidents and/or information vulnerabilities?
Higher maturity crossed 4 capacity levers has a statistically important affirmative narration pinch squad quality.

Regression study (Exhibit 4) shows that value depends connected getting galore dimensions right. Specifically, value is astir affected by nan following:

At a starring financial-services company, we recovered abstracted owners for improvement and quality, which resulted successful an MTTR that was importantly down nan company’s peers earlier pushing for “T-shaped” engineers who would return complaint of development, testing, and operations.

  1. Vision: Setting an organizational vision, which emphasizes value of deliverables, and ensuring that imagination guides day-to-day decisions truthful individuals consciousness committed to that vision; these shape nan organizational worth for quality.
  2. Culture: Perhaps counterintuitively, building a culture of psychological information that tolerates and shares failures mostly results successful higher levels of quality, arsenic squad members spot each different and study from mistakes. Furthermore, practitioners are much consenting to raise nan siren erstwhile basal if they cognize location will not beryllium antagonistic repercussions.
  3. Architecture evolution: Modular architecture (ideally utilizing microservices) and integration of caller services pinch halfway systems (for example, designing APIs truthful services tin beryllium reused by different teams) lend to cleaner releases and faster betterment from setbacks. Evolving nan architecture for resiliency and having nan correct devices are paramount.
  4. Reporting structure: While reporting structure whitethorn look disconnected from quality, autonomous teams that are portion of beardown communities of believe mostly person higher-performing members who do not dangle connected others to drawback mistakes for them and who tin enactment quickly arsenic a agreed squad to lick problems. Reporting building is besides linked erstwhile different perspectives are collected—for example, catching a ineligible request while discussing nan backlog versus during user-acceptance testing, which apt would hold a release.

The bottommost line: For organizations focused connected improving quality, it is imperative to group a clear organizational vision, create a civilization of experimentation and growth, and modernize nan IT architecture.

Effectiveness. Anecdotally, we spot teams go much effective and squad members much engaged arsenic organizations adopt an agile measurement of working. Our meaning of effectiveness includes nan following:

  • Delivery predictability. On mean (over nan past quarter), what stock of nan activity committed did nan squad really present (within a sprint aliases a merchandise cycle)?
  • Value realization. What stock of nan business worth committed (over nan past quarter) was delivered?
  • Team engagement. On a standard of 1 to ten, really apt are squad members to urge this institution arsenic a spot to work?
Higher maturity crossed 7 capacity levers has a statistically important affirmative narration pinch squad effectiveness.

The regression study successful Exhibit 5 shows important affirmative correlations betwixt effectiveness and 7 traits:

At a starring North American retailer that was looking to transform, we saw what happens erstwhile location is nary “North Star.” The statement had nary clarity connected why it was transforming, truthful nan execution of exertion initiatives was disparate, misaligned, ineffective, and frustrating. Everyone knew they needed to amended online sales, but location was nary clear commitment/vision connected nan way to get there. Teams weren’t delivering what nan business needed.

  1. Leadership: Leaders who clasp nan servant leadership mindset group a clear imagination for their teams and past get retired of nan measurement to let those teams to get much done. Great leaders look amidst uncertainty and supply required direction.
  2. Vision: Teams are much effective erstwhile they contribute, commit, and person ownership of a shared imagination that guides day-to-day decisions.
  3. Informal networks and communication: When individuals expand informal networks and communicate, they amended speech betwixt business and improvement teams and tin present nan worth committed to and expected by nan business. In addition, transparency pinch accusation and metrics creates a consciousness of trust, which increases worker satisfaction.
  4. Linkage mechanisms: Jointly defined processes to interact, coordinate, and resoluteness limitations wrong and crossed teams create linkage mechanisms that facilitate collaboration, worth realization, and higher worker web promoter scores. This collaboration besides helps place interdependencies astatine an earlier stage.
  5. Reporting structure: Reporting structures with autonomous, adequately skilled teams, who person nan correct capabilities wrong nan team, are besides much effective.
  6. Talent management: Organizations that promote and reward individuals for building expertise done beardown capability-building programs, system activity coaching, and feedback alteration individuals and teams to beryllium much effective. As a consequence, squad members are much apt to urge their statement to others.
  7. Resourcing: Dynamic resourcing supports effective teams not only by ensuring that individuals are aligned pinch teams based connected organizational goals but besides by allowing nan statement to optimize squad creation much easily. We typically spot mature companies often and radically alteration their squad building and squad compositions.

The bottommost line: Improving effectiveness is astir connecting nan stakeholders successful nan worth chain, including business, engineering, design, etc. Therefore, we spot networks and linkage mechanisms arsenic paramount pinch nan correct activity connected apical to region silos and empower autonomous teams.

With this deeper knowing of nan capabilities that genuinely thrust speed, productivity, quality, and effectiveness, organizations tin amended prioritize their efforts and win successful nan existent ever-changing marketplace environment. The first measurement to action is to understand wherever you are today, determine wherever you want to be, and specify nan tactical steps to get there. McKinsey’s proprietary Agile360 appraisal provides a proven and system attack to reply these 3 questions. For much accusation astir really Agile360 tin thief your statement amended agility and thrust capacity outcomes, please interaction Dan Gardner aliases Lauren McCoy.

Santiago Comella-Dorda is simply a partner successful McKinsey’s Boston office; Dan Gardner is simply a elder solution transportation expert successful nan Waltham, Massachusetts, office; Lauren McCoy is an subordinate partner successful nan Seattle office; and Vik Sohoni is simply a elder partner successful nan Chicago office.

The authors wish to convey Matt Brown, Yoav Cosiol, Christopher Handscomb, Alberto Jimenez, Rishi Markenday, Guilherme Riederer, Andrew St. George, Leanne Tremblay, and Valerie Wagoner for their meaningful contributions to this publication.