Diagnostics vs. Key Measures pdf

Diagnostics vs. Key Measures
By Chris Garson
Copyright 2012 Chris Garson
Smashwords Edition
In business, every department has a set of goals and measure separate from the
core business measures. For example, I managed software development for an
insurance company. The company’s key measures included Combined Ratio (a
measure of profitability) and policies in force (units sold) and pure premium (cost
per unit). In addition to these measure, I used many internal measures to assess
individual, team and process effectiveness
Over the years, I’ve found it very helpful to think of two flavors of measures.

1) Diagnostics: Diagnostics measure internal processes. Managers need a set
of diagnostics to accurately assess their team’s effectiveness. Diagnostics
are tools to help pinpoint where process improvement is necessary and
measure the effectiveness of those solutions. The economic impact of
diagnostic is often more indirect than direct
2) Key measures: Key measures asses core business results or processes and
typically have a direct economic impact on results. I’d guess that 90% of the
measurements produced at the departmental level are diagnostics and 10%
are key measures. Distribute diagnostics reports to the team. Distribute key
measures to the business.
Here’s an example. Test issue defect rate and time to resolve test issues are
typical QA diagnostics used to guide test automation decisions, assess test plan
effectiveness, and improve developer/tester handoffs. The average project
testing cost, expressed in dollars or man-hours, is a key measure that directly
affects a product’s profitability. If improve the test issue defect rate has no
impact on the average project testing cost, then we have not improved
performance on a key business measure. Your goal should always be improving
key measures. Diagnostics are a tool to help you focus your efforts.