In the labyrinth of measuring developer efficacy, McKinsey has embarked on a groundbreaking journey, unveiling metrics that promise to redefine success for businesses. Long deemed a Holy Grail, measuring developer productivity has often felt elusive, but McKinsey’s work with 20 diverse companies may have cracked the code. Here’s why it matters and how these metrics can revolutionize industries.
In a 2020 survey, McKinsey delved into “developer velocity,” exploring practices that unleash the full potential of development talent. The results were staggering—top-performing companies experienced four to five times faster revenue growth, 60% higher shareholder returns, and a remarkable 20% increase in operating margins. The impact extended beyond financials, influencing customer satisfaction and elevating the employee experience.
These revelations aren’t confined to the tech realm. In retail, software has become the fastest-growing job category, with about half of the world’s software engineers working outside the tech industry. Currently, there are around 27 million developers globally, and this number is expected to grow by 25% from 2021-31, according to the US Bureau of Labor Statistics.
The pressing question emerges: How can leaders ensure they deploy developer talent optimally? The murky relationship between inputs and outputs in software development, coupled with its collaborative and creative nature, adds complexity. McKinsey believes it can be done, and here’s how.
McKinsey is working with 20 companies in tech, finance, and pharmaceuticals to implement a set of metrics derived from Google’s DORA and Microsoft’s SPACE frameworks. These metrics, complemented by four “opportunity-focused metrics,” aim to provide a sophisticated view of software productivity.
Inner/Outer Loop Time Spent: Balancing activities related to creating the software product and putting it into production.
Developer Velocity Index Benchmarking: Comparing a company’s practices against peers to identify areas for improvement.
Contribution Analysis: Assessing contributions to a team’s backlog to uncover trends and optimization opportunities.
Talent Capability: Ensuring the right people are in the right place by deploying industry-standard capability maps.
The results from these metrics, though not definitive, show promising outcomes related to customer defects, employee experience, and customer satisfaction.
While some may view measuring developer productivity as a myth, McKinsey argues that it’s a crucial endeavor, especially in the face of ever-growing importance in software development and fierce talent competition. The model is undoubtedly imperfect, but its significance in driving progress cannot be overlooked. As the software development landscape evolves, attempting to measure developer productivity becomes not just a pursuit but an imperative for progress.
