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Does engineering performance affect profitability? Here's what the data says

Julian Colina
December 14, 2020
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Does engineering performance affect profitabiliy?

I think we all feel that strong engineering leads to stronger companies.

Look at the top companies today - Facebook, Google, Amazon, Netflix.

They are all tech giants with elite engineering teams and it's no coincidence that these companies have high market share, customer satisfaction, and show engineering excellence.

In fact, research across thousands of companies has shown a high correlation between engineering performance and organizational performance stating:

Elite engineering performers are 2x more likely to hit organizational goals.

Turns out teams that excel in their core delivery metrics report over 100x faster, higher quality shipments - highly correlated to higher rates of profitability, market share, and customer satisfaction.

Why is this?

They are more effective at delivery.

Teams that show elite performance are able to delivery quality code, quickly are able to get value to customers, get faster feedback on product, have the flexibility to handle shifting demand.

So the question is..

What is 'elite' performance?

There are 4 key metrics that are proven indicators of engineering success. Teams that excel across these 4 metrics tend to outrank their peers in engineering performance and are highly correlated with successful companies.

Here are the 4 key metrics:

Lead Time - Time to implement, test, and deliver code measured from first commit to deployment.

Deployment Frequency - Number of deployments over a period of time.

Change Failure Rate - Ratio between successful and unsuccessful changes.

Mean Time to Recover - Time it takes to restore service after production failure.

Elite performers show 200x more frequent deployments, 100x faster development times, 2,600x faster recovery time, and 7x lower failure rates.

There metrics are a great north star for engineering teams - helping align around delivery and driving organizational success.

They allow teams to measure and optimize delivery - accelerating their rate of improvement.

How can we achieve it?

Guesswork and oral tradition are no longer requirements for improving engineering performance.

The research outlined in Accelerate marks a new era where we can use proven data to help improve engineering performance, culture, and ultimately our company's success.

For organizations looking to improve, here is a clear path forward:

  1. Start with foundations - Measure your team's baseline across the 4 key metrics. This gives you a starting point on which to improve.
  2. Adopt a continuous improvement mindset - Identify your unique constraint (or set of constraints) and work to remove them.
  3. Never stop improving - Once those your constraints no longer hold you back, repeat the process.

How does your team stack up?

Sign up for Haystack and adopt a data-driven approach to 'elite' engineering performance.

At Haystack we help measure your key metrics, identify key constraints, and help your team adopt a data-driven culture of continuous improvement

Want to see how you stacks up? Sign up for Haystack

About the author

Julian Colina
CEO & Cofounder of Haystack.

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