I once watched a leadership team celebrate a 40% increase in velocity. Their Scrum teams were delivering more story points than ever. Dashboards were green. Everyone was congratulating each other. There was just one problem: customer satisfaction had dropped for the third quarter in a row and revenue was flat.
They'd optimised for the wrong thing. They'd gotten really good at producing output — features shipped, stories completed, points burned — without any evidence that those outputs were creating value. This is the fundamental problem that Evidence-Based Management (EBM) exists to solve.
Why Velocity Is a Terrible Metric
Let me be blunt: velocity is a capacity planning tool at best, and a weaponised dysfunction machine at worst. Here's why:
- It measures output, not outcomes. Delivering 50 story points of features nobody uses is not progress. It's waste.
- It's easily gamed. The moment velocity becomes a performance metric, teams start inflating estimates. A 3-point story mysteriously becomes a 5. Velocity goes up. Nothing changes.
- It can't be compared across teams. Team A's velocity of 40 and Team B's velocity of 60 tells you nothing about which team delivers more value.
- It incentivises busyness over value. When managers ask "why was velocity down this sprint?", teams learn that looking busy matters more than delivering the right things.
Velocity tells you how fast you're running. It says nothing about whether you're running in the right direction.
The Four Key Value Areas
Evidence-Based Management organises metrics around four Key Value Areas (KVAs). Each one answers a different strategic question:
1. Current Value (CV)
Question: How much value do we deliver to users and stakeholders right now?
Metrics here include customer satisfaction scores, revenue per employee, product cost ratio. This KVA tells you whether the thing you've already built is actually valuable. Most organisations assume it is and never check.
2. Unrealised Value (UV)
Question: How much potential value could we realise that we haven't yet?
This includes market share gaps, customer satisfaction gaps, and desired outcomes not yet met. UV tells you where the opportunity is. High UV means there's significant value still to capture — which might mean investing more. Low UV might mean it's time to pivot to a different product.
3. Ability to Innovate (A2I)
Question: Can we effectively deliver new capabilities?
Metrics include technical debt percentage, defect trends, time spent on features vs. maintenance. This KVA is where most teams are quietly dying. If you're spending 60% of your capacity on maintenance and defects, you've lost the ability to innovate — regardless of what your velocity chart says.
4. Time to Market (T2M)
Question: How fast can we turn an idea into delivered value?
This includes release frequency, lead time, cycle time, and deployment frequency. T2M is about speed of learning. The faster you can get something into users' hands, the faster you can learn whether it's valuable.
Connecting Strategy to Delivery
The power of EBM is that it creates a measurable link between what leadership cares about (value, growth, capability) and what delivery teams actually do. Here's how it works in practice:
Strategic Goal: "Increase customer retention by 15% this year."
UV Metric: Customer satisfaction gap — currently 3.2/5 target 4.5/5.
Experiment: Build a personalised onboarding flow and measure whether satisfaction improves.
T2M Metric: Lead time from idea to production — currently 6 weeks. Can we get it to 2 weeks so we can learn faster?
See the difference? Instead of "did we complete the stories?", the question becomes "did customer satisfaction improve?" Instead of velocity, we're measuring learning speed. The whole organisation aligns around outcomes, not outputs.
Organisations Measuring the Wrong Things
I see the same patterns everywhere:
- The feature factory: Measures features shipped. Never measures whether anyone uses them. Often discovers that 60-80% of features get little to no usage.
- The utilisation obsession: Measures whether everyone is "100% utilised." Creates bottlenecks everywhere because there's no slack in the system for variability.
- The velocity treadmill: Measures velocity trend. Teams inflate estimates to show "improvement." Real capability doesn't change.
- The happiness delusion: Measures team happiness. Happy teams are great, but happiness without impact is a comfort trap.
EBM doesn't replace all other metrics. But it gives you a balanced portfolio of measures that together paint an honest picture of whether your organisation is actually creating value — or just staying busy.
Getting Started with EBM
Start small. Pick one metric from each KVA that you can actually measure today. Don't try to build the perfect dashboard. Instead, ask: "What evidence would tell us whether we're creating more value this quarter than last?" Then measure that.
In the PAL-EBM course, we work through real scenarios where you design an EBM framework for your own organisation. It's not theoretical — it's practical and immediately applicable.