Velocity and Relative Estimation: Misunderstood or Misused or Dead?

In recent years, the terms "velocity" and "relative estimation" have become somewhat controversial in the Agile community. Many practitioners are seeking alternative methods to measure team productivity and capacity. However, as with most tools in our Agile toolkit, it's crucial not to discard these concepts entirely. The key lies in understanding their appropriate use cases and limitations.

The Value of Velocity and Relative Estimation

In my experience as an Agile coach, I've witnessed first-hand how these tools can be effective when used correctly. For instance, I once worked with a team that leveraged relative estimation and velocity to predict their sprint capacity with remarkable accuracy, giving them the confidence to pivot when required, knowing what they could pick up even when the ground moved under their feet. This level of precision allowed them to plan more effectively and deliver consistently, boosting both team morale and stakeholder confidence.

The Pitfalls of Misuse

On the flip side, I've also observed numerous organizations misapplying these concepts, leading to counterproductive outcomes. Some common misuses include:

1. Comparing teams: Velocity is a relative measure, unique to each team. Eight points for one team may represent a vastly different amount of work for another. Using velocity to compare teams is a fundamental misunderstanding of the concept.
2. Project forecasting across multiple teams: When multiple teams work on the same product, using individual team velocities to predict overall project output can lead to inaccurate forecasts. This approach fails to account for the complexities of inter-team dependencies and varying definitions of "points."
3. Performance metrics: Using velocity as a measure of team performance can create perverse incentives, encouraging teams to inflate estimates or take shortcuts to appear more productive.

The "It Depends" Factor

As with many aspects of Agile methodologies, the effectiveness of velocity and relative estimation often comes down to context. Factors such as team maturity, project complexity, and organizational culture all play a role in determining whether these tools will be beneficial or detrimental.

A Balanced Approach

Rather than wholesale rejection or blind adherence, I advocate for a nuanced approach:

1. Understand the purpose: Use velocity and relative estimation for what they were intended - helping teams understand their own capacity and improve their planning.
2. Be open to alternatives: Explore other methods of measuring progress and capacity, such as cycle time or throughput, which may be more appropriate in certain contexts.
3. Educate stakeholders: Ensure that everyone involved understands the limitations and proper use of these metrics to prevent misuse.
4. Continuously evaluate: Regularly assess whether these tools are adding value to your team and process. Be prepared to adapt or discard them if they're no longer serving their purpose.

Conclusion

Velocity and relative estimation, when used appropriately, can be valuable tools in an Agile team's arsenal. However, their effectiveness depends on proper understanding and application. As Agile coaches and practitioners, our role is to guide teams and organizations in using these tools wisely, always keeping in mind that the ultimate goal is to deliver value, not to slavishly adhere to any particular metric or method.

Remember: Use the tools for what they're useful for. If it helps, use it. If it doesn't, don't. Be willing to move on and try something different. The essence of agility lies in this flexibility and continuous adaptation to find what works best for your unique context.