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An empirical exploration of metrics for product development teams

IP.com Disclosure Number: IPCOM000128103D
Original Publication Date: 1999-Dec-31
Included in the Prior Art Database: 2005-Sep-14
Document File: 6 page(s) / 21K

Publishing Venue

Software Patent Institute

Related People

LaFountain, Burt David: AUTHOR [+3]

Related Documents

http://theses.mit.edu:80/Dienst/UI/2.0/Describe/0018.mit.theses/1999-156: URL

Abstract

The selection of metrics for product development teams is explored empirically, with emphasis placed on the incentive implications of metrics. The term "; metric "; is defined to include measures which a team can impact with its efforts. We recognize that by putting emphasis-- "; weight" - on metrics, the firm creates implicit reward structures within which teams will act to maximize their own best interest. We seek an understanding that will allow practical selection of a good set of metrics and weights within a firm. Such a set of weights will align the incentives of the team with the long-term profit interests of the firm. The empirical study is grounded in emerging theoretical work. This theory uses principles of agency theory to define parameters that influence the best weight for a metric. Two key parameters, "; leverage "; and "; risk discount factor (RDF) "; are presented and defined. These parameters, if known, can determine the best weight of a metric relative to other metrics within a firm. To estimate these two parameters within a firm, a set of metrics was examined for 16 past product development programs at Xerox Corporation. Each program was assigned a value for each metric based on documentation or interviews with team members. Different measures of the profit impact of each program were collected. The leverage of each metric was explored by examining the relationship between the metric and the profit impact. The RDF for each metric was determined by a survey administered to product developers at Xerox. Key observations from the data to date include: (1) The RDF as measured has little impact on the relative weighting of metrics in this sample. The weightings are dominated by the measured leverage.

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An Empirical Exploration of Metrics for Product Development Teams

by

Burt David LaFountain
B.S., Mechanical Engineering State University of New York at Buffalo, 1996 Submitted in partial fulfillment of the requirements for the degree of MASTER OF SCIENCE at the Massachusetts Institute of Technology FEBRUARY 1999
SIGNATURE OF author: [[signature omitted]]

Department of Mechanical Engineering

January 15, 1999

CERTIFIED BY: [[SIGNATURE OMITTED]]

ACCEPTED BY: [[SIGNATURE OMITTED]]

ARCHIVES MASSACHUSETTS INSTITUTE OF TECHNOLOGY LIBRARIES

Massachusetts Institute of Technology Page 1 Dec 31, 1999

Page 2 of 6

An empirical exploration of metrics for product development teams

An Empirical Exploration of Metrics for Product Development Teams

by Burt David LaFountain

Submitted to the Department of Mechanical Engineering on January 15, 1999 in Partial Fulfillment of the Requirements for the Degree of Master of Science

ABSTRACT

The selection of metrics for product development teams is explored empirically, with emphasis placed on the incentive implications of metrics. The term " metric " is defined to include measures which a team can impact with its efforts. We recognize that by putting emphasis-- " weight" - on metrics, the firm creates implicit reward structures within which teams will act to maximize their own best interest. We seek an understanding that will allow practical selection of a good set of metrics and weights within a firm. Such a set of weights will align the incentives of the team with the long-term profit interests of the firm.

The empirical study is grounded in emerging theoretical work. This theory uses principles of agency theory to define parameters that influence the best weight for a metric. Two key parameters, " leverage " and " risk discount factor (RDF) " are presented and defined. These parameters, if known, can determine the best weight of a metric relative to other metrics within a firm.

To estimate these two parameters within a firm, a set of metrics was examined for 16 past product development programs at Xerox Corporation. Each program was assigned a value for each metric based on documentation or interviews with team members. Different measures of the profit impact of each program were collected. The leverage of each metric was explored by examining the relationship between the metric and the profit impact. The RDF for each metric was determined by a survey administered to product developers at Xerox.

Key observations from the data to date include:

(1) The RDF as measured has little impact on the relative weighting of metrics in this sample. The weightings are dominated by the measured leverage.

(2) The metrics and covariates in the study are very interr...