Cycle efficiency (often called Flow Efficiency) is a metric that gives us a sense of how much time work is waiting. A cycle efficiency of 100% would indicate that we are adding value to the work item for the entire time it’s in progress. 50% would imply that half the time we’re working on it and half the time the work is just waiting.
For example, if we spend 3 hours in total adding value to a work item but that item takes 15 hours from start to finish then the cycle efficiency is
For typical work, cycle efficiencies of less than 10% are common. We’re not talking about the outliers being inefficient; we’re talking about the common case.
What this means is that in most workflows, the work items spend significantly more time waiting than actually being worked on.
Why might this be true?
- We have hand-offs between teams or between specialists on a team.
- We have multiple things in progress and are attempting to multi-task between them.
- We’re focused on keeping our people busy, which introduces wait states for the work.
- We have dependencies and have to wait for them to be ready.
You’re probably already thinking that you want to start measuring cycle efficiency in your environment so let’s start with the bad news. This is a very difficult metric to track with any degree of accuracy. The reason it’s difficult is because it’s an invasive measurement that requires people to keep updating it every time they start or stop working on an item. People hate doing that and so they don’t do it reliably.
That’s not to say that we can’t measure it at all. Dave Nicolette has an excellent write-up of how LEGO was used to visualize cycle efficiency at a client that we both worked at. This was only done for a short time and people were willing to play along because it was LEGO, which made it a bit fun.
The results were astounding. After only a few days of tracking this metric, the team started changing their behaviour to make the numbers better. They started swarming on the work to reduce the work in progress. They started declining meetings that weren’t critical. They started focusing on completing work rather than starting new. All because we’d visualized the data.
Most companies have a desire to be efficient, but they tend to focus on the wrong efficiency. They focus on resource efficiency (keeping people busy) rather than on cycle efficiency (keeping the work moving). If we want to be spending our time and money effectively, it’s that cycle efficiency that is the one we should care about.
See also: This story of a group that was able to deliver a new feature in a staggeringly short time by eliminating all the wait time in the process.