If you’re a developer, or a developer team lead, this article offers you actionable insights from a research study conducted by McKinsey & Microsoft that delves into the relationship between Developer Velocity and fundamental business outcomes, such as revenue growth, operating margins, and how quickly a business can innovate.
Microsoft worked with McKinsey on this study to further our understanding of the critical role that developers play in the success of organizations around the world. As a company that deeply understands the impact of developers, we’re excited to share these results, and hope the findings will grab the attention of senior business leaders. Our message for them is simple: orienting your organization to prioritize and empower the success of developers is a decisive competitive advantage.
Before we dive into the results, let’s take a moment to define Developer Velocity. This terminology refers to the pace at which a team of developers can deliver innovative software that is loved by end users. Developer Velocity goes well beyond the simple pace of delivery though. It’s about helping business leaders understand the value of providing world-class developer tools, structuring working groups to promote autonomous productivity through Agile and DevOps practices, and incentivizing innovation through a culture that fosters psychological safety.
The Developer Velocity Index (DVI) was created for this study as a quantitative measure to enable a comparison of Developer Velocity at 400+ global companies. The next step was evaluating the impact of Developer Velocity on business outcomes that matter to every senior business leader. In short, the research study demonstrates that companies scoring in the top 25% of the Developer Velocity Index experience 4-5x faster revenue growth, 20% higher operating margins, and 55% higher levels of innovation.
Top 5 Drivers of Developer Velocity
While the results of the full research study are intriguing, for the sake of brevity, let’s focus here on the top 5 drivers of Developer Velocity. And if you’re interested, you can find all the details of this research through the “Learn More” links provided at the bottom of the article.
#1 Developer Tools
Organizations in the top quartile of Developer Velocity invest in developers by providing access to world-class developer tools. Specifically, these companies provide developers with a flexible choice of integrated developer environments (IDEs), collaboration software, and continuous integration and delivery (CI/CD) tools that support each stage of the software life cycle. Another common tendency among top companies is enabling non-developer employees to create applications through low-code and no-code platforms, thereby protecting the time of their software engineers to focus on more challenging tasks. The rewards of these investments become obvious when you consider that these top 25% of companies achieve developer satisfaction and retention rates that are 45% higher than the bottom 75% of companies.
#2 Organizational Culture
The most critical cultural attribute shared by the top 25% of companies is creating an environment of psychological safety. This means establishing a shared belief that incentivizes risk-taking through experimentation and embraces failure through learning and knowledge sharing. This approach fosters innovation and continuous improvement, which becomes particularly effective when paired with a customer-centric philosophy. These top companies also frequently recognize the efforts of their developers, taking the time to publicly acknowledge and reward individual and team achievements.
#3 Product Management
Highly effective product management is a differentiator that’s increasingly valuable for the top 25% of companies. Along with managing budgets and project timelines, the role of a product manager focuses on delivering a compelling experience for end users. This job function requires a unique blend of business acumen, technical understanding, customer experience, and interpersonal skills that are necessary to deftly influence others towards desired outcomes. Hiring, training, and retaining skilled Product Managers should be treated with the same strategic significance as finding the right developers for your team. The most successful teams of developers also embrace a mindset wherein they take turns stepping into the shoes of the Product Manager to better understand the problems facing their end users and the solutions they can develop to address those challenges.
#4 Developer Experience
Best-in-class organizations do the best job of hiring, incentivizing, educating, and retaining talented people by deeply considering their internal developer experience. It begins by recruiting top developers with a compelling value proposition to join the team and continues by building programs that support continuous learning and set clearly defined career paths. Another critical step is structuring the organization around smaller developer teams to prioritize autonomy, loosely coupled architecture, and the implementation of Agile and DevOps best practices. Finally, introducing formal processes that encourage transparent dialogue and measure team health through regular surveys create an important feedback loop for the organization to listen to their developers and understand how to improve their experience.
#5 Open-Source Software
Companies in the top 25% of DVI that adopt open-source software and encourage their developers to contribute to open-source observe three times the impact on innovation compared to the organizations in the bottom 75%. Here we learn that embracing an open-source mentality has a significant multiplying effect on innovation for companies that are already leaders in Developer Velocity. And it should be reinforced that embracing open-source means adopting open-source software, motivating employees to contribute to open-source communities and projects, and adopting a similar internal sharing philosophy that is commonly referred to as InnerSourcing.
I hope this article has inspired ideas that you can bring back to your role as a developer, or developer team leader. Below are links to the full research study by McKinsey, along with a short-form (5 Questions) and long-form (10-15 Minutes) assessment tool with results from each that provide actionable guidance to help you accelerate the Developer Velocity of your organization.
- Full Research Study: McKinsey & Company - How software excellence fuels business performance
- Short-Form Assessment Tool for Developer Velocity (5 Questions)
- Long-Form Assessment Tool for Developer Velocity (10-15 Minutes)
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Three years into my software engineering career I was loving life. I could fix anything in the codebase with no doubts in my ability. I was confident, too. Most 24 year olds are. When I was offered the opportunity to become a dev team lead I jumped at the chance. With so much confidence, what could go wrong?
The first few months hit me like a freight train. I might have been a good developer, but I wasn’t a good leader - not yet. It was a humbling experience that I continue to grow from to this day. Great leaders understand that learning is a process that evolves over time, but only if you open yourself up.
In the past year as the host of the Dev Interrupted podcast, I have had the pleasure of interviewing and learning from some of the best engineering leaders in the business.
Here are 5 of their most inspiring lessons:
Always be delegating
Brendan is widely known as one of the co-founders of Kubernetes. But he is also responsible for managing over 650 engineers at Microsoft. Even though Brendan takes time to schedule as many one on ones as possible - sometimes as many as 14 in one day, and something he views as a priority as more teams become remote - he knows such large teams can only be successfully managed through delegation.
Let go of the instinct to jump into every project. It’s ok if your teams make mistakes. They’re going to learn, but only if you give them the space and agency to grow. Stepping away from micromanaging can feel scary, but it will set your organization up for long term success and your employees will thank you for it.
Remote first, not remote friendly
Shweta had the unique experience of undergoing a fully-remote acquisition during the pandemic. Her small team was acquired by Equinix, the largest data center company in the world. As if this adjustment wouldn’t have been difficult enough on its own, Equinix wanted Shweta and her team to teach them - an organization with over 30,000 employees worldwide - how to implement remote work best practices.
To be as successful as possible with this transition they chose to embrace remote work completely. There would be no half measures. If they were going to become a remote work company, they would be remote first - not remote friendly.
Leadership with empathy
Ben wants leaders everywhere to know that no one has ever done a better job because they were scared, stressed, or worried about their future. Especially not in jobs centered around creativity and problem solving like software development. Providing people with benefits such as mental health days does more for an organization’s productivity than measuring hours worked ever could.
When you take care of people they will work better and faster - that’s also what they want to do. Everyone wants to be successful. Value creation happens when people are provided for, not when they are treated like widgets.
Comparison leads to unhappiness
Kathryn believes that what’s being delivered is ultimately of greater importance than how something is being delivered. Though she is in charge of making sure engineering teams at Netflix run smoothly and efficiently, she takes great care when evaluating a team’s performance. She understands that productivity isn’t simple math.
That’s because every project is different. The customer base is different, the use case is different, personas are different, and where a team is within the software development life cycle is different. Ranking teams against each other shouldn’t be the goal. Success is best measured in context, not in competition.
Darren tells anyone that will listen there is a quick way to improve your meetings: make them harder to have. He believes people deserve to be able to focus on their work. No one wants to sit on video calls all day. Zoom fatigue is real. Focus should remain on critical day-to-day functions, not on hopping in and out of meetings that leave you feeling exhausted and unproductive.
Leaders should embrace tools like Slack that allow teams to gather consensus asynchronously. Reserving synchronous time for purposeful meetings like making decisions or sharing important status updates.
Starved for top-level software engineering content? Need some good tips on how to manage your team? This article is inspired by Dev Interrupted - the go-to podcast for engineering leaders.
Dev Interrupted features expert guests from around the world to explore strategy and day-to-day topics ranging from dev team metrics to accelerating delivery. With new guests every week from Google to small startups, the Dev Interrupted Podcast is a fresh look at the world of software engineering and engineering management.