What is Red Yellow Green?
Red-Yellow-Green (or Red/Amber/Green) is a status reporting mechanism used to help executives understand the current state of a project. Green means everything is good; we’re on track both with time and budget. In some cases, green means within 5% of budget. Yellow means there is some risk that there are scope or time problems, but with sufficient re-planning we can come back to target. Yellow is usually measured by some number crossing a predetermined threshold. Red indicates the project is in serious trouble.
RYG is just a model of reality (in truth, all reporting simply models reality). All models hide details with the goal of making the situation easier to read and understand. Some are hidden so much that the truth gets lost.
A team’s Task Board, Scrum Wall, or the overall Portfolio Kanban Wall are all first-order models of reality. While not perfect mirrors of the current state of the work, they’re fairly close. They help demonstrate qualitative information; i.e. which stories are complete, not just how much.
A Release Burndown Chart, Burnup Chart or Cumulative Flow Diagram are all second-order models of reality. In other words, they summarize information contained on the Walls/Task Boards. They’re useful because they help spot trends. The Cumulative Flow Diagram provides the most information on trends, but it still has less information on it than the Portfolio Kanban.
Red Yellow Green Reports are models of the charts, in that they summarize the charts, hiding even more informational details. They assume that a plan’s scope, budget, and time are fixed and unchanging. Models might be adequate in a world where these are true, but in a world that accepts change as the norm, colour-coded reports are dangerous.
At best, these reports don’t measure truly done so much as whether a team is on track to make a target. In addition, since RYG reports usually have green as a default state, often there are too few questions that are asked until it’s too late.
Even burndowns, burnups, and cumulative flow diagrams are imperfect because they focus on output (# of Stories or story points achieved) and not outcomes (the right features delivered to the customer.)
Charts of all forms appear to promise certainty, when there isn’t any, which creates a false sense of security. If we’re going to chart at all, we should use forecasts and not precise lines, and make it clear this a forecast. If your chart just shows the average velocity, then you should provide a forecast that says we have a 50% chance of achieving this rate for the foreseeable future.
If you want to get more sophisticated, you can track error bars as well. Measure your best and worst three Sprint’s Velocity in the last six months, and use these as your 20% and 80% confidence bars. Then you can say that you’re 80% confident you will do at least as well as your worst three sprints, and 20% confident that you will do as well as your best three sprints.
Even this model has a weakness in that it assumes your velocity will follow normal distributions. The reality is likely that it won’t. However, forecasting with error bars (or lines) usually gets the idea across that we’re forecasting a range of possible outcomes.
Finally, all reports discourage people from leaving their offices. They give us the false feeling of safety. The report seems real and so it gives a good model of what is actually happening. Toyota has the practice of Genchi Genbutsu – go and see, literally. Review the charts but then leave your office and go to the place of the work. Watch, listen, ask, and review the Portfolio Kanban wall with the team(s). This will bring you back in contact with the reality of which features have been truly done. This will help you see if all the Story Points in the charts delivered the value that they claimed.
So stop using RYG reports. They hide too much information. Do use Burndowns/Burnups/Cumulative Flow diagrams as a tool to help you spot trends, but don’t rely on them alone as the source of truth. And most importantly, review the Portfolio Kanban Wall with the Team(s) on a regular basis, as this is our best measure of reality.
Other have taken up on it as well: