How can I increase the productivity of my agile team? -- you're asking the wrong question

I get a lot of questions about productivity.  What's the best measure of productivity? Is it velocity for scrum teams?  What about number of stories?  How do we increase productivity?  My answer is usually met with a bit of shock:

"I don't care about productivity, and neither should you"

What!? yes you read that correctly.  Here's why: we don't need to deliver more features, we need to deliver the right features. This is one of my all time favorite charts:

Usage of features and functions in a typical system
Source: Standish Group

What this tells me is that 20% of the time we're on target, 64% is a total miss, and 19% is 'Meh'.  That's pretty bad. Do we really need to deliver more of that 64%?  

Here's an example I like to use.  Imagine a bomb.  To destroy a single target we had to do something called carpet bombing.  We had to saturate an area with bombs hoping to hit the thing we intended.  For a while we focused on getting more bombs on the planes and getting more planes in the air until someone invented the smart bomb. We now replaced hundreds of these:

with one of these:

What a smart bomb does differently is that it is constantly making course corrections.  Before there was a lot of technology invested into figuring out when to drop the bombs, now that's not even an issue, you pretty much just have to be in the right zip code and roughly the right general direction. Is a smart bomb more expensive than a regular old bomb?  Sure, but you have to buy, fly, and drop a whole lot more of the old bombs to get the same effect.

So what does that have to do with productivity?  Well, if the bombs are our features we need to stop worrying about how many bombs we can get on the plane, or how many features our teams can load into a release. We need to start worrying about how we hit the target. At the end of the day there are problems we're solving. If we don't solve a problem no one will use our features.  In military terms the problem was destroying a target, and that's what's important.  For an agile team it's not about productivity or how much stuff we get done. It's about actually solving the problem; did we meet the need.

Rather than asking about productivity we should be asking these questions:  Do we understand the customer's problem?  Are we getting feedback often and early?  Are we making course corrections? Are we like a smart bomb, constantly adjusting course and honing in on our target? Are we doing too much?  You don't need to drop a 30,000 lb bunker busting bomb to destroy a truck.

So is productivity important?  Is it important to deliver more features? Not nearly as important as delivering the right features.  If we focus too much on productivity we might find ourselves outdated carpet bombing features to the market while our competitors use a smart bomb to deliver the knock out blow.