Planning tool. Not a scoreboard.
Velocity helps a team plan its next sprint. Used for anything else, it quickly becomes meaningless or harmful.
Misuse
Use
“Increase velocity 10% every quarter.”
A planning aid for the team, and nobody else.
“Team A does 40, Team B only 25.”
Each team's trend, compared only with itself.
Points in performance reviews.
Focus on outcomes and flow.
Promising dates from one great sprint.
Forecast from a range of sprints.
Source: PubMed Central: 'When a Measure Becomes a Target, It Ceases to be a Good Measure' ↗
Velocity plans. It doesn't measure worth.