I see a lot of confusion around velocity in new-to-agile teams. Too many people treat velocity as an acceleration measurement. That is, they expect velocity to increase to some large number, as a stable state.
Velocity is a rate of change coupled with direction. When managers think they can measure a team with velocity, they confuse velocity with acceleration.
As I enter a highway, I have a higher rate of acceleration. As I continue to drive, I achieve a stable state: I get into a lane and maintain a constant speed. (Well, with any luck.) I stay stable with respect to the road (my direction). My velocity stays the same—especially if I use my cruise control. With a reasonable velocity—that might change a little with traffic—I can get to my destination.
Read more at Johanna Rothman’s Blog: Managing Product Development