The Agile Way of Working: Translating the customer-centric mindset into an organization’s behavior
The multidimensional nature of today’s products requires a new way of product development
Most established enterprise organizations are structured into functional departments of specialized expertise, such as operations, product design, IT, and marketing. Yet, the multidimensional nature of products with its functional, social, and emotional requirements necessitates different kinds of expertise to come together to create an all-round satisfying product. In classic organizations these experts are working largely separated from each other, doing their work on the product, and then handing it over from one specialized team located in one department to another specialized team located in another department. This way of operating focuses teams on working in a piecemeal fashion and away from bigger picture of the product and what the product means to the customer. It also creates long lead times and increases the chances for mistakes due to miscommunication between departments. Products are usually built to completion and it is only when the product is released to the market that the organization will find out whether it’s a success with its customers. This leads to a disproportionate amount of product failures and makes innovation success rather accidental than deliberate despite strictly structured and carefully executed innovation processes. It also shows that the great efforts enterprise organizations employ to learn about the customer and create a fitting product are largely ineffective. This includes much of the data gathering and analysis that has been employed since the advances in data science and technology in the past decade.1
Agile organizations solve this problem by structuring themselves differently from classic organizations in the following three aspects:
- Internal structuring of cross-functional teams around products instead of mono-functional teams around projects
- Developing products incrementally and in co-creation with the customer instead of building the product to completion and then releasing it to the customer
- Bundling expertise in communities of practice instead of specialized departments
This way of operating creates great adaptability to fast changing customer desires. It also requires fundamental behavioral change. As we will we see below, it creates such great adaptability to fast-changing customer desires that the future viability of established enterprise organizations will to a large extent depend on their willingness and ability to go through the required behavioral change.
Dedicated cross-functional teams structured around products with focus on the customer
In Agile organizations, each product is owned by a dedicated team that is end-to-end responsible for the development, building, and releasing of the product as well as further innovation on the product. Agile teams are cross-functional, meaning that all necessary expertise to bring the product to market successfully is comprised within the team. A product team works together every day in a shared workspace.
Creating dedicated product teams eliminates the problem of hand-offs and wait times between teams. Working together every day ensures direct face-to-face communication between team members and decreases the chances of mistakes due to miscommunication. Being dedicated to one product alone provides great focus and ownership. Expert teams in functionally differentiated organizations often work on several projects at a time with their focus being divided over several products.
End-to-end responsibility also implies that teams operate autonomously. While Agile management methodologies provide clear frameworks distributing tasks and structuring workflow, teams are free to organize themselves within these frameworks as they see fit. Teams work in so-called sprints which are work cycles of typically two to four weeks. At the beginning of every sprint the team holds a planning session in which it sets the goals and distributes the tasks to be accomplished in the coming cycle. At the end of each sprint, the team holds a retrospective session to reflect on failures and learnings.
Developing products incrementally in co-creation with the customer
When starting out with a new product, there is little knowledge about what works for the customer, what doesn’t work, and where value for the customer is created. The team wants to gain this knowledge as early and fast as possible. The product development process therefore begins with getting an in-depth understanding of the customer and the situation they are in. Identifying the Job to Get Done requires empathy, patience, and sharp observation. Team members need to fully immerse themselves into the customer’s problem and experience it first-hand. From this experience, they formulate hypotheses about possible solutions to the problem and suitable products that could provide these solutions. The next goal then is to validate or invalidate these hypotheses as fast as possible.
This is achieved by a collaborative process of incremental product building. The first step of this process is to build a so-called minimum viable product, which is a prototype with only the most necessary functionality. This product is then immediately released to the customer for feedback. Based on this feedback, the product gets adjusted and improved in the next iteration. Keeping the minimal viable product truly minimal is crucial. If a product prototype is too far advanced, customers might not notice what they don’t like about it because it functions well-enough. When classic organizations start to work Agile for the first time, they tend to build far too advanced prototypes and miss the benefit of the truly minimal viable product. The collaborative loop between team and customer is being repeated until the product is ready for use. Co-creative product development creates high chances for good product-market fit as factors for bad product-market fit are detected early and improved upon or eliminated altogether.
Agile teams follow well-defined methods in this product development process. One method that has proved to be very successful is the Design Thinking method which will be illustrated in the PinPin case in section 4.
Establishing communities of expertise and practice
One of the major advantages of functional differentiation is that it enables organization to build and retain expertise in a substantial and sustainable manner. Due to the focus on speedy production and release, Agile organizations run the inherent risk of becoming too factory-like and leaving not enough time for knowledge workers to keep growing in their fields and experience a sense of excellence and mastery in their domain. When this happens valuable experts might turn away and look for organizations where they can create more depth in their expertise. To prevent this problem, Agile organizations create communities of and practice, where experts and practitioners of specific domains come together to build relationships, share their knowledge, and advance in their fields together. The participation in these communities is voluntary. Communities of practice arise and decline naturally.
Shifting from the traditional to the Agile way of working requires profound behavioral change for leaders and employees
The highly collaborative way of working described above asks for fundamentally different behavior from both leaders and employees. Traditional working environments emphasize fitting in and functioning according to predefined profiles. Employees are being trained in and evaluated on order-taking, task-execution, and competition among each other. Agile working environments emphasize creativity, individuality, self-awareness, communication, taking responsibility, and self-organization. This requires individuals to display different sides of their character and learn how to bring openness, empathy, and vulnerability to the workplace. The success of an Agile transformation therefore depends more than anything else on successful behavioral change.
References
1 Clayton Christensen. 2016. Competing Against Luck. The Story of Innovation and Customer Choice. p.xi