There are two reasons why Agile growth strategies and innovation processes receive so much attention today. The first reason is speed. In a quickly changing market environment, companies want to innovate faster. The second reason connects to the notion that Agile development is a way to quickly explore and adapt while overcoming the rigidity of internal processes and long development cycles.
I know from personal experience that the Agile development concept is powerful and has a lot of potential. If you are considering its implementation in your organization, there are three things you should consider
1. There are different growth options, which are all important and need to be managed concurrently.
When it comes to Agile development, the focus is typically on the process side. This often clouds the fundamental issue of whether or not the company has the right projects in the pipeline to enable growth.
All projects can be divided, for simplicity’s sake, into core and new growth categories. This somewhat simplified approach helps provide a common language to describe how the company invests to prepare for growth. I intentionally use the word new here to emphasize that both options represent growth, just a different type of it.
Projects in the core category are critically important for serving existing customers and defending market share and profits. These projects must be delivered; therefore, only a certain level of risk is acceptable. Core projects should be managed through a Stage-Gate® process that is designed to reduce risk and variability.
Though core projects are important, they typically do not contribute much to long-term revenue growth and profitability. It is the new growth projects that bring new market (or business model) and technology attributes and that should be counted on for a sustainable competitive edge. These initiatives have inherent uncertainty; therefore, require different organizational and leadership frameworks to make them work. These are the initiatives where Agile development frameworks can be very effective.
Typically most resources are spent in the core, and the new growth domain is often short changed because it competes with the focus on day-to-day priorities in the core. Companies need to carefully screen and balance the portfolio so the core and new growth buckets are filled with the right opportunities. Understanding which project belongs to which bucket will also bring clarity to what development process should be used (Stage-Gate vs. Agile).
2. Agile development is not a substitute for Stage-Gate.
While recently delivering a workshop on Agile growth strategies to a group representing various companies and industries, I asked the participants to describe their typical growth projects in terms of market and technology newness. To take ambiguity out of the process, we used a unique scoring system and calibration of risk (G. Day HBR 2007) to estimate how much of a stretch these projects are for the company: The less familiar the market or technology, the further from the core business on the market technology continuum. Then, we combined the results into a group portfolio.
The result was interesting in that the representative growth projects were widely distributed on the market technology matrix, with a significant fraction of the projects positioned right at the core space. This finding provides an important insight: Growth can mean different things to different people, to different groups within companies or even among companies as a whole. Because of this scenario, defining a common language of innovation for your company is critically important in order to clarify how Agile development processes fit with the organization’s specific growth objectives (i.e., where and how they should be used).
3. Every process requires discipline.
One of the most common mistakes I see is that people think Agile (and entrepreneurial often fits under the same umbrella) means less disciplined. This is absolutely not true. Because Agile development deals with much higher uncertainty and risk, it requires even more discipline. It is harder to articulate milestones and new knowledge during exploratory work or when the objectives change, but a competent Agile team must do so in order to establish a clear direction for themselves and provide a decision-making framework for stakeholders and investors. Companies need a strong process with a clear set of expectations and deliverables to be successful with Agile development.
There are, of course, more gray areas between different opportunity types and management processes to use. However, starting with a clear definition of what growth options are important to your company and what resources are available to invest in each, as well as how to fill the pipeline with the right opportunities and use the right processes to deliver on growth, are the key steps to executing on Agile growth.
Irene Spitsberg is founder and managing director at InnoVentures LLC, a strategic innovation consulting company focused on building innovation capabilities and achieving early stage effectiveness. Irene spent 20 years with global leading corporations in various leadership technology and business development roles, where she was responsible for global teams working on the development and commercialization of new offerings in adjacent and new spaces. She was the key strategist and driver in establishing Innovation Ventures Group at Kennametal and designing its core processes. Irene’s other roles include Director Global R&D Business with Cristal and a number of technology leadership positions with GE Aviation. Irene hold PhD in Material Science, is the inventor or co-inventor on over 80 US patents, and a published author and frequent speaker on topics of Innovation Management. Contact Irene at firstname.lastname@example.org
Released: March 4, 2016, 11:01 am
| Updated: March 7, 2016, 8:44 am