As agile and sprint-based development cycles are becoming table-stakes capabilities, it’s easier to build new products and services than ever before. Almost every company serious about innovation or transformation has adopted agile development and innovation sprints to ideate, design and deliver new solutions on a continuous basis. Thus, as agile has become the status-quo of project and product delivery methods, the new challenge is not how to ship a new exciting product anymore. It’s building the right one that delivers real user value and positively contributes to business metrics.
Building the right solution vs building the solution right
While agile methodologies contribute to speeding up processes and producing neatly built outputs with beautiful designs, they’re not a guarantee that teams are moving into the right direction in the first place. Companies that are still running on the agile development hype train are unfortunately solving yesterday’s problems, as just generating more output per se, even if it’s of high quality, is not adding any customer value.
Agile equals speed plus good user experience
Only just a little while ago, the main challenge to build and deliver superior products or services was speed, agility and cross-functional collaboration. Especially corporate IT programs have followed a long tradition of waterfall approaches and long-term planning. Projects were executed because companies knew that they are ROI positive, at least most of the time. Fast way forward, long-term planning and delivery approaches have become obsolete in most industries. In order to quickly respond to changing customer needs and market landscapes, most corporates have gradually adopted agile methods such as Scrum and Kanban.
Take global banking giant BBVA as an example. They started their transformation journey in 2014 with the aim to turn the traditional bank first into a digital bank and thereafter the digital bank into a fully digital player. Since then, 30.0000 employees have been trained in design thinking and scrum in order to solve challenges in interdisciplinary teams. Now, they churn out new shiny products faster than ever before. The problem is, a lot of them inevitably fail in the market. Not every company has the financial reserves to cope with that fact.
Agile project and product delivery methods have become table-stakes capabilities for incumbents that want to catch up with the tech giants and protect themselves from fast-moving tech start-ups that disintermediate their value chains. For example, one in three banking and insurance customers globally would consider switching their account to Google, Amazon or Facebook if they offered financial services. Well, Apple just announced a new consumer credit card and Facebook will soon launch their own cryptocurrency Libra. Therefore, it’s absolutely necessary for the incumbents to become more agile and to break down silos. However, that’s really just the foundation for real transformation, as these agile processes and structures don’t contribute to understanding user behaviour and translating it into value-adding solutions. That’s what legacy companies should be focusing on today.
Been there, done that
Beyond the structural and procedural benefits of agile transformation, also the output is increasingly commoditised. Nowadays, any company is able to build an exceptional product with a great user experience (UX), as everyone follows the same processes and best practices. There’s no difference in, for example, how a big bank like BBVA or a nimble scale-up like Revolut designs new solutions, as design systems and user journeys are globally benchmarked and assimilated. Running on agile and following product development best practices is not a unique competitive advantage anymore.
Focus on creating customer value – easier said than done
Utilising agile methods ensures that new propositions are implemented efficiently (fast, co-created, adaptive), but the problem is that they don’t guarantee that all these new propositions actually matter. Offering a new proposition just for the sake of it, for example, by wrapping traditional old-school banking products in a new shiny app, most often fails in the market. A new proposition only matters if it solves a specific problem of a target market, either by serving them cheaper, faster or more effectively than before. What distinguishes the digital winners is that they not only operate on agile, but they understand what their target groups really need and are able to translate customer insights into winning propositions. They have the right customer-centric mindset and culture that allows them to find out what to build in the first place.
The key success factor for delivering customer value has therefore shifted to building solutions that matter: today a new idea most probably doesn’t fail because of design or production issues, but because no one cares about it and it doesn’t gain sufficient traction in the market.
Building the right solution, instead of building the solution right, aims at understanding which propositions provide real customer value and positively contribute to business KPIs. When any company can deliver great digital products at scale and speed, it’s critical to rigorously validate ideas early and to thoroughly analyse problem-solution fit. While Google and Amazon have the capabilities and budgets to sustain a shotgun approach to innovation, i.e. experimenting with a large and diversified amount of ideas, most companies need to adopt a more focused approach. Integrating lean start-up and human-centred design methods would be the right steps in this direction, as they help project teams to ensure customer value.
Corporate transformation needs to happen in order to kickstart a more customer-centric culture and an ownership-driven mindset between employees. Therefore, instead of just focusing on being great at delivering things, adopting methods to validate ideas early on is just equally important.
Real digital transformation is as much about culture and mindset change as about technology and agile methods. That’s why instead of setting up isolated innovation labs or large-scale training programs, companies first need flagship projects that produce tangible results quickly. Stimulating consistent behaviour towards more customer-centricity and nudging employees into new ways of working is just much easier when experiencing positive feedback loops firsthand.
Ideally, regular internal employees collaborate during such first pilot projects. Instead of committing to unrealistic long-term digitalisation roadmaps, they can generate actual results within a week, e.g. by following sprint-based methodologies. Consequently, the focus of these projects is to understand customers and their needs first, to establish a business case, and then to validate initial ideas quickly. After successful problem-solution validation, the teams can further develop the idea in an agile manner. While it drives ownerships to involve regular employees instead of outside units, a crucial success factor for such projects is that they shouldn’t be constrained by the standard corporate processes and IT systems.
Building agile and cross-functional teams in financial services
While working with a European scale-up in the financial services sector, we applied a combination of design thinking and lean start-up in order to develop and validate a new financial service from scratch in just 3 months.
By bringing legal, marketing, customer success and product managers into one room, we enabled the client to adopt user-centred methods and to own the process, as opposed to creating isolated external innovation teams that never bring sustainable change inside the core organisation. By setting a clear goal and milestones and working in sprint formats, we helped the client team to achieve extraordinary results. Time-to-market was cut, everyone involved felt empowered and the new service is currently strongly contributing to customer acquisition in one of the client’s European core markers.
Solely implementing agile delivery methods will therefore just help to ship products faster. However, in order to win in the digital marketplace and to be able to compete against the tech giants, companies need to get better at understanding their target customer segments and ensuring problem-solution fit. As soon as the direction is clear, projects can be continued in an agile manner.