Agile-transformation

Agile strategy and transformation: how agile companies see an average of 60% increase in revenue and profit

There are some interesting statistics on agile management. 

They are…

  • 98% of companies have become more successful because of agile. 
  • Since 2002, more businesses adopting Agile have increased to 88%.
  • Companies have seen an average 60% increase in revenue and profit since using Agile.

Agile transformation is no longer news – it is the norm. It is a flexible, iterative approach that allows for constant adaptation and change where technology acts as an enabler. Agile has been successfully applied to Product Development functions primarily to accelerate software development. However, companies are now realising that agile-ways-of-working can be applied to the rest of organisation to speed up innovation and improve decision making processes.

In this article, we will give you a breakdown of:

  1. Why agile transformations are worth taking the risk
  2. The start of agile transformations: identify strategic roadmap
  3. How to approach your agile transition
  4. How to optimise strategy execution using agile principles

This article will give you an overview of what Agile transformation is, where to start, and how to transition to transform your business and stay ahead of the competition curve.

Agile transformations come with risks that are worth taking

Companies that have managed to transform their business in a short period of time, like Adobe, Alibaba, AirBnB learned to adapt agile principles at all levels of the organisation.

They…:

  • Moved away from heavy-weight approval processes
  • Brought closer the people that make decisions and the people that do the work
  • Created empowered teams to make decisions at every step of their value chain
  • Adapted an iterative approach to decision-making processes ie make small steps, measure, receive feedback and adapt to feedback

Coming from a large corporate and robust organisational structure these changes might seem rational, but are hard to implement. Senior stakeholders are careful putting their organisation in jeopardy even if it means that the win could be huge.

Agile transformations come with risks; with risks of losing people, with a risk that it takes longer than expected, with a risk that the changes might mean a complete shift to reimagining your business and losing your USP.

However, more and more organisations are at the point of realising that not taking that risk, might mean that you can be out of business within a few years or even months.

Take Adobe, LinkedIn, Asprey who all managed to adapt an agile approach to leadership. They reimagined their business, galvanised their workforce within months to undergo a true business transformation, connecting to its customer base around the world in a personalised way.

‘Agile transformation’ is a framework to reinvent your business. It is a framework that enables a business to continuously revaluate value chain, reimagine business models and figuring new ways to reconnect with your customer. There isn’t Out-Of-The-Box Agile Transformation framework ready to be implemented. There isn’t a technology stack that ‘makes’ you Agile. Agile transformation is about creating a loop that leads to self-fulling prophecy.

The start of agile transformation: identify strategic roadmap

Upgrading technology does not equal business transformation. A clear strategy aligned to your long-term business roadmap is the centre to leveraging business opportunities and is also the starting point of agile transformation.

To develop a business strategy where technology can be leveraged to build a profitable ecosystem, we have to undergo ecosystem analysis to identify opportunities and build a roadmap based on revenue and cost analysis. In our analysis, we:

Review business scope.

Can I increase the scope of my business by ie introducing new products or services to serve my customers’ unmet needs. To identify unmet needs of our customers there are a number of strategies we can adapt, like the microscope or the Panoramic strategy. With a Microscope strategy we zoom in on the experiences of mainstream users. With a Panaramic strategy, we observe behaviour of large number of individuals, collecting data from multiple sources like errors, complaints or accidents.

 

Evaluate business model.

Technology disrupts a company’s business model. Whether the best plan of action is to transition to a PaaS/ SaaS (Product/Software-as-a-Service) model, or upgrading your value chain through offering exceptional experiences to clients (through marketing, offline or online channels), you have to figure out of your existing business model is compatible with the future demands of your customers.

 

Rethink your R&D and innovation.

Companies spend billions of pounds on R&D with the hope of creating innovative products that will give them a sustainable competitive advantage. The most common way that companies innovate is internally led. However, an internal led innovation alone is no longer enough to support companies’ growth expectations since product lifecycles decrease and R&D costs continue to increase. Instead, you should rethink how your organisation can take advantage of the user-led innovation, that is allow users engage in product development of personal need to adapt and modify existing products for their specific use.

 

Optimise Operational Excellence.

Companies that position themselves to leverage emerging technologies to automate large portions of their tasks are very likely to have significant competitive advantage. Real-time information and analytics are central to optimising operational excellence and revolutionise the entire supply chain. Think Augmented Reality, Virtual Reality, IoT and Artificial Intelligence.  The role of emerging technology in the operations to reduce cost for competitive advantage cannot be ignored.

 

Design Omni-channel Strategy.

Do you have a unified omni-channel strategy ie how have you linked your digital and physical channels? Each channel is best suited for certain products, for a specific group of customers and for a certain part of a consumer’s decision journey. The trick is to identify these complementaries and build around them. For example, your digital channels could be good for acquiring new customers since they provide a cheaper, low cost marketing channel with extensive reach? And your offline channel can act as a retention channel where your focus is on up- and cross selling more complex products. Alternatively, this can also be the other way around where an offline channel is better for acquiring new customers and digital channels for retaining them. Every omni channel strategy is unique that should fit around your unique strengths and can only be concluded after careful analysis and rigorous consumer research.

 

Acquire new customers.

New customer acquisition strategy is at the heart of any successful organisation. However, knowing who your customers are and where to look for them is easier said than done. We tend to use vanity metrics that portray a successful campaign like click-through-rate (CTR), conversion rate (CR) and customer acquisition cost (CAC). While these metrics can look healthy, we can fall into the trap thinking we are making money. But what if the customers you have acquired do not come back after signing up, or spend less that your avergae order value (AOV) and the cost of acquiring them hasn’t actually exceed money earned. The success of a new customer acquisition channel should be determined by the long-term profitability of customers, also referred to as customer life cycle (CLV). That’s why we should be careful with acquiring new customers through offers or welcome gifts and choose a long term strategy over any short term gains which in the process can loose you money. Technologies are becoming vastly advanced on measuring metrics across channels allowing you to analyse your customer’s behaviour.

 

Engage and retain with your customers.

Tools for reaching our customers have changed in the digital era where data and real-time optimisation are forming the customer engagement strategy. We need a deep understanding of the customers we acquire and provide value to engage with them. Consumers are complex and multidimensional and the measures that we have historically focussed ie the demographics, interest or even past purchases, aren’t so useful as they used to be. We need to step up and realise how we can reach a customer in the moment when they are facing a problem ie bored at home, stuck in an airport, going through challenges at work. Do you have a strategy how you provide your customers value in the moment?

How to approach you agile transition

After performing ecosystem analysis, and having identified opportunities, we create a roadmap prioritised by business value.

Then, you have to make a decision how fast you want to move ahead with your transition.

Every transition will have an impact on your bottom line. With a fast transition, you minimise the amount of time it will take you to recover, however the dip in income will be much more significant than with a slower transition.

If you opt for a slow transition, the decline in income isn’t going to be as steep. However, the slower the transition, the longer the impact on your bottomline will last.

fast-transition-vs-slow-transition
Fast vs Slow Transition

There isn’t a right or wrong answer, and the ‘right’ answer for you is going to ‘depend’ on you current position in the market. This can be analysed by looking at:

  1. Your Customers. How many unsatisfied and unhappy customers do you have?
  2. Competitors. How big of a threat are the other players in the market? Is your market position is jeopardy?
  3. Company. Do you have internal skills, capabilities and organisational structure to kick off on your digital transition?

Creating a roadmap for the future and deciding on how you want to approach your transition, does not mean that we know how the future will unfold. This is where Agile ways of working comes in.

How to optimise strategy execution using agile principles

Digitalisation, an inevitable aspect of your future roadmap, will lead to significant changes in internal operations of a company. If you have decided to make a shift, your organisation should be ready for those changes to ensure a successful transition.

Your focus should be to redesign your organisation and set it up for innovation. And this doesn’t start with technology. It start with redesigning your departments that will be affected by the change:

  • Product Development
  • Distribution
  • Customer management
  • Sales
  • etc

What seems like a small shift can create a cascade of changes that affect every part of your operation. Hence the answer to adopting agile principles that will set you up for innovation is to deliver a roadmap initiative end-to-end by following the following steps:

  1. Identify an initiative from your roadmap you would like to realise ASAP
  2. Create a cross functional team of people with different skills to deliver that initiative (Sales, Product, IT)
  3. Break the initiative into small chunks of about 2-4 weeks worth of work
  4. Aim to release a Proof Of Concept cheaply and within 2-4 weeks to your customers
  5. Ensure you have set up analytics to measure the effectiveness of your initiative
  6. Gather feedback from real customers
  7. Then make a decision based on recent feedback: do your customers like, have you used the right channels to promote the initiate, what can you change/improve or rework completely.

Agile principles are about having a flexible and iterative approach that allows for constant adaptation and change. Your roadmap initiatives do not guarantee success. No management consulting firm in the world will be able to provide data with 99% accuracy. Analysis is based on historic data and can accurately predict up to 80%. The remaining 20% is based on our complex and multidimensional human behaviour that no algorithm or analysis is able to predict with high accuracy. That is the reason agile principles have gained so much momentum over the last 2 decades and are still growing in popularity. It isn’t some trend that will seize to exist. Agility is a set of principles that will only evolve with time adapting to our fast changing consumer culture.

Subscribe To Our Newsletter

Join our subscribers to Weekly Newsletters. Every week, you'll get 1 actionable tip on agility, business transformations and software delivery for your organisation today.

    You may also like

    technical-excellence

    What do we mean by Technical Excellence?

    “Continuous attention to technical excellence and good design enhances agility.” The above is the ninth principle of the agile manifesto. And the ultimate goal of technical excellence in a simple form? Less bugs, more ...