Article

Kick-start your innovation engine

How to work with Agile teams in a product development

This article was originally co-authored by

Published

17 August 2020

On average, companies have a success rate of no more than 30% when developing new products. The number has been steady over the years and across industries.

What is wrong with your current development efforts?

What to do when technology and product lifecycles are cut in half, complexity continues to grow, and competitors release products up to 80% faster? These are the questions many established providers of hardware and software solutions currently face.

Companies grapple with this new reality because of internal hurdles: hardware components have to be linked to software, a vast number of individuals contribute to one development project, scaling is hard to achieve, and the project manager struggles to direct, track and report towards functional leadership. The amount of bureaucracy puts off young talents who choose jobs in more modern workplaces.

At the same time, the client is not waiting. His product lifecycle has shortened as well, and in most industries, he can choose from a global range of suppliers. To manage changing priorities, bring products to market quickly and achieve high employee engagement, you need to start working in an Agile way.

Don't develop products - develop business

Often, the responsibility to develop new products is split up by a stage-gate process. Someone is responsible for market strategy, another one for customer need and early concept, a third one for detailed design, a fourth one for supply chain and a fifth one for persuading customers to buy it.

We believe that the key to developing business more successfully is to place end-to-end ownership with cross-functional teams led by an entrepreneurial product owner. These teams work incrementally and iteratively to reduce uncertainty, deliver value and create market traction rather than hitting internal milestones on a long roadmap.

Our old development process was too slow, risky and inefficient. we struggled to create growth in our core business.

Benchmarking the benefits

30-60% reduction in time to market
Improved ability to manage changing priorities
Higher team moral and individual motivation
Up to 15% cost reduction

Cross-functional teams must comprise all the capabilities and skills (e.g. product management, engineering, marketing, sales etc.) to deliver their product to the market end to end. Agile teams should be able to work autonomously. They self-organise to maximise business success. Team responsibility replaces individual contribution. As opposed to project teams, the Agile team is the “primary home” for all team members. Ideally, there is one product owner for one product. To develop business, this product owner collaborates with one or more teams, consisting of 5 to 9 team members each.

Now we have cross-functional teams, which assume full ownership for growing our business through innovation.

In most cases, this setup stands in stark conflict with the existing management system based on functional structure and predicts and controls governance.

To succeed, engage in disruptive intervention on a small scale

1. Identify development value streams and create cross-functional teams with “zero-based staffing”

To keep implementation risk low and at the same time allow disruptive intervention, start by choosing only one or a few business solutions as Agile pilots. Usually, this is done based on already planned development projects. These pilots are then staffed to comprise the minimum skills required to deliver value independently (“zero-based staffing”). The team must be guided by a product owner who assumes ownership of the aspired business impact.

2. Liberate the pilot teams from existing corporate governance and support pilot teams as well as management

While keeping the formal organisational structure, management must free the pilot teams from existing management processes (planning, controlling etc.). They must assume ownership of their business solution, e.g. make all relevant decisions. Initially, pilot teams and management must be trained in Agile working methods, values and mindset. To guide the pilot teams and management through this radical change, close mentoring and coaching are crucial.

3. Change the organisation and propagate to more value streams

While supporting the pilot teams to deliver value for the customer, management must systematically evaluate organisational impediments and incrementally redefine their operating model. The transformation scales by launching more teams into the new operating model and moving beyond development. Clear behavioural rules must be put in place to ensure that teams collaborate effectively and efficiently. Communities of passion ensure sharing of knowledge and good practice.

We really achieved speed – we can get around to so many things in such a short amount of time – that’s amazing. Normally it would take much longer.

Becoming Agile is central to any CEO agenda

Achieving true agility is indeed a challenging endeavour. Merely revamping product development falls short of realising the expected benefits. It requires to fundamentally challenge existing operating models and management systems. The executive team must be willing to put cross-functional and fully empowered teams in place.

Pilot teams must be freed from existing management processes to allow a truly Agile way of working instead of just using Agile working methods (e.g. Scrum framework). Goals and incentives must not get in the way of empowered cross-functional teams. Furthermore, management must change its leadership style from directive to supportive in order to allow the pilot teams to assume full ownership.

Case: Switzerland

Context: The client is a globally operating supplier to the construction industry. They differentiate through superior productivity and quality. However, their market position is threatened by insufficient innovation performance. The current product development takes too long (18-30 months). The client struggles to attract next-generation entrepreneurial employees.

Project: To slash bureaucracy, establish modern ways of working and significantly improve innovation performance, the client launched fully accountable cross-functional teams with the mission to achieve business growth. The team has been supported by a dedicated Agile coach to anchor new ways of working based on Scrum, Design Thinking and Lean Startup.

Benefits:

Reduced time to market significantly (up to 50%)
Increased hit rate predictability on launch dates without lowering solution quality
Increased employee satisfaction and ability to attract next-generation employees

Case: Denmark

Context: The client is a global producer of products and services used in areas such as commercial and industrial refrigeration, including food storage and transport, air conditioning systems, heating, drives and mobile hydraulics. Product development efforts show long time to market and lead to low customer satisfaction. There is an urgent need for improvement.

Project: For this reason, the client decided to test Agile working methods, i.e. Implement Consulting Group’s Half Double methodology, focusing on impact, flow and leadership. The aspiration being to be the first to the market and build a position as a preferred solution provider to key players.

Benefits:

Increased employee engagement by 30%
Reduced time to market from 18 to 6 months (from defining to launching new business solution)
Higher customer value orientation and commitment across cross-functional teams