Professional Documents
Culture Documents
Darrell K. Rigby is a partner in the Boston ofce of Bain & Company. He leads
the rms Global Retail and Global Innovation practices and is an expert in
Bains Digital practice. Steve Berez is a partner in Bain & Companys Boston ofce.
He is a cofounder of Bains Information Technology practice, which he currently
leads in the Americas, and an expert in Bains Digital practice. Greg Caimi is
a partner in Bain & Companys San Francisco ofce. He is an expert in Bains
Digital practice and a member of the rms Technology, Media and Telecommunications, Organization, and Results Delivery practices. Andrew Noble is a
partner in Bain & Companys Boston ofce. He is a member of Bains Retail,
Digital, Customer Strategy and Marketing, and Organization practices.
Agile innovation
The fundamentals of Agile are simple. To tackle an opportunity, the organization forms and empowers a small,
focused, cross-functional, self-managing team. The teams
initiative owner, who typically comes from a business function and divides his or her time between the Agile team
and key stakeholders, uses techniques such as design
thinking to build a catalog of promising ideas or features.
The initiative owner continuously (and ruthlessly) ranks
that list based on the latest estimates of value to customers,
financial results and other innovation initiatives. A
process facilitator protects the team from distractions
and puts its collective intelligence to work.
This approach systematically targets common impediments to software projects and other forms of innovation.
It frees senior managers from micromanaging, enabling
them to spend more time strategizing, removing impediments and increasing cross-functional collaboration.
It increases customer engagement and satisfaction by
improving visibility and adapting to the customers
Agile innovation
Agile benefits
Ability to manage
changing priorities
39
All projects
87
Increased team
productivity
11
84
Increased team
morale and motivation
18
Large projects
3
10
20
30
40%
Faster time
to market
77
Reduced
project risk
76
0
20
40
60
90
100%
Successful
Waterfall
79
Agile
Sources: The Standish Group, CHAOS Report 2015 (n>10,000 projects); VersionOne, 10th Annual State of Agile Survey, 2015 (n=3,925); Scrum Alliance, The 2015 State of
Scrum Report (n=4,452)
Agile innovation
Three brief examples help to illustrate the typical pathways and benefits of Agiles migration beyond IT.
John Deere. A recognized leader in advanced technology
in agricultural and construction machines, John Deere
created a global technology network of research and development centers staffed with innovators. The centers
job: Continue to build on the companys legacy of revolutionizing the markets it serves.
George Tome came to John Deere in 1998 as project
manager within the companys corporate IT group. Tome
brought with him a strong background in software development. Later, he became manager of Program/Project
Management in Enterprise Advanced Marketing within
Deeres Global Technology Innovation Network, which
has responsibility for discovering technologies that
could revolutionize the company over the next 5 to 10
years. But he was growing increasingly frustrated with
traditional project management approaches, so he began experimenting with Agile principles under the
covers, as he put it to us. From 2010 to 2012, as Deeres
IT department moved aggressively to shift more than
800 developers into Agile teams, the culture of the organization opened up to broader expansion of the concepts.
Agile innovation
Agile innovation
Agile innovation integrates design with development, adapting and releasing the most valuable
features far faster
Waterfall
Agile
Feature 3
Feature 1
Feature 2
Feature 3
Feature 4
Discover
Feature 2
Design
Develop
Integrate
Design
Feature 1
Deploy
Develop
Test
Deploy
Test
Integrate
Team
Customer and
business involvement
Constant collaboration
Design
Development
Delivery
Constellation Brands), introduced Agile to the organization from the top. Martella wanted Mission Bell to
qualify for Safe Quality Food (SQF) Level 2 certification.
It was a daunting process, and Martella wondered how
quickly a 100-year-old organization could embrace so
much change. While reading a book on Scrum, he decided to test the approach on the SQF certification process.
Today, Agile has become a kind of watchword at NPR, turning up in unlikely places. One team adopted Agile practices
to manage the creation of a new digital archive of more than
750,000 records. Another team applied the methods to optimize the breakdown of a typical broadcast hour between
national news and local information like news, traffic and
weather. In programming, the network now creates a small
number of pilots with a minimal staff and then begins iterating. Show developers gather feedback from local program
directors. They ask listeners for critiques and suggestions,
often through social media. The process is quick, public and
dramatically reduces risk. In the end, this saves money.
NPR developed programs such as the TED Radio Hour
and How to Do Everything (a podcast) at one-third previous
cost levels. Because it has spent less money on development,
NPR can feed the program to local outlets free of charge for
a while so that they can build an audience.
Agile innovation
Keys to success
Despite the progress of Agile methodologies, many companies are reluctant to adopt themand not every company that does is succeeding. Data on failures suggest that
the major impediments fall into three key categories:
Agile innovation
At OpenView itself, the prioritized backlog was an immediate and easy success. The team quickly cut 30%
of its projects, actively identifying things not to do.
Retrospectives, held every Monday morning to identify
opportunities for continuous improvement, were also a
hit. So was focusing team members on fewer projects
most had been overwhelmed by working on 10 or 20
projects at a time.
Within a week, he had signed up 600 registrants (a company record) and put the terrified junior technologist in
7
Agile innovation
Favorable to Agile
Market environment
Customer involvement
Impact of
interim mistakes
Corporate culture
Innovation type
Modularity of work
Favorable to traditional
Agile innovation
get people focused on the right problems, provide strategic direction, eliminate impediments and enable crossfunctional collaboration.
They also need to lead by example, which itself is likely
to produce significant benefits. Systematic, a global software company that provides IT solutions for healthcare,
defense and many other applications, illustrates the
possibilities. Its developers began adopting Agile methodologies several years ago. Founder and CEO Michael
Holm, though initially skeptical, eventually came to appreciate the benefits. But what was he doing to help?
For example, a large financial services company we examined wanted to improve its agility, and it launched a
pilot to build its next mobile app using Agile methodologies. Of course, the first step was to assemble a team.
That required a budget request to authorize the project
and fund the people. The request was batched with other
initiatives waiting for the annual planning process. After
months of reviews, the company finally approved funding.
The app development pilot actually went quite well, and
the team was proud of its work. Before being released,
however, it needed to pass vulnerability testing, which
would be conducted in a Waterfall process that already
had a lengthy waiting list. Then it needed to be integrated
into the core IT systemsanother Waterfall process with
a six-to-nine-month logjam. In the end, the total time to
release improved very little.
These productivity gains illustrate the problem of different parts of an organization moving at significantly
different speedsa phenomenon that has led George
Tome, of John Deere, to formulate a rule that someone
else dubbed Tomes Law. The law holds that commercialization velocity, or time to market, equals team velocity
(the speed at which a team produces new value) plus
organizational velocity (the speed at which the larger organization accepts and integrates this new value). If a
team takes four weeks to create a new product and the
Agile innovation
organization 16 weeks to integrate it, the commercialization velocity is 20 weeks. If the team doubles its productivity to two weeks but the organizational integration
doesnt improve at all, the commercialization velocity
will improve by only 10%.
Everyone on the same page. Individual teams focusing on small parts of large, complex problems
need to see and work from the same ranked list of
enterprise priorities. If a new mobile app is top
priority for software development, it must also be
top priority for marketing, budgeting, vulnerability
testing and software integration.
Agile practitioners like to develop minimum viable products, early iterations that can be put out into the marketplace and tested with customers so that they can be
improved. This article has been purposely designed as
a minimum viable product. Our hope is that it will help
executives who are unfamiliar or unsuccessful with Agile
methodologies learn whats involved and test them out.
10
Agile innovation
augmented reality magic mirrors that show customers how apparel will look on them without trying it on;
a delivery system that lets customers select apparel electronically and have the items placed inside
their personalized dressing rooms immediately or at a prearranged time; and
videoconferences with specialized remote stylists who offer personalized fashion advice and
can send recommended items to customers dressing rooms.
The innovation group believes that all three features are critical to the redesign and asks the six-person
engineering team how long it will take to develop them concurrently. Engineerings answer is 18 months.
But the engineering team has a better idea.
The engineers explain to the innovators that fragmented multitasking kills productivity, squandering
time and increasing errors. Grappling with three complex tasks simultaneously would waste 40% of
the teams time on context switchingthat is, interrupting workflows and forcing team members to
pause, restart, reload and refocus their problem-solving processes (see figure, Fragmented multitasking
kills productivity). Instead, the engineers propose to work on only one major feature at a time.
Continued on page 12
80
60%
75%
60
40
20
Task 1
Task 2
3
Number of simultaneous tasks
Task 3
Task 4
Task 5
Source: Gerald M. Weinberg, Quality Software Management: Systems Thinking (New York: Dorset House, 1992), 284
11
Agile innovation
But which should they start on? How can the company rank development activities when all the features are
essential? The engineering team suggests a methodology based on revenue potential, required investments
and contributions to other initiatives. For example, the delivery system (feature No. 2) offers the highest revenue and profit potential along with the lowest and most predictable development costs. It will also significantly enhance feature No. 3 by enabling remote stylists to send recommended items to customers dressing
rooms almost instantaneously. Working together, the innovation and engineering teams assign the delivery
system a value of 10, remote stylists a value of 7 and the technologically riskier magic mirrors a value of 5.
Taking a two-year perspective, the team quantifies the comparative value of an Agile approach. If the
company tries to develop all features concurrently, the entire dressing room redesign will take 18 months
to complete, and each feature will then create value for 6 months. Multiplying the value of each feature
by six and then adding them together generates a value index of 132 (see figure, 24-month scenarios).
But suppose the team sequences its activities to complete the most valuable features earlier? In that case,
the delivery systems benefits will start flowing in 6 months, and remote stylists will begin generating
benefits in 12 months. The value index doubles.
That isnt all. By focusing on one feature at a time, the apparel companys engineers minimize context
switching costs and reduce development times by 40%. They complete the entire project in 10.8 months,
nearly tripling the value index. Moreover, this valuation excludes other Agile benefits such as minimizing
the waste inherent in unproductive meetings, repetitive planning, excessive documentation and quality defects. It also enables the team to develop features iteratively with active customer participation, adapt rapidly
to changing priorities, delay the risky bet on nascent magic mirror technologies and increase cross-functional
collaboration. The result: an innovation that delights customers long before competitors can respond.
24-month scenarios
Concurrent multitasking
1 2 3 4 5
Bob
Sue
Ed
Amy
Joe
Siri
Ranked and sequenced
1 2 3 4 5
Bob
Sue
Delivery
Ed
Amy
system
Joe
Siri
9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Task 1
Task 2
Task 3
Total
Task 1
Task 2
Task 3
Total
9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Remote
stylistics
Magic
Mirrors
=2.2X
12
Task 1
Task 2
Task 3
Total
Beth Altringer, A New Model for Innovation in Big Companies, Harvard Business Review, November 19, 2013, https://hbr.org/2013/11/a-new-model-for-innovation-in-big-companies
Tom Grant with Dave West and Alissa Anderson, Increase Agile Efcacy to Improve Customer Value, Forrester, January 10, 2012, https://www.forrester.com/Increase+Agile+Efcac
y+To+Improve+Customer+Value/fulltext/-/E-RES61254