Is it better to innovate or create

Agile innovation - innovate faster, more efficiently and more flexibly

This article shows why agile innovation is important, where it has its roots, what defines it, how it differs from conventional innovation and how companies can make use of agile innovation methods.

Challenges and opportunities of digitization

Digitization is having an enormous impact on our society and is turning entire industries upside down. In times of global competition, companies need to get their products to market faster and more cost-effectively. Their offers have to be even more customer-oriented than those of their competitors. The main reasons for these challenges lie in the accelerated innovation cycles, the enormous cost pressure and the constantly changing customer needs.

The digitalization megatrend also offers enormous opportunities. We all know the inspiring business model innovations from Netflix, Amazon or Uber. But there are also excellent examples in this country. A good example is Mibelle, a Migros Group company, with its online laundry service TICK (BMI Lab, 2018). Mibelle recognized a pain point on the end customer side, namely that doing laundry is viewed as a waste of time and resources for many. With TICK, Mibelle offers a service in which the laundry is collected at the end customer's home and freshly washed and, if necessary, delivered again ironed. All administrative tasks are handled entirely online.

This example shows that as a company you don't have to be an internet giant to create a new business model. Mibelle did not use or invent any new technologies, but rather merged existing digital services into a new offer. The real hurdles, according to Mibelle, are the necessary commitment, courage and perseverance.

How should companies deal with all these challenges and how can similarly successful offers such as TICK from Mibelle be created for them? The solution lies in increasing one's own innovative ability and speed, increasing efficiency and the ability to adapt to rapidly changing situations. All of this is taken into account with agile innovation methods, firstly by integrating external knowledge and user feedback during the entire innovation process, secondly by testing a lot very early on, and thirdly by adapting quickly to changed conditions. But where do the agile approaches come from, on which agile innovation is based?

Fig. 1: Challenges and countermeasures for companies (source: own illustration)

 

Roots of agile working

The physicist and statistician Walter Shewhart, who was employed by Bell Labs at the time, can be named as the founder of agile methods. Others see their emergence much earlier, namely in Francis Bacon's “articulation of the scientific method” around 1620 (Rigby et al., 2016). Shewhart introduced his “Plan-Do-Study-Act (PDSA) cycles” to improve processes and products. His approach was already based on iterative and incremental approaches. W. Edwards Deming, who studied at Sewhart, brought these agile methods to Japan after World War II, where they enabled armies of Toyota managers to use them. From this, they in turn developed the famous Toyota Production System and thus the basis of today's “lean thinking”.

Out of necessity to launch a new product within only 6 months for a software company called Easel Corporation, which should replace the old one, Jeff Sutherland created the Scrum method in 1993. Sutherland himself an expert, among other things in object-oriented programming and efficient application development, borrowed methods such as the short, daily meetings suggested by Bell Labs to increase efficiency and the rugby approach. The latter goes back to a study by Takeuchi and Nonaka, in which they examined why various Japanese companies operated so successfully. The solution: They gave individual teams the opportunity to develop a product from the idea to the launch, instead of handing the same product over to the next team after each production step.

Over the following years, the methods of agile working were continuously refined until 2001 a group of 17 developers, who called themselves “organizational anarchists”, defined the “Manifesto for Agile Software Development” with its four basic principles in Snowbird, Utah (Beck K. , Beedle M., 2001):

Individuals and Interactions more than processes and tools

Working software more than comprehensive documentation

Cooperation with the customer more than negotiating a contract

Respond to change more than following a plan

In the “Agile Manifesto” and its principles, of course, the focus is on the customer. Change requests should be able to flow into the improvement of the product at any time. Satisfying customer needs through early delivery of valuable software is a top priority. However, the team and its members are also given a very high level of attention. This emphasizes how important it is that all experts who are needed to solve a problem act in a team.

You should be able to organize yourself and the team is given the necessary support and trust. It is just as important that the teams exchange ideas at regular intervals and try to adapt themselves optimally to new circumstances through reflection in order to be as efficient as possible. The product, the software, should be kept as simple as possible through good design and technical excellence and should be delivered at short, regular intervals.

The basic principles of agile innovation

The long-term application of the agile approach in the software industry shows that by following these principles, enormous advantages can be achieved in terms of the speed with which functioning software is developed, the ability to adapt to new requirements and the work culture in teams. The challenges in software development are very similar to those in innovation management.

In both sectors, one is often confronted with unpredictability, with rapid changes, and even with completely new conditions. So it is only obvious that agile approaches also lead to success in innovation management. The authors of the HBR article "The Secret History of Agile Innovation" are certain of this: "... agile’s branches will continue to spread to improve innovation processes in nearly every function of every industry." (Rigby et al., 2016)

How are the agile methods described above translated into innovation management? The German company Innosabi GmbH, which has focused on the development of innovation management software for years and has meanwhile blossomed into one of the established providers in the industry, is pursuing a very plausible and comprehensible approach. Your adaptation and transformation of the “Agile Manifesto” into the world of innovation management is as follows (Paal, 2019):

Openness over secrecy

Prototypes over finality

Collaboration via transaction

Adaptability via resistance

 

Openness over secrecy

Companies can gain enormous advantages by opening up and incorporating ideas and impulses from external sources into their innovation process. These external sources can be employees of other departments, suppliers, external specialists, users of their own products or the general public. With this so-called open innovation approach, they increase the speed at which innovations arise and promote their diversity and quality. Because for the vast majority of problems the following applies: There are experts somewhere who have already solved similar problems or who are able to use approaches from other industries to solve the problem they are looking for.

Gone are the days when a single developer or a small team of developers worked on the next big coup "in secret". Companies that are still developing in this way are overtaken by agile companies. However, the prerequisite for opening up is, above all, to live an open corporate culture that allows openness and is not determined by the not-invented-here syndrome - only what comes from your own forge is good. If there is an open corporate culture, the second requirement is transparency. Open innovation will only be successful if your own employees and the external groups to be involved understand the rules of the game, know what stage the innovation is at and what is required of them.

Prototypes over finality

If companies decide to involve external communities, especially their customers, in the early phases of the innovation process, they gain considerable added value in terms of the quality of their product and the efficiency with which the product is developed. Ultimately, this has an important influence on customer satisfaction.

In this way, companies receive input on improvements and changes to their offerings directly from the end user. Such feedback is particularly valuable for companies. After all, who knows the needs of customers better than the customers themselves? In this way, the product is tailored to the customer's needs and the risk of developing an offer that nobody needs in the end is reduced. The following applies: the more and the faster you test, the sooner you will recognize any mistakes in your thinking. Because these are recognized early, no resources are used to develop the wrong offers.

A focus on the right products and quick customer feedback increase the speed of development. The involvement of users can take place both in the generation of ideas and in the implementation of the finished product. As in the prototype phase, the product development phase, when manufacturing a minimum viable product (MVP), offers an iterative procedure in which the product is optimized with tests and quick feedback.

Collaboration via transaction

To a certain extent, collaboration is the kit in agile innovation management. All of the other three basic principles require a certain degree of collaboration and are based on the exchange of knowledge in order to achieve a common goal. The easier it is to exchange existing knowledge, be it by breaking down silos within the company or by creating networks and ecosystems outside company boundaries, the more effectively and efficiently it is possible to work on solving an existing problem.

The best collaborations are not those that are primarily driven by monetary incentives, but rather by the motivation to get the best product for all parties. So it's about creating a win-win situation in the ecosystem. Suppliers benefit from increased sales and customers benefit from optimal products for their intended use. In turn, your own company experiences increased demand for your product, wins satisfied customers and benefits from motivated employees.

Adaptability via resistance

As mentioned at the beginning, one of the three main challenges to be solved is as a company to quickly adapt to changing customer needs. Classic project management, in which primarily work is carried out sequentially and is controlled using the three variables of cost, time and performance, is rather unsuitable for this. This requires agile processes with which companies can flexibly adapt to new circumstances. But the introduction of agile processes alone is not enough. Rather, a corporate culture must prevail or be created that is adaptable and does not resist innovation.

This applies in particular to the company's error culture. The principle of “Think big, start small, fail cheap, move fast” must be anchored in the company's DNA: Believe in your vision, start with simple prototypes, test a lot and make mistakes at an early stage if they are not yet costly . Then be quick with an MVP on the market, continuously improve it and react quickly to changes.

Fig. 2: The basic principles of agile innovation (source: own illustration based on (Paal, 2019)

 

Innovation process for applying agile innovation

With the introduction of completely new methods, of course, the process of how the methods are to be used is also adapted. Fundamental identifying features of agile innovation are not shown in the widespread and generally used funnel model of the innovation process. Although the stage-gate process, on which the funnel model is based, is partially repetitive, it is clearly structured sequentially and linearly.

In the so-called NextGen Innovationfunnel, as it is called in the Institute for Information Systems at the University of St. Gallen (Back et al., 2018) others simply call it “Combine Design Thinking, Lean Startup and Agile” (WDO, 2017) is a combination of Design thinking, lean startup, agile and growth hacking presented. The main components of customer focus, collaboration, iterative approach and agile principles can be found in this new process.

With this new approach, the first thing to do is to define the problem and to understand the “customer pain points” in principle before starting the actual innovation. If you think of yourself that you have understood the needs of your customers, you can ideally look for ideas on how to solve the identified customer pain point, ideally by using external sources. Now the first test loop begins by collecting feedback from your customers for your first (paper) prototypes and mockups and corroborating or invalidating your hypotheses on which the solution is based. The innovation team rotates in this loop until the right problem-solution-fit has been found. It often takes several runs.

In the second phase, the actual lean startup loop, the product is again developed with the involvement of its customers. The strength of the customer involvement can be chosen by yourself. A weak customer involvement means “only” getting feedback from your customers, which in itself is very praiseworthy, a stronger involvement would be to develop the new product together with the customer in a co-creation.

In accordance with the principles of the Agile Manifesto, an attempt is made in this phase to create an MVP that initially only contains the basic functions of the solution, but can be made available to its customers for testing very quickly. In this process step you turn around until you think of your product that you have hit the product market fit. In the last cycle, the product is continuously improved according to agile principles, e.g. with the help of the Scrum framework.

Fig.Combine Design Thinking, Lean Startup and Agile (Source: Own illustration based on (WDO, 2017) and (Brenner W., 2015))

 

How can agile innovation be applied in practice?

The introduction of agile innovation in your own company is not a sprint, but rather a marathon. Especially when it comes to creating a culture in established companies that supports the principles of agile innovation. However, agile innovation would not live up to its values ​​if companies first had to go through a long-term transformation process to use it before they could start. Agile Innovation can, if desired, start in sub-areas of the company, in a self-contained project or with a sub-step from the process mentioned, in order to gain the necessary experience.

In our next article we will present some tools and methods that can be used for the practical implementation of agile innovation.

Would you like to deepen the discussion on agile innovation or do you have questions? Then contact the author or a member of the swissICT Innovation section. We are looking forward to your contact.

 

Author:Urs Isenegger is the owner and managing director of swintelligence GmbH and a member of the swissICT innovation group. Urs Isenegger is convinced that better results can be achieved together than alone. That is why with swintelligence he wants to enable every company - regardless of its size and resources - to incorporate insights, ideas and feedback from outside into its innovations, developments and decisions.

Picture: Gorodenkoff / Adobe Stock

bibliography

Back, A., Thoma, S., & Guggisberg, V. (2018). Management of digital innovations: has the innovation funnel model obsolete? Business informatics & management, 10(2), 24-35. https://doi.org/10.1007/s35764-018-0030-0

Beck K., Beedle M., van B.A. et al. (2001). Manifesto for Agile Software Development. https://agilemanifesto.org

BMI Lab. (2018). From product to business model innovation: TICK, the laundry on demand service from Migros. https://bmilab.com/blog/2018/2/15/from-product-to-business-model-innovation-tick-the-laundry-on-demand-service-from-migros

Brenner W., U. F. (2015). Design Thinking: The Handbook (2nd revised). Frankfurter Allgemeine Buch.

Paal, A. (2019). PRINCIPLES OF The roots of agile working methods. https://blog.innosabi.com/hubfs/Downloads/Principles of Agile Innovation.pdf? hsCtaTracking = f97a4f79-25fc-4f1e-ba95-921e9965a610% 7Cc900e7fd-e092-4221-a630-cb08cb1e86d2

Rigby, D. K., Sutherland, J., & Takeuchi, H. (2016). The Secret History of Agile Innovation. Harvard Business Review, 7. https://hbr.org/2016/04/the-secret-history-of-agile-innovation

WDO. (2017). Understanding design thinking, lean and agile. https://www.wdoinnovation.com/design-thinking-lean-agile/