agile methods and customer centricity – is it all just a fairytale?
by Jannik Wahl
“Agile” describes a set of principles and methodologies that can be applied to product development. It’s become a buzzword used increasingly by many different types of companies: from small start-ups born agile (e.g. Spotify or booking.com) to large companies with traditional corporate cultures and long decision-making processes. Agile methods positively impact turnover because product development is shaped by customer input, and the latest studies prove that it can work for all types of companies.
Agile methods, including SCRUM, can help large companies drive digitalization and reep the benefits of a customer-centric business model.
But is this just a fairytale for traditional companies with historically grown structures?
For large companies in Germany, studies suggest that traditional corporate culture is a key obstacle to digitalization. They are characterized by hierarchical structures with fixed processes and specifically defined roles and responsibilities but this conflicts with agile methodology, which advocates fast delivery, customer-centricity and simplicity. So for these companies, is customer centricity through agile methods really achievable?
5 main challenges on the path to customer centricity with agile methods
#1: political interest
Hierarchical structures in large companies are characterized by a system of reporting to mid-level management and executives. This can be detrimental to customer-centricity since, during the decision-making process, management interests can over-shadow customer interests.
#2: behaviour in success
Success can cause complacency and resistance to change. In the past, success for a company heavily relied on product-centricity. This approach is risky now, however, because customers are much more engaged with brands and businesses. Additionally, political interests, strict reporting structures, hierarchical decision-making processes and very limited decision-space for employees and teams are barriers to customer-centricity because decisions are being made by people who are not directly communicating with customers. Keeping a customer focus requires sustained effort and a change in mindset – something which may be tough to achieve in traditional companies.
#3: willigness to change
A willingness to change the status-quo is the next obstacle. Transforming a corporate culture takes a significant number of people to lead this change. A holistic approach that includes all relevant stakeholders and internal influencers is needed, though this can be difficult to establish. Single departments or teams that are able to successfully apply agile methods might deliver short term improvements but tension resulting from other teams that oppose this approach may lead to conflict and a negative impact on productivity. This kind of situation - groups of people working against each other rather than collaborating - is not uncommon.
#4 silos and dependencies
Agile methods like SCRUM require cross-functional teams. But strong silos exist in many companies and this prevents the kind of high level collaboration needed to achieve agile transformation. What’s more, dependencies in historically grown IT structures counteract the need for flexibility and fast delivery.
#5 zero failure tolerance
Quick development followed by the fast roll-out of a perfect product is nearly impossible to achieve. According to agile methods, products are rolled out quickly and then customers decide whether they really meet their needs. If they don’t, it is at least a fast and less expensive fail. Many companies, especially those in Germany, are afraid of this approach because of their premium and product-centric approach. The reality of this, however, is long product development cycles without any customer input.
These are the 5 challenges for companies looking to achieve customer centricity through agile methods. Irrespective of a company’s size, a prerequisite for achieving customer-centricity is the ability to change historically grown structures and mindsets.
Experience shows that applying agile methods in a superficial way to the challenge of digitalization doesn’t work. Customer centricity, as the key to a business’ future success, has to come from a firm belief in the values and principles of agile methods and effective application of them (such as SCRUM). Without that, customer centricity will only be a fairytale.
For more information about rpc – The Retail Performance Company please see www.rpc-partners.com.
The article is also published on LinkedIn.
The second part of this article can be found here: "Agile Methods and Customer Centricity – First Steps to Successful Transformation."