An Agile Approach to Digital Transformation (+Principles, Benefits)
In 2018, 70-years-old Toys ‘R’ Us closed its doors for good. Children were beginning to play online games while the shopping experience had moved online. Toys ‘R’ Us, lacking the agility to cross over to the digital world, allied itself with a startup called Amazon which led to the toy store’s collapse.
Legacy companies need the technical skills to make the leap, the budget to purchase new technologies, qualified servant leadership to transform themselves, a workforce that blends skills with technological knowledge, and the know-how to overcome resistance to change. Most of all they have to adopt the right system that helps them effectuate that change.
That’s where the agile approach comes in, with major industry leaders like General Electric (GE), Netflix, and Nestle testifying how agile has helped them digitally transform their businesses.
What is Digital Transformation?
Modern companies have a choice: digitize yourselves or go extinct. Digital transformation is the process of upgrading legacy systems and manual processes to digital ones, to meet evolving customer expectations, automate tasks, and drive productivity.
Consumers seek innovation. They want shopping experiences that are fast and convenient. Research shows brands with strong omnichannel customer engagement strategies retain around 89% of their customers, in contrast to 33% of companies with weak strategies. It’s all about being digitized which means adopting digital innovations like virtual assistants, robots, drones, AI, or augmented shopping experiences (and so forth) as consumers seek the comfort, excitement and instant gratification that comes with digital service.
Tools include customer relationship management (CRM) software for retaining and attracting customers. If you’re a financial institution or large healthcare company you’ll want machine learning systems that help you collate, secure, analyze, distribute and automate your Big Data in real-time to compete. For retailers, it’s plugging into an e-commerce platform that helps your company stay relevant as you scale across both physical and digital landscapes.
Most businesses have a robust social media presence. On top of that, you need cybersecurity solutions to protect you and your client from being infiltrated by malicious actors.
It’s a race. Those that implement new technology as well as optimize their legacy systems win.
Unfortunately, it’s not easy. You need the right digital transformation strategy to guide you. That’s where agile comes in.
What is Agile Transformation?
Agile is a test-and-learn process with the system divided into sprints, or phases, of one to three weeks, with each sprint containing its own goal. Responsibility for the project is shared by the whole team who collaboratively decide when to move on to the next phase.
The 12 principles of Agile prioritize iterative and incremental development, collaboration and self-organizing, cross-functional teams and quality over rules. Most of all Agile is a steady iterative process of “growing into it’’ that takes time, where the team learns from mistakes and automates improvements.
The four core values of the Agile methodology are:
- Individuals and interactions are superior to the following protocol.
- That software works is more important than extensive documentation on how it should work.
- Customer collaboration and satisfaction are more important than contracts.
- Responding to change is what matters rather than following a plan. Agile is dynamic, flexible, and an ongoing learning process.
Done well, research indicates that businesses that adopt the agile methodology experience 98% rate of success and 60% more profit than companies that lean towards the traditional approach. More than three-thirds of marketing leaders told leading agile marketing and consulting organization, Agile Sherpas, that they became significantly more productive after embracing the Agile approach.
For these reasons among others, at least 95% of organizations practice Agile development methods according to the most recent 15th Annual State Of Agile Report.
Framework for Agile Transformation
The actual framework iterates around these three procedures:
- Collaboration activities: Stakeholders organize daily stand-up meetings, and scheduled sessions, such as milestone reviews, backlog refinement sessions, and project update meetings. In short, it’s where team members (and sometimes users and external agents) meet to discuss product performance and discuss how to proceed.
- Reviews: The development team demonstrates its finished work and answers questions, following which the Product Owner (or team as a whole) discusses the work backlog or work in process. Potential deadlines for the next segment are discussed as are other considerations such as possible changes in items like timeline, budget, or marketplace demands.
- Retrospective: The Team sits for two to three hours to discuss the results of the review session and to reflect on what they should (a) stop doing (b) start doing c) keep doing. Retrospective helps the stakeholders plan the next iteration and promotes continuous improvement.
What Is Agile Digital Transformation?
Agile Digital transformation is simply where legacy companies follow the Agile approach to successfully develop the capacities for delivering innovation.
The biggest challenges of digital transformation include coming to grips with complex software and technology, learning new tools and processes, negotiating security concerns, dealing with budget restraints, navigating resistance to change, and adapting technology to customers’ changing needs. Most of all, there’s the need for a simple but effective change management strategy.
Agile provides the perfect solution with its iterative time-boxed approach which helps teams practice their new skills. Agile is open to failure, encouraging legacy companies to improve their skills. It’s customer-centric, including clients in its deliberations therefore more likely to please them. The team moves on only after all security concerns have been resolved.
Most of all, the agile approach provides the perfect risk-free solution in that it splinters digital transformation into short manageable phases, where the team learns from their results before moving on. Less money is invested since mistakes are fewer and projects usually end up delivering value to users.
In short, the agile approach to digital transformation is:
- Adaptive in contrast to following a plan
- Self-managed in that it’s controlled by the team at all levels in contrast to manifesting top-down executive control
- Periodically assessed and reviewed by the team in contrast to undergoing metric evaluation
- Evaluated on whether or not it satisfies the end-user. That’s in contrast to companies that build their digital infrastructures under inflexible, highly mechanized and standardized procedures.
All of this makes agile digital transformation nimble, flexible, dexterous and fast.
Best Practices for an Agile Approach to Digital Transformation
A few things to keep in mind when adopting an agile approach to digital transformation include:
- Identify the purpose of your business transformation. Know your value proposition
- Include Security Champions in your team, so security remains one of your topmost concerns.
- Stimulate proactive cross-department collaboration, seeking input not just from IT but from inter-and intra-department experts and from external stakeholders too.
- Encourage stakeholders to share their anxieties and concerns.
- Consider introducing the Prosci ADKAR Model to help employees overcome their probable fears of digitalization and/ or of losing their jobs.
Why Agile Drives Digital Transformation
Here are the reasons why an agile approach to digitization is effective:
1. Constant communication and collaboration
In top-down projects with deadlines, employees are urged to follow instructions and complete their work with minimum fuss. Such environments tend to be fear-driven since the reputation (and jobs) of executives are at stake if the project fails. Dissension and change communication are discouraged, with flawed projects often the result.
With Agile, on the other hand, the entire team – IT, non-IT, executives and sometimes clients – are encouraged to participate and share their feedback, resulting in projects that work and delight end-users.
2. Trust and accountability between employees and team members
When a company is top-down driven, project success involves the reputation of decision-makers, where executives fear failure if projects fail to deliver. They could embellish performance reports where leaders bend reports to reflect apparent success. In contrast, Agile’s whole-team collaboration drives a culture of transparency where each stakeholder feels responsible for project success.
As Gartner reports, businesses move twice as fast on their digital transformation journey once staff and management appreciate the importance of their project.
The traditional structure with its waterfall approach invests expense, then doggedly insists on profitable results. Dissension is discouraged since there’s a forced deadline, with employees graded on how they meet top-down requirements. Once decision-makers have set out on their plotted journeys, it may be too late to peddle back without investing more expense and time.
Agile, on the other hand, hedges for risks by dividing its process into time-boxed sprints, one for each goal, and moving forward only once its team members unanimously agree they can proceed.
4. Continuous improvement
Digital transformation is an ongoing process. Developers know they need to constantly evaluate their IT systems and update as regulations change, or as new infrastructure appears on the market. This habit of continuous process improvement is especially critical when it comes to shortening IT defenses against cyber invasion and ensuring systems adhere to evolving government regulations, notable guidelines on consumer privacy.
The ability to constantly improve is particularly important for top-level industries such as those in the FinTech, Health, Government or Legal sectors, where even one single failure can bring them to their feet. Continuous improvement can seem overwhelming – unless you parcel it into manageable units.
When you’re focused on what your customer wants you are more likely to end up delighting them. A quick comparison of the Fortune 500 list from over sixty years ago shows that nearly 90% of those who were kings of their industry disappeared, due to market disruption. Only those that employed customer-led innovation, such as Boeing, Campbell Soup, Colgate-Palmolive, General Motors, IBM, Kellogg, and Procter and Gamble, prevailed.
Core Principles of Agile Digital Transformation
Agile digital transformation embraces five core principles:
1. Create a transformative vision
It’s all about creating something big. You want to delight your customers. MIT research finds that it’s companies that commit to corporate innovation that most times succeed. This culture of innovation too has to be woven within the company with ideas coming from call center workers, IT developers, and just about anyone in the organization. That’s the agile approach. And that’s where you want to be.
2. Build secure platforms
For some reason, agile approach has gathered criticisms on its security front. An article in the Journal of Information and Software Technology, for example, reports that Agile practitioners focus on security during the early parts of the cycle and the implementation phases but tend to be lax later on. In response, cybersecurity consultant Neelu Tripathy suggests that Agile teams include ‘security champions’ whose roles would be to champion security issues in their journey towards digital transformation.
3. Engage customers digitally
Digital solutions (like AI bots, self-service checkouts, augmented reality interfaces, landing pages or social platforms) succeed when they’re customer-centric. Find out what customers want, make it, test it, give it to them. Consider involving them with focus groups or social surveys. Eight out of 10 buyers today research a company online before contacting them or making a purchase. Humanize your digital transformation, and you’re more likely to grow.
4. Generate data-driven insights
Let data premise your actions. Build a data-based platform where you and your team regularly analyze its insights to drive performance. While 60% of organizations have invested in new technology to drive profit, only 11% of these organizations effectively use generated data to make better decisions. That’s according to a recent AON study that surveyed 922 organizations across the Asia Pacific and the Middle East. So, fully leverage the power of the data within your organization. That’s where agile helps you.
5. Embrace agility to iterate and improve processes
Adopt a test and learn the system, where you move only when all team members consent that the objective of that sprint has been accomplished. These time-boxed phases also help practitioners improve their skills in other ways.
It gives them the space to learn new technologies and ways of thinking, keep up with industry and technology trends, evaluate and learn from competitors and check out new methodologies as well as test old ones. An agile principle is a continuous unremitting improvement.
Benefits of Agile Digital Transformation
The agile approach checks off as the answer to each of the challenges companies face when they contemplate digitally transforming their enterprises.
Agile digital transformation is all about collaboration. In this way, Agile creates a culture of contentment increasing employee accountability for project success and where technology onboarding moves faster than it otherwise would. Money is spent profitably, risks are avoided, company reputation is leveraged since you’re more likely to earn repeat customers.
The Agile approach also allows organizations to rapidly adapt to industry and technology changes, with minimal disruption. It creates and maintains digital touchpoints with stakeholders and clients, while breaking down information silos, so what you ultimately get is a culture of trust. Here are a few other ways how an agile approach improves adaptability of an organization:
- Agile companies test before they buy technology and test again before they release so unprofitable products are shelved, delivering higher ROI on its investments.
- Agile helps you familiarize yourself with complex software and IT skills at a comfortable but steady pace. Its transparent culture and openness to feedback also helps companies overcome innate resistance to change.
- Agile transformation is customer-centric approach and involves customers each step of the way.
- Security is a concern for most of the IT organizations. As long as you integrate security champions in your framework, Agile helps you monitor cybersecurity. More than anything, Agile is the consummate change management approach that legacy companies look for and need to become digital natives.
Agile is all about “show and tell”. Often, progress is driven by stories where stakeholders describe the technology’s typical user, what these users want and why. For example, a team that designs an AI bot may ask themselves:
As a call center operative, I need to know what new information we need from customers. So that I can change what I say on the phone to customers.
Accordingly, developers would program a chatbot that solicits that information from callers-in.
Agile also pivots around focus groups and meetings, where IT teams are encouraged to show their work and where participants are opined for feedback.
Another popular method is graphic storyboards (otherwise called sprint burndown charts), where participants see at a glance which tasks have been accomplished and which still need to be completed. Participants also post notes such as Priorities and Posts for Debate on office walls. In Agile’s Feature-driven development (FDD) framework, leaders prefer distributed notes and documentation to frequent meetings.
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Challenges of Agile Digital Transformation
That said, a boggling 47% of agile-pioneered transformations fail. Reasons include:
- Employees fear technology will replace their jobs
- There’s no clear value proposition – stakeholders are vague on why they need that innovation.
- Lack of funds to purchase new technologies
- Absence of qualified leadership to drive transformation initiatives
- There’s a shortage of resources with the right combination of skills and industry knowledge
- Certain units or departments of the organization may hesitate to welcome transformation
- Work can lapse into chaos since it lacks the centralizing directing force.
- Negative feedback from as few as two or three members could lead to endless product cycle loops.
Above all, there’s the organization’s failure in selecting an effective change management strategy to manage organizational change.
How to Adopt an Agile Digital Transformation Model
Agile can be a nebulous process unless it’s fragmented into stages. That’s what researchers Palfreyman and Morton proposed in their 2022 treatise, where they outlined a seven steps conceptual model that organizations could adopt for agile digital transformation:
Step 1 - Prepare
The prepare step is where organizations ready themselves to start the agile digital transformation process, where they get buy-in, collate their teams, and define their objectives and value proposition among other items.
In this step, you’ll need to build your agile transformation team. This lean team should consist of :
- The Enabler, namely the assigned leader of the team who oversees the “what” of the project.
- The well-rounded IT Expert with expertise across digital industries, social skills, and a high credibility with developers, coaches, and doers across the business
- Analyst, the person who can quickly absorb information and analyze issues. Also, the person whom the team consults when stuck. Namely the problem solver.
- The Business or Tech Sponsor. A person from the executive team who believes in change encourages speed and forks out required resources and contacts
- A Graphic or Design Expert who knows how to build visual stories.
Step 2 - Scan
The scan step is where horizon scanning techniques are used to investigate technologies that could help organizations achieve their objectives.
Step 3 - Prioritize
The prioritize step selects resources and technologies that would most profit the company. Team members can use the MoSCoW analysis technique that factors in on the most important features your solution needs to have to provide value.
Step 4 - Learn
The learn step helps the team members familiarize themselves with the technology to achieve their desired ends
Step 5 - Experiment
The experiment step is where the team builds a ‘proof of concept’ or pilot model to work out kinks and to gain buy-in.
Step 6 - Plan
The plan step is where team members plan how to introduce their digital innovation from training employees to use the new tool/s to launching and fine-tuning the tool/s to fit their needs as they go.
Step 7 - Build
The build step helps the team build and then automate its project.
The entire process is agile-oriented with goals parceled into time-boxed phases of one to three weeks and stakeholders analyzing the results of each phase before proceeding.
Does Digital Transformation Ever End?
One of the problems with agile is scope creep, where team disagreement could eventuate in endless product cycle loops.
Definition of Done (DoD) is the agile term used for when teams decide whether to sign off on finished projects. Researchers Chen and his colleagues writing for the South African Journal of Information Management identified four conditions that teams could use as their checklist for “Done”. These are
- Customer-centricity, namely that the solution either fulfills a customer need, solves a customer problem, or would be welcomed by targeted consumers. There should be no doubt that the innovation succeeds in satisfying customer expectations and needs.
- Governance. The solution is leakage-resilient and ready for market. It adheres to government compliances, particularly privacy standards and can’t be breached.
- Innovation. The technology gives the company a competitive weapon, making its products and services, for example, more accessible, affordable, and available to a larger population.
- Resource attainment. The company has the funds for system maintenance and repair. The company also has the funds it needs to hire professional staff, train employees, and invest in cybersecurity among other expenses.
The Lighthouse Project
One of Agile’s biggest challenges is that indefinite project ends and expectations can lead to scope creep and experience rot. That’s particularly so with projects that involve digital transformation and even more so with large and complex projects.
In their 2021 paper, Haydn Shaughnessy and Fin Goulding recommended that moderators scale their project back into a critical short-term mini-version they called a Lighthouse Project which could serve to identify the skills and workflows needed to manage structural change.
Stakeholders ask questions such as:
- Must-haves. Are these needs mandatory?
- Should-haves. Do these features or needs add value?
- Could-haves. Would these nice-to-have tools be missed if left out?
- Will not have. Should we do without those tools (and maybe consider them down the road)?
In the Lighthouse Project, team members work through issues such as:
- Critical structural changes (to lower the risk of the digital implementation)
- Critical skills needed for project success (this helps them choose team members and delegate tasks)
- Which methods/ skills/ models they should implement to develop their solution (agility)
- Its value proposition or what the end results should look like – and when this will be delivered (early delivery and time-boxing)
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