Speed of Innovation in Real Businesses

Posted on Wednesday, 28. November 2018 in category Digital marketing. 7 min read • Written by

Matija Torlak

How by Implementing Agile Methods a Consumer Electronics Retailer Saved 1,780 h of Managerial Work a Year and Optimized Work Schedules in Just 6 Weeks

Changes; the speed of implementation; why employees don’t improve operations as agreed with management; why they don’t see what needs to be done; why so many projects are not implemented correctly and don’t bring incremental sales or optimization.

These can be daily topics on weekly management meetings and are a source of frustration for management in real-time businesses; moreover, it is also a source of frustration for all employees and the whole business culture.

For improving the speed of innovation, you need to have a clear vision of where you want to lead your company, a clear focus on where innovations and changes are needed, the resources (human, IT, knowhow) and a project management mindset which is focused on last mile implementation.

In this last part involving project management, Agile approaches are very useful. The term Agile comes from Agile Software Development, which was introduced and written by 17 software developers in 2001 in “The Manifesto for Agile Software Development”. This is an approach to software development wherein requirements and solutions evolve through the collaborative effort of self-organizing and cross-functional teams and their customers and users.

The Agile approach was mostly used in software development, while in our case we need greater speed of innovation. Agile can also be implemented in other branches of business, but leaders must be realistic because not every function needs to be organized into Agile teams. Agile methods aren’t suited for certain functions in companies where strict compliance is needed, where repetitive processes exist, and where strict hierarchy is needed.

But with regard to speed of change, Agile methodology and Agile teams are best suited to innovation. And you need innovation in all types of business. In retail, the changes are huge. The business models are changing, while the internet, social media, shopping malls, online platforms, payless retail, online loyalty programs and startups are disrupting the traditional Brick & Mortar and Multichannel retailers. And companies who don’t implement changes are lagging behind in the eyes of end consumers.

With organized Agile teams, which are focused on improving products and services, processes or business models, traditional hierarchies can be adapted to more agile enterprises that are more suitable for the VUCA world.

Agile teams can be implemented in any kind of business; they are small and multidisciplinary, and confront complex problems (as defined in the CYNEFIN framework). When an Agile team is empowered and has a vision of which problem can be improved, then the team breaks down a complex problem into modules, develops solutions to each component through rapid prototyping and tight feedback loops, and integrates solutions into a coherent whole. The essence of an Agile team is to provide a solution, even if it has to change the plan, and the team is accountable for outcomes (such as growth, profitability, process improvement, production line improvement, customer loyalty).

What does Agile look like in the traditional business of Brick & Mortar shopping? First, there is always a vision. An Agile manager had a vision that the work schedules for 300 employees who work in 18 different cities should be standardized, made transparent with a clear work process, and fair to all employees. There was one more additional requirement – the work schedule should have automatization with an HR system for automatic payroll calculations. This is a basic process which should be standardized in a company with a turnover of 100 mio+, but unfortunately each of the 18 store managers has his/her own process of preparing work schedules for employees. On average, each store manager used 10 working hours per month to compile a monthly schedule and used 5 working hours to do all the payroll calculations in a huge Excel file which was sent to the HR department.

In the past, when Agile methods weren’t in use, this optimization would be done through the IT department, and it would look like this: The manager who applied for optimization would speak to the IT department. The IT department would then take 3 weeks to figure out when it could squeeze this optimization into its busy workflow. Then it would take up 2 months to brainstorm, develop and innovate a solution, and after 3 months this solution would be presented to the manager who came up with the idea. The solution would be totally different from what the manager had imagined, because the manager didn’t specify the requirements properly, and because the business and its IT department don’t use Scrum as a working method for writing requirements and delivering statuses and milestones. In the end, a lot of resources would have been used, and a solution would have been prepared.

But there is another option and it’s called Agile methodology. Here are the steps taken by an Agile manager to improve the work schedules for 18 store managers and 300 employees:

Week 1:

  • Analysis of the current situation and processing of how monthly schedules were made by store managers. It took him one week to monitor and question all the store managers about what was working well in the current process, what needed to be improved, and what the problems were.
  • With the analysis, the Agile Manager found out that 2 store managers had an efficient process of making monthly schedules, and he asked them if they would be on the Agile team.

Week 2:

First meeting of the Agile team (2 store managers, one IT developer with knowledge of SQL databases, and the Agile manager) was held, at which they decided that each week they would deliver one version of the Monthly Schedule (MS) and that each week a new version of MS would be tested by 4 store managers, who would provide their feedbacks and improvements. 

Week 3: 

First version of MS was tested live with 2 store managers from the Agile team and 4 store managers. On Friday the Weekly Lesson Learned was held, where 4 store managers who were testing MS gave their feedbacks on what was working in the new system and where they had experienced problems.

Week 4:

  • All the improvements from 4 store managers were included in version 2 of MS and 4 additional store managers tested version 2 of MS, together with the first group of 4 store managers. So altogether 8 store managers tested the latest version of the Monthly Schedule, which was already in the SQL database in the company’s cloud service, and provided feedback, and mentioned problems and possible improvements at the Friday Weekly Lesson Learned.
  • The HR department had a member in the Agile team, so it can now use the SQL database from the cloud service in its payroll calculation program, because it was made by the same member of the IT department who was in the Agile team. Therefore, all the requirements, security processes and data transformations were fulfilled.

Week 5:

  • The Agile team took all the feedbacks from the 8 store managers from week 4 and made a new version 3 of the Monthly Schedule.
  • Version 3 of MS was tested by the previous 8 store managers and 8 new store managers who performed the scheduling of their employees in version 3.
  • Altogether, all 18 store managers tested the latest version of MS and provided feedbacks, improvements and the issues they had experienced during the process in version 3.
  • Version 3 was already connected with the HR payroll program and the HR tested the payroll calculation using the old process and the new automated process.

Week 6:

  • Version 4 was made by implementing all the changes that were made by all 18 store managers who were operational doers in the process.
  • Version 4 was live, and the Agile team wrote the process documentation.
  • Version 4 was connected to the HR payroll program.
  • Version 4 was uploaded to the company’s cloud system and all the security backups and processes were made.
  • 18 store managers performed the new process of preparing monthly schedules for 300 employees.

With the Agile approaches of rapid prototyping, empowered employees, a multidisciplinary team, and tight feedback loops, the Agile team improved the process in the company. The results were astonishing:

  1. 1,780 hours saved by store managers (improving the planning process from 9 hours per month to 42 min).
  2. Transparent and fair work schedule for 300 employees; all from the director to the sales person are seeing the same spreadsheet when they’re working.
  3. By connecting to the HR system, many mistakes in the calculation of monthly salaries were eliminated. On average, there were around €3,000 worth of mistakes done in the old process, which was eliminated with automatization.
  4. The Agile team didn’t spend a single EUR on outsourcing; all the improvements were made with internal resources and existing software.
  5. The phase of last mile implementation was optimized, because store managers didn’t need any training in implementing the new process, because the process had been made by them, using their improvement inputs.

Agile can be used for complex problems and leaders should start to set priorities and break the journey down into small steps, with feedback loops and a pilot or MVP as soon as possible.

Companies that successfully scale up Agile see major changes in the speed of innovation and improvements in their business results. Agile practices are about having big ambitions of step-by-step progress, with regular feedback loops. Scale it and the future will be closer than it seems.

What was the LL (Lesson Learned) when we tackled complex problems with Agile approaches?

The function of an Agile Coach or Agile Facilitator is crucial

The product owner with the idea for innovation is the one who will deliver the end results. He just needs help and guidance from an Agile Coach. The Agile Coach doesn’t interrupt or guide the process, he just encourages the product owner to deliver improvements on a weekly basis, properly checks the feedback loop, and if relevant feedback improvements were implemented in the next version of their product/process improvement/service. If a company wants to employ Agile approaches, an Agile Coach or Agile Mentor or Agile Facilitator is a must.

The risk of middle management stopping the speed of innovation

Middle management should be properly trained in Agile practices and briefed by top management on how Agile approaches are a contribution to the overall performance of the company. If this is not done, there is a risk that the middle manager might block the product owner who is using Agile approaches. Agile approaches are much quicker than standard processes in companies and these can become a problem if there is no proper communication.

Start small and proper communication is vital

The key to success is to find a product owner with an idea. With the help of an Agile Coach, they can assemble a small team (3-5 people) and tackle complex problem with different tactics. Their success can then be scaled up in other teams. Don’t start with 10 problems at once, because each company has a different culture and innovations are changes which are usually not well received by employees, if they don’t know why this needs to be done.

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