Microsoft Dynamics 365 Blog

Written by: Ben Werner

Lessons from Agile Development can help any business foster a culture of innovation

The pace of change in today’s markets is faster than ever, and your company needs to be able to change quickly, too, or risk becoming obsolete. Companies that succeed in creating a customer-driven culture of innovation and that demonstrate a willingness to adapt while maintaining their core principles will be well positioned to thrive in an uncertain future.

In a recent interview with BBC News, Yale Professor Richard Foster predicts that “by 2020, more than three-quarters of the S&P 500 will be companies that we have not heard of yet.” Think of it: in less than 10 years, more than 375 new arrivals will define the state of the global economy— and they’ll replace more than 375 formerly blue chip companies that find themselves on the brink of obsolescence.

While that may spell opportunity for these as-yet-unheard-of up-and-comers, for leaders of established companies it’s a chilling forecast. Foster’s research focused on the pace of change, and his message is clear: if your organization is going to be around 10 years from now, you need to adopt a culture of change and innovation—today.

So how can business leaders cultivate the organizational agility needed to adapt to rapidly shifting markets and consumer preferences, especially in an established company? Companies in any industry can take a lesson from the world of high-tech, where the concept of agile development has taken hold, leading to unprecedented iterative and fast development times, and new ways of thinking about team dynamics.

It’s widely recognized in software development and engineering organizations that agility is critically important. But despite the sophistication of agile principles in the development space—and numerous examples of their successful application in organizations of all shapes and sizes—the broader community of business leaders is just starting to understand the value of agile development in solving more general business challenges, including issues around market forces, competitive pressures, company culture and values, technology, process improvement, and others.

There are many formal and informal methodologies and approaches to agile development, but most share a few common principles that can be applied to any business:

  • Speed is critically important. Dynamic companies are defined by their ability to respond quickly to shifting market demands, competitive pressures, and other business challenges, as well as their success at shortening development cycles for bringing new products and services to market. 
  • Don’t bite off more than you can chew. Agile organizations uniformly reject boil-the-ocean problem solving and thinking. Instead, they think small in everything they do, breaking down larger issues into manageable tasks, constantly testing and iterating on these small, tactical solutions while assembling the pieces into larger, strategic initiatives.
  • Focus on high-value tasks. Agile teams know how to prioritize their time, ranking tasks, maintaining a prioritized, master list of work or action items, and ruthlessly eliminating wasted work by not doing the things that don’t matter.
  • Create real customer value. Agile organizations know how to deliver products, services, and incremental improvements that are meaningful to their customers. They open customer feedback channels, using social media and active listening, and take action on what they learn.
  • Build effective teams. Agile organizations recognize the importance of the team over the individual. They start by establishing a common language and shared understanding of the problem, and continue by introducing a minimum set of rules that define the culture without being overly limiting.  This results in open, two-way communication, enhanced productivity, and often, less stress than traditional hierarchical or rigid organizations.
  • Lead from the back. Agile teams exhibit a grass roots approach to problem solving and ideation that taps the creativity of entire team, and that eschews the top-down leadership model engrained in many traditional organizations. New ideas are as likely to be elevated from the rank and file, as to be handed down from the executive suite—often with surprising and highly effective results.

Whether or not Foster’s predictions come true remains to be seen, but we do know that organizational agility and a willingness to adapt to changing times can contribute to organization’s success. Perhaps by embracing these principles, you can ensure that your own organization is around to see for itself.

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