Agile is a product development approach that focuses on
delivering small increments of product functionality over
time. The goal is to deliver the highest value features quickly.
This makes agile attractive financially since revenue and benefits also start accruing quickly. In addition, when agile is compared to
other product / project management frameworks, it wins the trifecta. Agile
reduces risk. Agile enhances quality. Agile cuts development costs.
In this article, we will review how to achieve the benefits
of agile while also confronting some of its challenges. Topics covered are:
- How to Earn Revenue Now
- How to Remove Roadblocks
- How to Manage Rework
- How Agile Cuts Costs, Enhances Quality and Reduces Risks
- When to Use Agile
How to Earn Revenue Now!
The challenge is for the product owner to focus on features
that drive revenue and benefits. And the first step is to pick the right
segment. Since the product will be rudimentary, demanding consumers will reject
it. If it is rejected, then little revenue will be realized and the agile
approach fails.
The key is to find a segment that is ignored by current
solutions and is therefore willing to deal with the inconvenience of a
rudimentary product. As this initial core accepts the product and proves its
benefits, the product may be extended to capture additional segments.
The story of the transistor radio illustrates how to capture
an overlooked segment with a simple product and then go on to refine the
product for a broader set of consumers.
In the early fifties, radios used tube technology which
provided outstanding audio quality. Transistors were discovered that could be
used for radio, but the sound was poor. Instead of going head-to-head with an
entrenched competitor, Sony found a way to exploit the transistor’s difference
to make it a differentiator. The difference was size. A radio could now be
built that was portable.
That first transistor radios cost over $300 dollars in
current costs. It appealed to a small segment who wanted to listen to sports
where audio range was not a big issue. It also attracted teenagers who could
listen to their choice of music.
Costs continued to decline and sound quality improved
to be “good enough”. Transistor radios not only captured the portable market,
they went on to displace tube radios in the stationary market. Transistor
radios are still the most successful consumer electronics product with over 7
billion sold.
An outstanding framework to use when considering agile product development
is Clayton Christensen’s Disruptive Innovation. The
3-step process is:
- Launch- A product or service takes root in simple applications at the bottom of a market. The product provides less performance overall. But much better performance of an unmet need that creates a new market.
- Refine - The product relentlessly moves ‘up market’
- Conquer - Displaces established technology and competitors
How to Remove Roadblocks
As you can see in
the diagram, the “burn rate” or rate of spending for agile is high from the
start. If agile is unable to deploy quickly, its costs escalate causing return-on-investment
(ROI) to plummet.
The agile framework is set-up to eliminate many inherent
roadblocks by establishing a team of full-time associates who remain together
for the duration of the program. Teams will be discussed more in a later
section.
But there are still some specialists that are needed for a
short period who are called upon when necessary. Since these specialists are in
high demand, there is often delay in getting their services.
Before implementing an agile approach, resolve allocation of
critical specialist skills. Some approaches to consider:
- Automate – Whenever possible, critical and frequent services should be automated and made self-service. Server builds often hold up software development teams and make a good candidate for automation.
- Delegate – Determine what specialists’ functions could be delegated to agile team. It may be necessary to develop standards and provide oversight.
- Engage temp resources – Allow the agile team to acquire third party resources as needed following appropriate standards and oversight. Unlike traditional methods, the agile team will only have a few weeks / months to prove their value proposition, so costs are unlikely to escalate.
- Implement agile services management – There is a complimentary agile approach for service queue management to make more efficient and predictable. It is called Kanban.
How to Manage Rework
In agile, a holistic design for the fully built product is
not completed upfront. Instead product design emerges as the solution is built
and refined.
Those with experience will see that an emerging design may
also cause rework. For many of us coming from more traditional methods, the
specter of emerging design makes us shudder.
But a holistic design may provide a false security. If the
product is using new technology, defining a robust and scalable design is
unlikely on the first pass. It may be more useful to get feedback sooner than
to over-analyze. So start small, get it out in the real world and plan on
making adjustments.
If the technology is well established, there is opportunity
to borrow design patterns from successful projects. For example a 3-tier
architecture when developing a website is a proven pattern.
The development team also may have insights as to which
features support synergistic development. The caution is that we want to avoid
building lots of foundation functionality that delays release of the product.
With frequent
delivery, it becomes necessary to perform some development functions such as
testing repeatedly. In more traditional methods, testing would only be done
once. For those activities that are now completed multiple times in agile, it
is important to review how they may be made more efficient. For example,
automating test cases will reduce costs and avoid elongating the schedule.
How does Agile Cut Costs, Enhance Quality, & Reduce Risk
At the heart of agile is the “empirical process”. The "empirical process" manages product development through frequent inspection and adaption. The steps are plan, do, inspect and adapt.
Because agile defines short, consistent, time-boxed
development cycles of just a few weeks, the empirical process is effective in
agile. There are numerous opportunities to plan, act and review. More frequent
iterations
- Improves efficiency by exploiting the “learning curve”. Hastening the number of iterations, hastens learning.
- Helps us avoid making large investments in features that are not useful since there is regular review by the product owner who is a core member of the team and by the product consumers.
As mentioned earlier, the team is dedicated and full-time.
Dedicated team members avoid switching costs that occur when a person must
switch from one project to another. When switching, a person must remember
where they left off and then ramp up. Studies suggest that switching adds up to
40% to overhead.
All of these agile methods cut costs, reduce risks and
enhance quality by working on small doable chunks and correcting issues early.
When to Use Agile
Consider switching to agile for more of your product
development. It is especially helpful when the problem or solution is unclear
and requirements will change frequently in response to new information.
Agile benefits any product that that can launch with a
simple version that attracts early adopters. Remember that if the product is
successful there will be sufficient benefits to fund refactoring and
incorporate learning into the next version of the design.
When the underlying technology used to develop a product is easy to change, then agile is ideal. For example websites, on-line apps, a restaurant menu, a class curriculum, or the finishes in a building.
When the underlying technology used to develop a product is easy to change, then agile is ideal. For example websites, on-line apps, a restaurant menu, a class curriculum, or the finishes in a building.
It is also useful for products weighed down by too many features. The National Science Foundation completed a study that found that 50% of system features were never used and a significant percent were used sparingly. Those extra features make products more difficult to use and frequently add to on-going overhead.
Google exploited this insight with the release of its office
products such as Gmail that focused on the high benefit features and dumped the
rest. The features cut were
not missed by the typical user.
Why Use Agile
The CFO will find agile exciting since revenue / benefit
realization starts much earlier.
The product owner and development team will also be compensated.
They gain feedback from consumers sooner which is informative and rewarding.
Being on a development team using traditional methods can be
a long march without any big wins until the end. Agile provides frequent delivery
of working product to enhance the team’s morale.
In addition, the team experiences improvements in their
ability to deliver more effectively using the empirical process. Crisis
management – a factor in many projects – is eliminated since change can be
incorporated easily in the next iteration.
Resources
- Product management using disruptive innovation - Read more @ Professor Christensen >>
- Empirical process - Read more @ Agile Learning Labs >>
- Switching costs of multitasking - Read more @ American Psychological Association >>
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