—W. Edwards Deming

In my experience, the ultimate business benefit of going Agile is that it . . . can . . . make . . . the . . . company . . . more . . . money. Did this get your attention? I find that few people will actually say this out loud. However, to make money, you need to delight your customers by building customer value and harness the brainpower of your employees.

Think about it for a moment:

• If you are truly committed to building customer value, then you will be building what the customer wants and the customer will be delighted, ergo they will buy the product or buy more of the product, while increasing the likelihood of remaining loyal to you.
• If you are truly committed to empowering your employees, then you will provide a work environment where they feel ownership of the work and can make their own decisions, and they will be more motivated to activate their brainpower, improving morale and increasing the likelihood that they will go the extra mile to create a quality product.

The employees are the company’s greatest assets for success, and the ­customer represents the greatest potential for company revenue. Isn’t this what you really want?

Although executives/senior management in companies may have some sense of the business benefits of Agile, I suggest that a major reason Agile is being implemented in many organizations is because they see it as the trend in the industry, so they think they better do it as well. In other words, they may be introducing Agile for the sake of jumping on the bandwagon, and most of their employees are then not sure why they are doing it but are mechanically following the process.

A mistake I often see when Agile is first rolled out is that only the mechanical aspects are introduced. For example, “this is a Scrum team,” and “this is Continuous Integration.” This is particularly harmful when senior management is introduced to Agile this way. They then interpret this as “Agile is something the engineering team should do” and don’t really see their role in Agile.

Instead, when you introduce Agile to executives/senior management, they should be educated in the agile values and principles, business benefits, and their role in an agile transformation. Then they will realize that Agile is about helping their business opportunity and that they have a role to play.

There are supplementary reasons teams or organizations are turning toward Agile. In general, many software development projects have a poor track record of delivering on time, on budget, with high quality, and what the ­customer wants. The question then becomes, what are the reasons for this track record? Some reasons include:

• Cannot possibly know everything or most things upfront.
• Schedules are defined with little information about the work.
• Software development is complex.
• Processes are often lengthy, with a lot of rigid ceremony.
• Defining requirements in detail is difficult.
• Customer needs change, and so do market conditions.
• Testing gets abused and minimized at the end as schedules get tight.

The good news is that applying an adaptive framework like agile methods can reduce many of these problems. For example, if you reach every scheduled release date, you bring the project in on budget, and you build it with quality, but you do not build features that customers want, they will not buy it and you have failed. This is why I contend that if you align your culture and processes around building customer value (e.g., what customers need and when they need it), then you will be successful and have increased your chances of making money.

In addition, I see Agile often focused on the engineering side of the company because there is a lack of understanding that Agile will help an organization’s bottom line. Although Agile will benefit the engineering side, particularly eXtreme programming (XP) practices, Agile should really be driven by strong business reasons. If you look at Agile as a business tool to make more money for the organization, you will gain greater buy-in from senior management, who are often the sponsors of agile programs and are looking for a business edge.

Show Me the Money

Though there are many benefits for going Agile, it occurred to me that to get serious executive/senior management attention is to get them to understand that Agile is really there to increase revenue—in short, to help them make money.

One way to help them is to provide an illustration in which Agile is their dashboard, with dials and levers that can help their organization (see Figure 3-1). I ask, what do they think occurs when they step up the level of customer engagement? What happens when you move up the level of employee engagement?

I leave executives to ponder whether they think these sincere actions can lead to making more money. In my experience, this gets them to actively listen, versus the passive listening they may exhibit when they think Agile is an engineering method or something the engineering team and others must do.

Yes, Agile can increase productivity. Yes, it may reduce your time to market. Yes, it can improve employee morale. Yes, it can help you manage change. Yes, it can help you increase project visibility. Yes, it can help you improve quality. Yes, it helps in many other ways. And yes, Agile can lead to an increase in customer sales, ergo an increase in profits. This is all true if Agile is implemented correctly.

There I said it: if Agile is implemented correctly. This is a big and important if. The if means that Agile must be implemented sincerely, aligned with agile values and principles, and with a special focus on the customer and employee. This is where I contend that an organization really has to “be Agile” to get to the point of affecting their profits. It does not mean that a company can do anything to make money, and it particularly implies that you have to think and act differently to achieve the results you are looking for.

Engaging Your Customers and Employees

I have narrowed down what I believe are the two success factors in creating a thriving business. To achieve making more money, you have to have a culture where customers and employees really matter. I’m not talking about the lip service that is prevalent today. In some cases, we see quite the opposite, where employees are disenfranchised and customers are rarely engaged. Instead, the goal is to have a culture and practices in place that truly gain the benefits of engaging with customers and employees. Through the customer and employee, a company draws their power within an agile culture and, I contend, within any thriving company.

When you have a riveting focus on the customer and you believe that an engaged customer matters, then you have the basis for a relationship where you can truly understand what the customer wants. When you have a sharp focus on employees and provide them the space to make decisions and own their work, then you will begin to understand the value an engaged employee base can provide.

Agile Value to Incentive Differentiator (AVID)

Let me introduce you to a concept I call the Agile Value to Incentive Differentiator (AVID). This is a framework where the values of the organization or company convey the importance of customers and employees (i.e., that “customers and employees really matter”). If the values are sincerely translated to organizational objectives and agile approaches are applied, then it can act as a differentiator between the success of your organization compared to the success of other organizations. Of course, every company likes to say that employees and customers matter, but are their objectives and actions really aligned with these values?

Upon closer inspection, the values should translate into objectives focusing on customer engagement and employee engagement.

• Customer engagement focuses on establishing meaningful and honest customer relationships with the goal of initiating continuous customer feedback to truly identify what is valuable to the customer. This includes establishing all of the activities involved in attaining this.
• Employee engagement focuses on empowering employees so they can self-organize into teams and can own and be a part of the decision-making process at their own level.

Then we add the “secret ingredient” of applying a continuous and adaptive approach (a.k.a. agile processes, methods, practices, and techniques). If done properly with the ability to adapt, this can lead to an increase in customer sales and an increase in team productivity. This finally leads to your incentive, which is an increase in company profits (more money).

I know this is both simplistic and difficult, but if implemented and if the vision is sincere, it may be achieved. The goal of this book is to help you adjust your mindset to achieve the vision and objectives. How true you are to the vision and objectives is up to you. Please note that you will have a dependency on your sales and marketing practices, but if you are building customer value (i.e., what your customer wants), then marketing and selling should be easier. Because customer value is so important, let’s take a closer look at understanding this concept.

Elusive Customer Value

—Thomas A. Edison

As you may know, a key focus of Agile is to deliver customer value. Value is the benefit a customer will get from your product or the functionality if you align with their needs. Customer value should be specified from the perspective of the end customer or those receiving the value from a specific product. The authors of Lean Thinking put it this way:

Customer value has both temporal and cost conditions. It is an elusive target that must be adapted to continually. What is considered valuable today may not be valuable tomorrow.

For example, in the 1980s, cellular phones were large and emulated the shape of a brick. In the 1990s and into the early 2000s, customers valued smaller and smaller phones. We saw evidence of this with the Motorola StarTac cellphones and the even smaller Pantech C300. But in the late 2000s and early 2010s, customers began valuing larger screen sizes on their phones due the advancement of smartphone technology (see Figure 3-3). We see evidence of this with smartphones now having 4.7-inch screens and larger. Build a great small phone for the wrong time, and few customers find it valuable.

This provides us with more evidence as to why Agile and its continually adapting nature is so important in the effort to grasp the elusive customer value. From an agile perspective, this specification of what is customer value for a product should be a continuous activity to ensure you align and adapt with the ever changing needs of the customer and sporadic changing conditions within the marketplace.

Agile Business Strategy

The primary intention of the AVID model is for companies to craft a business strategy that incorporates the customer and employee engagement objectives and agile values and principles that can help drive the mission of a company. This strategy should focus on elusive customer value, support continuous customer validation, and apply prioritization and minimum viable product techniques that lead to greater financial gain. A strategy that truly understands the advantages of employee engagement—including empowerment, self-organizing teams, and ownership—may gain the benefits of increased productivity and stronger company performance.

If customer and employee engagement are not woven into the company strategy, it sends an unwritten message that these factors do not really matter and can lead to substandard financial results. By incorporating these agile elements into your business strategy, you can set the levels of customer and employee engagement to see how they affect customer value and employee empowerment and eventually your profits.

With this in mind, let’s take a closer look at what the vision of “customers and employees matter” really means. Let us start by discussing the importance of customer engagement (Chapter 4) and then the importance of employee engagement (Chapter 5).

¹ James P. Womack and Daniel T. Jones, Lean Thinking: Banish Waste and Create Wealth in Your Corporation (Productivity Press, 2003).