Lean, Agile and Scrum have been household names in the corporate world for competitiveness and performance improvement for the best part of the last 20 years. They have been tried or adopted by many companies and created a vast wave of business transformations.
Combined with the digitalisation of activities and value chains and the power of data, these methods lie at the basis of some of the most spectacular commercial successes, epitomised by names such as Amazon, Uber or AirBnB. This trend has permeated through all the activity sectors and industries. There’s virtually no escaping from them. So much so, that it is sometimes hard to see the wood from the trees, when one wants to start an improvement initiative. One thing the flurry of variants of these methods out there is a testimony of is the fact that there is no « one size fits all » approach, when it comes to use them in any particular situation. Tailoring and scaling will be required.
On the other hand, the principles embedded in all 3 approaches are sufficiently generic that they don’t necessarily require to be accompanied by a complex change programme. This is especially true for SMEs, whose modus operandi and size mean that they already practice Lean and Agile thinking intuitively, in one form or another.
But in today’s business context, characterised by a lowering of the competition barriers, the unleashing of entrepreneurship and the redefinition of business models, a sharper, more rigorous and more conscious application of competitiveness and performance principles is necessary to keep an edge over one’s rivals or take the lead.
Irrespective of the changes brought about by technology, the fundamental questions at the heart of commercial success remain the same : how to create more value and how to be more competitive than the others?
In this context, the digital transformation upon which virtually every company is embarking is merely a means to create more value than an end in itself. In fact, the so-called digital revolution has just amplified and catalysed the results of strategies based on customer satisfaction and the elimination of waste from the value chains. And that is precisely what Lean, Agile and Scrum are about.
In the end, whether you are an e-commerce juggernaut or a local business, a large multinational or a small business, your objective remains the same : to find the optimal balance between value creation, defining the options you need in your product or service and to manage the operational and user risks.
To reach this equilibrium, you need to make trade-offs between these three elements defining competitiveness and to deliver your product or service to your customer in the most efficient way.
Realising that objective requires finding the answers to some key questions. It is both simple and subtle.
1. What does value mean ?
One sometimes tends to forget it, but the value that we produce conditions the succes of what we undertake. It is therefore crucial to get our heads round what it means at two levels: for our customers or end-users and for ourselves as a business. What is important for them and what are the criteria which will decide whether what we propose to develop will create enough value for the company ? Understanding the former will define the focus of the development, whilst the latter will help identify the concept more likely to meet the investment criteria.
2. Which options can I build in my product or service ?
In function of the value drivers identified earlier, be they technical, commercial, operational or the three of them, it is important to list the options at hand in all of these areas, to select the ones which will create the biggest bang for their buck. This is where the temptation to stick to tried and trusted solutions should be kept in check to allow creativity and open mindedness to play their part alongside experience.
3. Which are the risks that my product or service are likely to face ?
The important thing here is to put yourself in the shoes of the customer or the user and to project yourself into the operational phase, to identify the risks that are likely to affect the user experience and the delivery or availability of your product or service. A word of caution: good risk identification is more subtle than it looks. It is necessary to identify the cause to the risk, the risk event through which it manifests itself and its consequences, in order to define the best strategy to manage it.
Once the answers to these 3 questions have been found, the foundation for the definition of a competitive concept is in place.
But to get there, it is necessary to understand how the control variables along the axes linking these building blocks work.
Between « value » and « options » the control variable is cost. Options have to be ranked in terms of their « price/quality » ratio, so to speak, by asking the question as to which options the customer or end-user would be most ready to pay for, because they enhance its experience of the product or service.
Then along the axis linking « options » and « risks », the control variable is functionality. In this case, the options are ranked by a « function/risk » ratio. The idea is to compare the impact on risks of adding specific option in the product or service vs. the user experience, but also to evaluate their impact on production risks.
Finally, along the axis linking « risks » and « value », the control variable is quality. Indeed, in some cases, the presence of certain options can be so critical for value creation, despite the risk they entail that the only way to manage them is to play on the quality of the components.
The options under consideration have to be compared from the point of view of the impact of risk realisation on the value perception from a user perspective.
The above groundwork is essential for reaching the optimal balance leading to competitiveness. It can only be reached by considering all 3 elements together, because they are linked and influence each other sometimes in opposite directions. Trade-offs will be required, compromises will be needed and some options will be rejected on these grounds to get to the optimal selection both from a customer and from a business perspective.
The advantage of this approach is threefold : it is customer-centric, it identifies the scope, boundaries and possible options and objectivises the choices leading to a competitive product or service and its efficient execution.
If you are interested in knowing more about this approach or the pragmatic application of Lean, Agile or Scrum principles in your business context, check out our website or get in touch : [email protected]