In a current study (as of 2020) by the IUBH International University of Applied Sciences 247 managers from SMEs were surveyed on agility. Over 75 % of the SMEs surveyed stated that they were already pursuing an agile strategy. 11 % even described the importance of agility as dominant in their overall corporate strategy. In his article, TCI partner Bernd Ettelbrück looks at how SMEs can benefit from agile principles in their business strategy and project management.

Characteristics of agile organizational methods

Agile organizational methods are characterized by

• greater influence of the customer on company activities
• Distributed decision-making authority based on skills and inner drive rather than hierarchy
• autonomous teams in self-organized processes instead of tight structures.

Successful medium-sized organizations have been working this way for a long time and have been agile for a long time, but did not call it that. If you change the management method, there are effects that need to be considered in advance.

Quality, low costs and a focus on core competencies are no longer enough today. Speed and the ability to adapt to changing market conditions are at least as important for success. Trust in employees, an understanding of mistakes and a willingness to learn together are more important than the agile methods themselves.

Agile methods: Origin and objective

Companies increasingly have to meet targets that change. This action in the VUKA WorldThe increasing complexity and ambiguity of the global economy, an environment characterized by change, uncertainty and ambiguity, has an impact on entrepreneurial activity. Customers and companies expect more flexibility and a faster response to changes in requirements and market developments. Although agility and flexibility are often used synonymously, they have different meanings: While flexibility refers to reactive adaptability, agility emphasizes active action.

Agility - a concept from software development

In 2001, 17 software programmers around Kent Bent met for a skiing vacation in Colorado. In joint discussions, they developed the "Manifesto for Agile Software Development", which is based on four values:

• In software development, the focus should be more on the individuals and their interactions and less on the processes and tools.
• Functioning software is more important than its documentation.
• Working together with the customer is more important than negotiating contracts.
• Reacting to changing requirements is more important than fulfilling a plan.

Agile methods in the SME sector

The management of medium-sized companies that want to work agilely should stand by these values. A total of twelve principles were derived from this, including, for example

• The early and continuous delivery of the software to the customer has the highest priority.
• Changes to requirements during implementation are welcome in order to satisfy the customer.
• Partial deliveries should always form a functioning unit.
• Close cooperation and regular exchange between developers and employees in the specialist departments.
• Teams should work autonomously and independently.

These tools and techniques are summarized in processes and task descriptions, i.e. roles, and form the agile methods. Surveys show that the use of agile methods in project management scores significantly better than traditional methods in the categories of quality of results, time to market and customer satisfaction.

Advantages of agile methods compared to classic project management

During the research for this article, 35 agile methods were identified. Agile methods support day-to-day work (14), leadership (2), project management (4), product management (7), innovation (6) and company organization (2). There is therefore no such thing as "the" agile method, but rather procedures that support the respective work.

What they all have in common are the agile values, principles and the goal of becoming more flexible and faster. The company potentially becomes more flexible and faster because decisions are made by the team and complex control mechanisms are eliminated.

Lower risk

Another aspect is the lower risk of agile working in projects. In the so-called waterfall method, building blocks are developed in all sub-projects or work packages, which are only put together at the end to form a solution. Project duration and budget consumption progress and the overall solution only becomes clear shortly before the end. The agile approach is different, where a functional, so-called minimal viable product (MVP) is defined and then implemented with part of the budget in a short period of time. This makes it clear at an early stage and with a low budget consumption whether the customer's wishes or the development goal are achievable and realistic.

Agile action is not a "question of conviction", but a business calculation. Can a certain corporate goal be better achieved with agile methods or not? Agility costs money. Processes, task descriptions (roles), managers and employees need to be trained. The project takes longer because the work is initially methodical and not content-related. Agile working is initially more effective in the best case, as it better aligns resources. The efficiency must then be reflected in the scaling of the deployment through cost savings - either through shorter project durations or lower management and control costs.

Making a project agile and not changing anything else therefore does not add any value.

Decision criteria for the use of agile methods in SMEs

If the following criteria are met, a medium-sized company should intensively engage with agile methods:

• The "Stacey Matrix" is a coordinate system that classifies projects according to the probability with which the requirements for the solution can be described and the probability with which the solution path is known. This results in a space that is described from simple to complicated, complex to chaotic. Projects can then be processed using either classic or agile methods.

• The Company should be service-oriented. This means that the products should be supplemented by services, or the company is a service company that only offers services.
• Experience in the Software development. If a company already has experience in agile software development in this area, these findings can be applied more easily in other business units.
• If the creation of the customer service requires Intensive cooperation with partners and suppliers necessary agile processes are recommended, as they tend to facilitate collaboration and enable faster delivery of the overall service.

Success stories

The media mostly report on success stories from large companies such as Daimler (automotive), Robert Bosch (electronics) or AXA (financial services). These companies launched a major training offensive and subsequently achieved shorter lead times and lower management costs in numerous projects.

However, the trend towards agile methods is sweeping across the entire corporate landscape. Start-ups include N26 (financial services), Blinkist (learning), Yello Strom (energy) and moovel (mobility). Service-oriented, dynamic companies that focus on customer requirements include Trivago (tourism), Mymuesli (food) and Zalando (fashion). In addition to private-sector companies, church organizations such as individual dioceses of the Catholic Church, the Essen Economic Development Agency and, for many years now, the US Navy have also been changing management structures and processes.

Outstanding SMEs include the PTV Group (software development), Takkt AG (delivery) and Trumpf (manufacturing, engineering). Viessmann shows how successful transformation can work with the use of agile methods: the transformation started in 2015 at the suggestion of the senior boss. The market had changed through networking. Heating systems were integrated into an ecosystem: Start-ups with new ideas emerged, aggregators integrated heating systems, energy companies and service providers, new competitors such as RWE and also telecommunications companies entered the market. The service sector became increasingly important.

With the use of sensors in heating systems and in heated rooms and buildings, the heating system became a system connected to others. Just as heating systems became networked, Viessmann also had to become networked in order to remain competitive and created its own company in Berlin.

The central task for the company was to gain the commitment of its employees. After all, the switch to agile methods in the digital transformation is always also a change or cultural issue: the intrinsic motivation of employees needs to be awakened, they need to be motivated and encouraged to develop new ideas. Even gentle pressure from outside and requests to work together as a team have a counterproductive effect and generate reactance.

Not every issue is suitable for agile methods

However, this should not give the impression that agility is a panacea. After all, everyone wants to be fast and flexible, which is why "agile" is the method of choice. Often one or two techniques are used, such as time boxing or a stand-up meeting, and you are - supposedly - agile. Even if otherwise the boss sets and controls the direction.

Company with clear guidelines

Many companies have very clear specifications, for example automotive suppliers. These companies develop on platforms and usually have several development sites, for example in the U.S., Europe and Asia. The solution path and customer requirements are clearly defined here (Stacey matrix). Agile methods are not very suitable for working successfully in these areas.

Large companies: Agility promotes information flow

Many people work in large companies. Thinking in silos is widespread and often "the wheel is invented several times". Agile processes are generally suitable for this type of company, as involving more people and having interdisciplinary teams promotes the flow of information and tends to improve solutions.

Agile methods in the SME sector

In medium-sized companies, well-established teams of experts usually work on solutions and the availability of employees is limited. The same approach as in large companies would slow these companies down. Tasks would remain unfinished and the experts would first have to instruct the other colleagues in the team to enable a discussion on an equal footing.

Agility is not a grassroots approach

Agility is also not a grassroots approach. Agility requires commitment, support and encouragement from management. The willingness to learn from mistakes and continuously improve while working together is important. The company must also be large enough to earn back the investment later by scaling performance. When deciding to work agile, it is advisable to start in selected areas such as IT, the R&D department or product management.

Recommendations and conclusion

Agile processes offer the opportunity to mobilize your own organization and align it better with the market and customers.

However, a business objective must first be formulated and the above criteria must be observed. Agility is not an end in itself, but a methodical approach that achieves goals more cost-effectively and better in the long term.

Agility is above all a cultural issue. The most important prerequisite: management must encourage employees to act entrepreneurially, to discover and live out their intrinsic motivation. Medium-sized managers in particular should master ambidexterity and combine the advantages of the classic approach with agile methods in a hybrid approach. This is the best starting point for embarking on the journey towards an agile corporate culture and adopting suitable structures, processes and an employee-centered understanding of leadership.

Literature

Agile Manifesto, (2001), www.agilemanifesto.org

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Schulke, Arne; Jütte, Silke (2020), Can German SMEs be "agile"? Whitepaper on the research project of the International University of Applied Sciences, IUBH, Campus Studies, Bad Honnef, Bonn

Ternès, Anabel; Schieke, Sebastian (2018), Megatrend digitization: Where do German SMEs currently stand? ; page 5-18; Mittelstand 4.0; How medium-sized companies don't miss the boat when it comes to digitization; Springer Verlag, Wiesbaden 2018

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