The Digitalization megatrend ensures that the speed of innovation increases. Companies that want to grow must be able to adapt their structures quickly in order to remain competitive. Agile working methods help with all of these challenges. In this article by Bernd Ettelbrück, you can find out how companies are implementing them in practice and how the new working methods are being established in SMEs and large companies using practical examples.

Note from the TCI editorial team: Read also part 1 Agile methods in SMEs - basics, challenges and recommendations for action and part 2 Best practice and learning from mistakes: putting agility into practice

Always the same or always new? Agile vs. classic project management

Agility can only be achieved through many different impulses, e.g. through training, through visits to best practice companies that use such processes, through the willingness of management to adapt and rethink development processes. This is also a change: traditionally, the management sets a strong impulse, which it supports and pursues with various measures. Doing the same thing consistently and sustainably over and over again means success. This is different with agile working: here, new, different impulses are constantly being set, the company system is "disrupted" in many ways in order to initiate change.

From manual work to mental work

A fundamental change in our working world favors the use of agile methods: The shift in value creation from manual to mental work. Individual skills and good collaboration within the company's "network" are becoming more important.

How do companies become agile? Take small steps

However, the exact organization in the company remains a field of tension. There is no silver bullet or best recommendation. It should always start with pilot projects and then continue working in the direct environment in the form of an onion-skin model. For example, a development team starts, then the company involves the IT department and later a service team that provides additional services. An alternative could be to proceed according to agile maturity levels. The team that has already gained experience with agile methods or has a particular affinity for them, e.g. the IT application development team, begins the process.

Agile working methods: Triggers for the introduction

There are essentially three triggers for the introduction of agile working methods in companies.

1. rapid growth

Companies grow. First there are small parts, they are organized, they are put together, they continue to grow and ultimately a compromise is created rather than a skyscraper. To avoid blocking themselves or tying up valuable resources in overheads, such companies rely on independent teams and more autonomy.

2. intense competition

A changed competitive situation, new players on the market, more closely networked supply chains, more demanding customers and growing price pressure are all reasons to increase efficiency, shorten delivery times and speed up processes.

3. management and leadership

People shape processes, groups make decisions, employees talk to customers. They should be empowered to react more quickly without having to hold lengthy consultations in hierarchical structures. This speeds up decision-making and promotes autonomous working. Agile working in the company is an operational necessity and a personnel development measure in one. Agility is characterized by the mindset, not the choice of methods. Three elements make agile teams successful: Transparency, trust and iterative leadership. This means that there is usually parallel leadership: the team coach alongside the leadership team.

Agility and digital transformation are closely linked

The following practical examples show how companies have successfully adapted to changing conditions by introducing agile methods.

Viessmann: Agile working methods in response to increasing networking

Viessmann started the transformation in 2015 at the suggestion of the senior partner. The market was changing 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 telecommunications companies entered the market. The service sector became increasingly important and, with the use of sensors and machine-to-machine (m2m) communication in heated rooms and buildings, the heating system became a system in a network with others. Just as heating systems became networked, Viessmann had to network in order to remain competitive and created its own company in Berlin. A key success factor was employee communication to ensure that they supported the transformation. Agile methods are always associated with cultural change, which can only be achieved with intrinsic motivation from employees.

moovel: More self-organization and innovation through agile working methods

At moovel, informal networks are the engine for self-organization and innovation, as Thorsten Heilig, Head of People & Organization at moovel, puts it. moovel is the mobility subsidiary of Daimler - and a cooperation partner of BMW. Mobility is a very dynamic market under strong international competitive pressure. In this environment, moovel wants to assert itself, react quickly, grow strongly and be successful together with a new partner without losing its own culture.

In order to improve product and user centricity, moovel works with a squad logic, as Spotify has also implemented (more on this in part 2 of this series Best practice and learning from mistakes: putting agility into practice). However, this is almost only possible in large companies, as the personnel costs are high when several teams work in parallel. For SMEs, focus is crucial - otherwise overall performance suffers.

Mobility services are a bundle of products that are made available to users via a platform or an app. The challenges: Interfaces, integration of applications, precise tailoring to user requirements. For example, several means of transportation must be integrated in order to implement a transport request from location A to location B with one or very few clicks. In international competition with other manufacturers and numerous start-ups, speed counts. This high speed is made possible by parallel agile teams that only need to coordinate on individual points. The result: shorter lead times and more products per quarter with the same amount of resources.

One lesson is that every product needs an individual organization. For example, there are feature-based products that focus on individual performance characteristics or "mini-products", i.e. small supplementary services or additions to existing products. The other pole is formed by comprehensive products and complete mobility solutions that require end-to-end responsibility from the team in order to achieve the (self-)set goals. It is advisable to try out which agile approach or method is suitable for this, as changes in processes and the organization are iterative.

Zalando: Growth through agility

Zalando is an example of successfully overcoming growing pains. In the beginning, the company was a small online retailer that worked in a team structure from the outset - the number of which grew steadily. For online retailers, IT structures along the value chain are essential. Many other teams were equally affected by changes. This led to rigid processes. However, strict guidelines prevent experimentation, change and innovation.

The first step was to change the team structure from several functional teams to one team that combines all skills, i.e. development, product, design and quality. The team size should be between five and a maximum of 12 people. Larger teams were split. Overarching, specialist skills were further developed in 18-month training sessions.

The Zalando teams manage themselves according to the principles of Purpose, Autonomy and Mastery. They set their own goals, work autonomously and review their work progress. Each team has end-to-end responsibility, also due to the team composition. This triad is important, especially the linking of team autonomy and end-to-end responsibility for a result, a process, an application or a product. Because autonomy without responsibility is called a vacation.

Zalando measures the following positive results:

• More releases
• Higher frequency of projects
• Increased customer satisfaction
• Higher employee satisfaction

Work is carried out according to the motto "fail fast, fail forward". The teams work in parallel and minimize their "alignment points", i.e. coordination meetings. Iterative cycles of teamwork, alignment with targets and coordination between the teams create rituals that provide security, lead to efficiency and help to standardize processes. In the next step, they can perhaps be automated. This is the efficiency advantage of implementing agile methods in the company - not the method itself.

The two key success criteria of the Zalando teams are: dedicated responsibility for the entire task and that each team combines all the skills required to solve the task. The challenge is to adapt decisions to the problem and to formulate the challenges in such a way that a suitable team task can be derived from them.

Topics are worked on in many teams and the relative progress of the work is assessed. This contributes to teams helping each other to complete a task. This is the result of scarce resources, as is the case in every company. To better allocate resources, a transparent prioritization rule was developed:

1. What is good for the customer?
2. What is important for the company?
3. What helps on the regional market?

The principle of teamwork is specialization - "rather deeper than broader". Scarce resources encourage this approach. As a general rule, a narrow scope is a sign of success.

TAKKT 4.0: Agile working methods to master the digital transformation

The TAKKT Group produces and sells business equipment and special equipment to corporate customers worldwide. The company has 16 brands, around 300,000 products, three million customers and a turnover of over one billion euros at 70 locations. Takkt operates two business models:

1. The Omnichannel commerce serves defined, large customers via multiple channels and a targeted approach and sells customized products, such as specially manufactured pallet trucks for car manufacturers.
2. In the Web-Focused Commerce offers a wide range of products. There is less advice here and sales are mainly made via the Internet. The customer advantage is the ease of procurement at attractive prices.

The company has been realigned with the TAKKT 4.0 initiative. The goals are growth, sustainability and the consistent use of digital technologies. This follows the realization that buying behavior and the working environment in companies are changing rapidly. The company sees both business models as particularly suitable for benefiting from these developments and achieving sustainable organic growth.

For TAKKT, there are three central key activities for a successful digital transformation: the digitalization of the entire value chain, the introduction of more agile corporate structures and the development of innovative business models. The 2020 vision included the following goals:

• The e-commerce business is to be doubled in five years. This is to be achieved with outstanding customer experiences on the web.
• The organization will undergo lasting change, existing successful business models will be digitized and aligned with the requirements of their customers.
• In the medium term, the implementation of the Digital Agenda should increase organic sales growth.

The measures of the Digital Agenda are structured along six fields of action:

• Strategy & Innovation: Innovative methods are used to develop new solutions and offers for customers.
• Customer Journey: Business activities are aligned with the decision-making and purchasing behavior of defined customers.
• Organization & Culture: The corporate culture should change and promote more agile and flexible working in cross-divisional teams.
• Data & analytics: Increased use of data analysis with the aim of better understanding purchasing decision processes and developing customized solutions for customers.
• Technology: Modernization of existing and introduction of new technologies as a prerequisite for achieving the goals associated with the digital transformation.
• Process automation: Standardization is followed by the automation of manual activities. This speeds up processes and increases customer satisfaction as a result.

In the area of organization and culture, the TAKKT companies are increasingly using agile working methods such as design thinking and scrum. The aim was to initiate a sustainable change in management culture towards agile working and to transfer creative freedom and responsibility to individual teams. To this end, over sixty international managers were given a week's training in "Leadership in the Digital Age". The training was supplemented by workshops and company visits. In addition, the premises at several locations were redesigned to encourage creativity and facilitate collaboration. The company also hired numerous new employees with strong digital expertise in online marketing and webshop development.

These measures are intended to create a test & learn culture and promote the company's digital transformation.

The TAKKT example is a good example of how a Blueprint for a digital transformation of a larger medium-sized company with several locations.

In contrast to the other two examples, Zalando and moovel, the topic of agility at TAKKT is not a guiding principle in the company, but rather a cultural measure that accompanies measures and projects. The need for change in the organization is therefore not as great, making it difficult, if not impossible, to measure attributable added value through agility in the company.

So what are the benefits of agile working methods in companies and how can success be measured? Part 4 of the series "Agility in the company" deals with this question.

Source cover image: Image: © fizkes | Adobe Stock