How Does Innovation Blend With Agile Product Development?
Innovation can be thought of as a standalone organizational entity or as a fully embedded process in the product development function. The latter raises various interesting questions, such as: How should product innovation be orchestrated after launching the MVP in the market? How can product innovation continue as part of the ongoing product development — through the fast iterations of the agile approach? What kind of innovation processes, methods, and tools do modern companies apply when building a digital product?
Isaac Sacolick, Rosemarie Diegnan, Fabrizio Ferrandina, Adi Mazor Kario, and Johanna Rothman share their valuable insights.
Excerpt from 60 Leaders on Innovation (2021)
Isaac Sacolick
President • CIO • Digital Transformation • Founder • Author — StarCIO
Let’s simplify the industry jargon on ideation, innovation, product management, product development, design thinking, minimal viable products, and agile product development. Most organizations look to conceive new ideas from a broad range of people across the enterprise. They want to select the best concepts, invest in them, bring them to market, and continue innovating to grow revenue and improve customer experiences.
Agile product development processes provide a framework for sustainable innovation. - Isaac Sacolick
The typical challenges are about defining a process for selecting the best ideas, establishing how minimally viable products get defined, leveraging customer feedback to improve the offering, and choosing which KPIs help guide the innovation process. My recipe for addressing these challenges starts in the center of where ideas turn to plans and realities. Agile product development is the central planning and delivery process. Sustainable innovation, ideation, and product management practices depend on a collaborative, flexible, and consistent agile planning and delivery process.
Agile product development processes provide a framework for sustainable innovation. Central to the process is enabling multi-disciplinary teams to plan and deliver product improvements to customers in incremental releases and reviewable enhancements in sprints. There are three aspects of the process that are central to successful product development:
- A product owner who defines customers, personas, and value propositions and is responsible for prioritizing a backlog of capabilities and improvements.
- Teams that understand customer values, align on business goals, define acceptance criteria, recommend solutions, and commit to completing plans and implementations every sprint.
- A feedback process that shares customers’ voices, customer satisfaction scores, usage metrics, operational factors, and financial impacts to the product owners and teams so they can reconsider priorities and plans.
Inside and surrounding the agile product development process are innovation processes for understanding market needs, customer values, user experience considerations, regulations, business model factors, and competitive dynamics. These practices fit neatly into agile methodologies:
- Innovation processes such as commissioning market research, organizing brainstorming sessions, adopting design thinking practices, and conducting focus groups all help teams formulate product strategy, design, and requirements. These are the inputs to epics, features, and user stories teams plan and deliver in sprints and releases.
- Practices such as A/B testing, feature flagging, inline polls, and capturing usage data are all best innovation practices that teams engineer in the delivery process.
- Lastly, innovation also plays a role in interpreting customer feedback by recognizing which signals are most important to pay attention to and how best to implement product adjustments.
There are many tools to consider when maturing innovation and agile practices. Teams need a collaboration tool like Jira Software or Monday.com for managing their backlogs, requirements, and sprints. Larger organizations can manage the product development and ideation process with tools like Jira Align and Aha! There are many different tools for designing user experiences, testing features, and capturing user feedback.
So if agile product development is at the center and innovation practices focus on optimizing customer experiences, how should organizations figure out what ideas to pursue? In Driving Digital[1], I address this question by starting with a very lightweight, one-page vision statement to articulate customer definition, value proposition, and strategic alignment. Suppose there’s a team ready to pursue the idea and have drafted their vision statement. In that case, their objective is to develop a product plan by articulating several starting questions that qualify the offering and quantify the benefits. Commissioned teams then use agile sprints to perform research, brainstorming, experimenting, testing, and other innovation activities to answer their questions and ask new ones. They go through one release of this planning and then report back their recommendations on whether to pivot or kill the idea. The better ideas may require further planning, or the team may move to justify investment for a PoC, pilot, or MVP.
In a steady state, the product already has an MVP or pilot in front of customers. In these cases, the product owner fills the backlog and sprints with a mix of innovation, planning, and delivery activities. The magic of delighting customers and growing business happens with a blending of these activities so that teams are consistently delivering new capabilities and improving user experiences for their customers. That’s agile innovation!
Isaac Sacolick (@NYIke) is StarCIO’s President and guides business leaders on succeeding with data and technology while executing smarter, faster, safer, and more innovative transformation programs. He authored the Amazon bestseller, Driving Digital: The Leader’s Guide to Biz Transformation Through Technology, has over 700 articles published, and keynotes on digital transformation topics.
Rosemarie Diegnan
Chief Strategy & Product Officer — Wazoku
Using agile product development methodologies to drive your innovation processes will allow you to innovate faster, more efficiently, and more effectively. Agile product development is not a universal process, but rather a mindset that encourages cross-functional teams to develop products iteratively and collaboratively — rather than waiting to deliver a final ‘finished’ product.
Agile product development was born out of the inefficient practices of traditional software development, where consecutive, disconnected activities led to products that often failed to live up to expectations or meet the end customer’s needs. Moving to more agile methods — where development is broken into small, iterative parts — allows everyone to work collaboratively and quickly adjust if, and more likely when, initial expectations do not meet the specific needs of the end-user. As early iterations are developed, everyone is able to provide feedback and suggest changes and enhancements leading to faster delivery and better end results. Innovation processes — whether related to the development of digital products or other services — benefit when agile principles and methodologies are applied.
Agile product development is not a universal process, but rather a mindset. - Rosemarie Diegnan
To do so successfully, you must use similar tools and processes to manage what activities will be pursued and in what order. I recommend the following agile methodology:
- Start with an open and transparent platform that clearly articulates the problem you seeking to solve. In response to this problem statement, you allow all of your stakeholders — both internal and external — to contribute ideas about how to solve the defined problem.
- Identify and clearly articulate the evaluation criteria to be used to both prioritise and select the ideas you will pursue initially and in later iterations. This is a very important step because often the decision to not do something is more important and beneficial than the decision to do something.
- Articulate a well-defined minimal viable product (MVP) that solves one specific problem independently and successfully. If you define your MVP to do too much, everything will be done incompletely or with unnecessary compromise, rather than focusing on building the one thing that shows the capability to come over time.
- Adopt a project management methodology based on short cycles (usually 2–4 weeks), each producing a working prototype. By limiting an iteration to something that can be independently tested, you provide yourself with the ability to gather stakeholder feedback quickly and timely — with direct and immediate effect on your next iteration.
- Engage and nurture a consistent group of stakeholders that are incentivised to test and provide honest, impartial feedback. To have the greatest impact on the success of your innovation, engage both internal and external stakeholders as early and frequently as possible. The time spent in these early feedback loops will lead to your eventual success.
- Approach each iteration with a willingness to stop the project if the feedback suggests the innovation is not on target to solve the defined problem and generate value. This can be the hardest step because we become invested in our projects over time, but if you are focused on true innovation and the development of value, you will embrace this step and learn the lessons, so the next innovation project can result in real value.
- Define a clear process for managing the backlog of enhancements and changes to apply only after the initial MVP. Don’t start adding ideas or enhancements from this backlog before you have launched your MVP, as it will only encourage scope creep (remember the well-defined MVP?). You can and should capture the backlog of ideas (using the same platform you used to define your problem) throughout your early iterations, but need to resist the pressure to increase the scope of your MVP, which will only result in delays.
Most importantly — remember that once the MVP is launched, each future iteration should follow the same steps with the only difference being it is applied to an existing offering. With each new enhancement, you must continue to ask what specific problem is being addressed and will the suggested change bring value to your customers and your organisation.
Rosemarie Diegnan is an experienced product leader having led product teams across a number of internet businesses in the USA and UK. Rosemarie joined Wazoku in 2012 and has led the design and delivery of its market-leading innovation suite including an Enterprise Innovation Platform, Idea Management Software and Open Innovation Marketplace.
Fabrizio Ferrandina
CEO — Zühlke Group
Innovation thrives when collaboration is fostered by encouraging agile practices, when teams feel free to bring up out-of-the-box ideas, and when user feedback is used effectively. Agile practices match well with the Build-Measure-Learn[2] innovation processes that test ideas early with customers. Customer feedback then directs the product backlog, out of which the product is delivered in small working increments. Such continuous feedback cycles allow products to evolve efficiently, whereby the ‘ideas repository’ continuously feeds into the product backlog. Ideas can be prioritized using strategically aligned OKRs[3]. Alternatively, tools like solution opportunity trees or ideation workshops are used to design experiments that are then fed into the product backlog for development.
Feedback from early adopters may trigger decisions regarding the evolution of the MVP. - Fabrizio Ferrandina
When building digital products, we rely on the following four pillars for successful innovation:
- We use the process of Build-Measure-Learn to develop minimal viable products (MVPs) for testing with customers. The focus is on doing the minimal amount of work to validate/prove that the product is viable before launching it, then working to iterate, deploy, and scale based on evidence.
- We employ Design Thinking[4] to ensure that we are designing and building products that are ‘fit for purpose’. It’s imperative that we speak to actual customers for this and don’t try to second-guess based on what we ‘think’ we know.
- With continuous discovery, we run cross-functional discovery teams (including representatives of user research, design, analysis, and technology) that continuously explore and refine upcoming features from the ideas backlog. This ensures that the development backlog always represents the latest product thinking based on feedback from real customers and lean experiments.
- Strategyzer’s methodology on product portfolio management is currently the best resource on the market for how to manage a portfolio of products at various stages of their lifecycle. It lays out the differences between managing products in the innovation or start-up stage versus later development stages.
After launching the MVP, feedback and data from early adopters is gathered and may trigger decisions regarding the evolution of the MVP. ‘What works for the customer and what does not?’ is the central question. At this stage, we employ user research to understand if the product meets the customer’s needs and how it should evolve. Real-time data capture and analytics can be embedded within the products and their supporting platforms. This data provides authentic feedback as the product begins to scale beyond the early adopters. Continuous discovery in this context means that once we have gathered feedback, we continuously revisit and revise our product backlog, using the design thinking approach to define and prioritize features yet to be developed.
However, successful innovation requires more than methodological fitness. Company culture and the management approach is much of what provides the right platform for fostering innovation within an organization. Buy-in across the organization, ample resources, and a certain tolerance for failures enable ongoing experimentation.
Fabrizio Ferrandina is Group CEO of Zühlke, a global innovation service provider. His career has been dedicated to driving software and system projects for clients all over the world. Until 2018 Fabrizio Ferrandina was CEO of the German subsidiary and member of the Zühlke Group Executive Board.
Adi Mazor Kario
Product Innovation and Value Creation expert — Invincible Innovation
The Agile methodology was born for software development — it evolved as an approach for managing a (software) project by breaking it up into several pieces — thus achieving flexibility to build smaller units as needed and move the overall execution/ development process faster. The main advantage of the Agile methodology is that it helps companies deliver results much faster.
Agile helps companies to deliver results much faster. - Adi Mazor Kario
Moreover, the Agile process allows frequent and effective collaboration both within the development team and with the broader group of stakeholders — and this is vital for the success of the project. In contrary to lengthy, expensive, and risky projects, the ‘agile way’ provides the means to get feedback fast and adapt accordingly — it enables a continuous improvement process throughout the development of the product.
Many companies make significant efforts to adopt “Agile” working patterns as this would enable them to become more open to the outside world, more flexible, and faster — by constantly and continuously creating new products and services. However, “Agile” does not mean magic for every company and every project: if you don’t know precisely the why and what, Agile will not be enough. It is only after you know why you are innovating and what you want to build, that Agile helps teams execute better, with fewer risks.
The “Lean startup” method helps companies make better decisions and move through the product lifecycle faster, “Just like a startup”. This is crucial for companies that need to go from an idea to market faster and to effectively compete with startups in their industry. More specifically, the Lean method allows companies to: [a] Understand what has changed in the outside world in terms of users and their needs [b] Conceive ideas as solutions that might serve these needs [c] Build tangible “beta” solutions or Minimum Viable Products — MVPs [d] Test related assumptions and de-risk the product [e] Make decisions: grow, kill or pivot.
The ‘agile way’ provides the means to get feedback fast and adapt accordingly. - Adi Mazor Kario
However, leaders have to consider that the biggest downside of the “Lean startup” is that it was created for startups, without taking into account the strengths and assets of established companies. These assets should be incorporated into the lean approach in order to help the new ventures to grow and succeed.
Both “Agile” and “Lean” are effective in helping companies to get from an idea to the MVP or beta stage. However, being “Agile” and “Lean” is not enough — as these methods don’t provide the tools to grow a venture into a substantial company. Once a startup has launched the MVP and starts to see results in terms of customer traction, they would invest more energy in boosting their marketing and sales efforts and in securing funding that would allow them to grow.
The same processes are also relevant and required for a corporate startup venture — but surprisingly enough, this is sometimes more complex within a corporation than it is in a startup. The “merging” of a new venture and the core business requires a change in strategy, efforts, resources, and internal dynamics and, as a result, in many cases, such ventures fail to grow. Corporate leaders should be aware that the investment for creating new business ventures should carefully consider the required resources and growth strategies, upfront.
Adi Mazor Kario is known for her ability to take creative business ideas and turn them into massive revenue. Adi has worked with IBM, Intel, Google, and Waze — along with hundreds of startups in Israel, the “Startup Nation,” and played a crucial role in the Google Accelerator.
Johanna Rothman
Consultant, speaker, writer — Rothman Consulting Group, Inc.
Many people think that agile approaches allow for faster delivery. That might be true. However, the real power of the agile approach is the fast(er) feedback. As the team creates a possible product or solution, the team and the Product Owner (PO) offer each other fast feedback. Then, once the team agrees that a particular set of features will solve the problem, the PO (and with any luck) the team can receive direct feedback from the customer.
Short feedback loops help the entire organization to decide what to do next. - Johanna Rothman
The product team uses the customer feedback to refine the features and also to decide on the next direction for the product backlog. The more frequently the PO and product team can address and progress the product backlog, the more feedback the team can offer to people who decide about the project portfolio.
However, having efficient feedback loops is only one of the pieces for an environment of innovation: we also need experimentation. The faster the feedback loop, the easier it is for any team to experiment. The product team may experiment with prototypes, or with minimum viable products in order to gauge customer reactions and measure engagement.
I happen to like experiments that disprove my hypothesis. Here’s a hypothesis I use a lot. We think we will attract some percentage of possible customers with a new offering, such as 10% of the total clicks. The experiment consists of creating a landing page and asking for an email signup or some other equally easy task. We receive 1000 visitors to that page. We receive 9 clicks. That’s less than the 10% we expected which is strong evidence to disprove that particular hypothesis. However, since we didn’t spend a lot of time or energy on this experiment, the team can continue experimenting with other potential offerings — different ideas attempting to solve the customer’s problem.
The more a product team experiments, the more focused and valuable their backlog can be. The product people might create a long backlog of ideas or experiments, but the actual product backlog can be much shorter. This allows the project portfolio team to create and run experiments with projects. Too often though, the project portfolio team has a long, long list of projects and too few teams to run them. Fast experimentation and validation helps the project portfolio team to better prioritize the portfolio, set the focus and assign the most promising projects to teams for execution. The more often the managers ‘optimize’ the project portfolio, the more likely the organization is to find a possibly transformative product.
With short feedback loops and experimentation at any level, the organization can create its own innovation, in terms of both process and product.
Johanna Rothman, known as the “Pragmatic Manager,” offers frank advice for your tough problems. She helps leaders and teams do reasonable things that work. See her 18 books, blog, and other resources at jrothman.com and createadaptablelife.com
[1] Driving Digital: The Leader’s Guide to Business Transformation Through Technology
Excerpt from 60 Leaders on Innovation (2021) — the book that brings together unique insights and ‘practical wisdom’ on corporate innovation. Created and distributed on principles of open collaboration and knowledge sharing: Created by many, offered to all; at no cost.
