Designing Digital Retail (Part 3): Growing Digital Capabilities and Culture
This is the third in a series of articles that explore how traditional retailers can move through the challenges of digital transformation. You can see all the articles in this series here.
The next post will discuss the opportunities and challenges of orchestrating digital product development at scale.
Digital transformation in retail involves making the journey from siloed multichannel businesses to cross-channel and omnichannel retailers who can deliver compelling customer experience. In order to make this journey, retailers need to develop digital capabilities. This involves building a culture and operations of digital product development. The end goal is to create a coherent technology infrastructure that delivers efficient operations and seamless, compelling customer experiences.
The sheer complexity of bringing technology and data to the core of the business requires a sophisticated organisational orchestration. Many retailers will undertake acquisitions to bring this capability in-house, or will enter into partnerships to begin to develop these capabilities. However, this is a short-term solution. In the long-run, these capabilities should be developed as a core capability of the organisation, to enable it to compete with digital-native organisations such as Amazon and Ocado.
The sheer complexity of bringing technology and data to the core of the business requires a sophisticated organisational orchestration.
Moving from projects to products
An important transformation journey currently being made by many retailers is the transition from a ‘projects’ software development approach to a ‘product’ approach to software (Baird, 2018). If a retailer is to fully committed to their digital channels, it must do more than carry out occasional, short-term software projects in siloed parts of the organisation. It must instead commit to long-term product management. Numerous books have outlined successful approaches to digital product management. These include Strategize: Product Strategy and Product Roadmap Practices for the Digital Age (Pilcher (2016), Inspired: How to Create Tech Products Customers Love (Cagan, 2018) and Building Products for the Enterprise:Product Management in Enterprise Software (Reeves & Gaines, (2018). The following table describes the difference between a product and project approach to software.
The dominant method for Product approaches to software development is Agile (Pilcher, 2010). Agile approaches have many benefits, including improving the quality of software, increasing the speed to market, increasing the success rate of software and increasing the productivity of software teams (Kumar & Bhatia, 2012; Rigby et al., 2016). Agile is often contrasted with Waterfall approaches to software development which plans a project in advance, is inflexible, linear and non-iterative. By contrast, Agile approaches allow flexibility and ongoing adjustments and are ‘outcomes-focussed’ rather than ‘features-focussed’.
There are many examples of best practices in software engineering shared on the open market by numerous authors and organisations, including Agile Scrum, Lean Software Development and Kanban. While there are many different approaches to software development and management, each organisation must find the model that works best for them, for their culture, and that enables them to find the right balance of team autonomy and top-down control.
One of the most popular models is the Spotify Squads Model (Kniberg & Ivarsso, 2012). This recommends a matrix style organisation consisting of squads (or scrums) working on a product or an area of a product (see Fig 2). Each squad is a multidisciplinary team with a Product Owner, Product Designer and Software Engineers. Each discipline or role reports back to their ‘chapter’, or discipline team (i.e. the organisations engineering team, or design team). There is also a concept of a Guild, which is a looser multidisciplinary community that comes together more occasionally to explore a shared area of interest. Finally, groups of squads make up a tribe, which is overseen by a tribe leader, or Lead Product Owner whose responsibility is to oversee a larger division of the organisation which their squads are contributing to.
Perhaps the most important role in all this in the Product Manager or Owner, who takes a kind of ‘CEO’ role of a product, and holds the responsibility of interacting with all stakeholders, understanding the business needs and working with designers, architects and developers to convert business requirements into a software product.
Developing Culture and Capabilities
Alongside developing digital product teams, organisations must also develop the specific capabilities required to achieve successful product development — in the langauge of the Spotify model, they must build their chapters, which includes the developers, designers, researchers, testers and architects. For instance, each product designer must be able to return to their chapter to spend time with other designers, gathering and sharing inspiration and ideas. Each developer must be able to take programming problems to other developers and feel a sense of belonging to a wider culture of technological progress. The organisation must also bring teams together to share stories of success and progress and to develop a narrative of purpose and meaning.
Next up: Designing Digital Retail (Part 4): Orchestrating Product Development at Scale.
References
Baird, N (2018). What Digital Transformation Actually Means For Retail. Forbes, March 13, 2018. Retrieved from https://www.forbes.com/sites/nikkibaird/2018/03/13/whatdigital-transformation-actually-means-for-retail/#5f138ffe7038
Cagan, M. (2018). Inspired. How to Create Tech Products Customers Love. Wiley, 2nd Edn
Kniberg, H., & Ivarsson, A. (2012). Scaling agile@ spotify with tribes, squads, chapters & guilds. Entry posted November, 12.
Kumar, G., & Bhatia, P. K. (2012). Impact of Agile methodology on software development process. International Journal of Computer Technology and Electronics Engineering (IJCTEE), 2(4), 46–50.
Pichler, R. (2010). Agile product management with scrum: Creating products that customers love. Pearson Education India.
Pichler, R. (2016). Strategize: product strategy and product roadmap practices for the digital age. Pichler Consulting.
Reeves, B., & Gaines, B. (2018). Building Products for the Enterprise: Product Management in Enterprise Software. “ O’Reilly Media, Inc.”.
Rigby, D. K., Sutherland, J., & Takeuchi, H. (2016). Embracing agile. Harvard Business Review, 94(5), 40–50.
