Technology is no longer an enabler for organisations. It is a core capability and the speed at which this capability can change directly impacts an organisations agility. With increasing pressure on agility, a trend that will accelerate in 2020 is the shift towards organisations using a product-based operating model, according to Robert Kingston, our CTO at Capgemini in the UK.
A product-based operating model introduces a fundamental change. It flips a classic tower-based operating IT model on its head to focus around autonomous engineering capabilities that are aligned to an organisations business value chain. This model helps align technology capabilities much closer to user needs and improve overall organisation agility.
To be successful, organisations need to “be Agile” and not just “do Agile.” To do so in multiple business units and product groups, they must rethink foundational processes, structures, and relationships. This involves putting less emphasis on generic frameworks and more focus on customising the approach based on the organisation’s culture, also stated in a recent report from the Capgemini Research Institute, Agile@Scale.
These small, customer-focused agile teams have reaped the benefits of a swifter Go-To-Market, improved quality and efficiency.
The move to product-based capabilities offers three main benefits:
- Time – Reduces the time from a new idea or change to implementation. This improved agility enables organisations to experiment with new technology and business models that help remain competitive or enter new markets.
- Cost – Autonomous teams remove handovers and create higher productivity. The number of teams and the cost of working with users to build new products or services are minimised, reducing the scope of reworking.
- Quality – Designers, Engineers and Developers work directly with users in more enduring relationships to build what users need. This enables better quality products to be built and improves user experience.
There are also some less obvious benefits, which are:
- Better employee morale and satisfaction as Designers, Engineers and Developers feel empowered by being connected to end-users, using their feedback directly and being less reliant on other teams.
- A shift to product-based teams permits for diversity and agility in the ecosystem while allowing for a variety of different suppliers, enabling more choices and better services.
Choosing the right approach – a paradigm shift
Organisations that are successfully moving to a product-based operating model are taking a phased approach to implement the model – starting with a particular product group which is easier to change and drives business value. The Agile@Scale report also indicates that in organisations with limited Agile experience, big-bang scaling leads to frustration, as it takes time for Agile culture to grow organically. Such organisations get disillusioned and fall back on a traditional, phased approach. Moreover, this runs counter to the core tenant of Agile – an iterative and learning method.
Revamping an operating model is a massive undertaking, and a product-based model has some significant dependencies, for example, enough T-shaped people to be able to operate the model successfully. There will be substantial risks to address and short-term disruptions as new ways of working take hold. As with any sizeable change management initiative, such a transformation will require long-term commitments from employees at all levels, in all functions and business units. This means there is also an arising need to merge the agile environments with the part of the organisation still following a traditional approach. This needs the product-based model to work very closely and cohesively with the rest of the organisation. A lot of organisations are looking to create mechanisms that will enable them to merge the two or get them to interoperate.
Approaches for operational models
A continued trend from 2019, we expect organisations to be moving towards a business value chain driven way of structuring their operating models in 2020. This entails a focus on value through end-to-end visibility of operations instead of optimising specific activity. This differs for all sector. For example, in the manufacturing sector, the value can be driven by design and service, whereas for the retail industry, the value can be driven around customer lifecycle or experience.
Organisations need to remember that agility is not a destination – it’s an ongoing commitment to deliver customer value faster and adapt quickly to changing conditions. Once they realise that agility’s goalposts continue to keep moving, they can genuinely describe themselves as “being Agile.”