Which Industries Would Benefit the Most from Agile Innovation

Given the current circumstances, leaders’ first impulse may be to prioritise retention and consistency over risk-taking or new untested ventures. However, in such unpredictable times, markets and consumers can turn on a dime. Leaders must be both reliable and flexible if they are to withstand fluctuation. In other words, they must innovate to succeed. It is important to define innovation in terms of measurable and incremental organisational change. Systems and processes must be put in place for this type of innovation to have a tangible impact.

The two most common types of innovation are incremental and architectural (the application of a product or methodology from one field to another). Both of these categories are conducive to an agile approach.  Resources must be used with the knowledgethat a particular solution will work, rather than hope or speculation. This makes a case for the adoption of short, iterative product development cycles and tight feedback loops. 

It is well-established that agile approaches can be applied to industries outside of software development. This may include (but is not limited to) measures for continuous improvement, team collaboration, and the use of empirical data (such as sales data or surveys) to provide an enhanced customer or end-user experience.

However, a homogenous approach runs the risk of treating agile as a ‘magic bullet’ solution. This will only undermine the values and complexities of industries, departments and teams. Therefore, this article will highlight several industries that are arguably falling behind the innovation curve, and how they could benefit from adopting ideas from agile development.

Which Industries are Struggling with Innovation in 2021? 

In February 2020, RSM International surveyed nearly 800 European companies to determine which sectors were both prioritising innovation and meeting their innovation goals. For the purposes of this survey, ‘innovation’ can be broken down into three specific categories: 

• Sectors’ use of technology 
• The frequency at which they engaged with stakeholders
• The extent to which efforts to be more ‘innovative’ were embedded in company culture

These parameters made it relatively straightforward for RSM to score industries on how proactive they were in pursuing innovation, as well as their progress towards their innovation goals. Their main findings are summarised below: 
 

*Numbering has been omitted where the percentage is equal to the previous entry
Source: Innovation Survey, RSM International, 4th Jun 2020

This data confirms what could be described as a consensus surrounding industries such as Real Estate. These industries tend to be slow-moving, relying on the timely completion of a few large projects a year. There are also several examples where, contrary to popular opinion, industries are struggling to innovate. RSM points out, for instance, that the low ranking for Finance (16th for innovation success) is surprising, given its focus on digital innovation. 

RSM’s study was illuminating in how it highlighted where industries held innovation in high regard, yet faltered in their actual progress. A primary example of this is Marketing, which scored 6th for prioritising innovation yet fell behind Construction, Engineering and Real Estate in its actual achievement of innovation goals. RSM’s three innovation categories are particularly helpful for explaining this type of dissonance.

The events of the last year have pushed many industries into uncharted territory. Current circumstances require not only new visions and methods but a renewed sense of tenacity. With such a focus on flexibility and continual improvement, could Agile pose a potential solution?
 

According to Lunavi, a technology consulting firm, 70% of IT professionals plan to integrate agile approaches across their business as a whole. For an agile approach to be implemented successfully, it requires a nuanced understanding of industries’ varying goals and requirements. Therefore, this article will provide actionable recommendations for how agile methods can help a select group of industries regain their footing in the current climate.

Agile innovation in the finance industry 

It may seem surprising that the financial sector is struggling to reach its innovation goals. However, Financier Worldwide found in 2015 that 90% of leaders admitted there was a lack of focus on radical innovation. Several years later, Deloitte’s report ‘Regulatory Trends Outlook for 2018’, claimed the financial industry was being hindered by a ‘legacy infrastructure’ that would take years to transform. For example, a focus on traditional product development means that customer and end-user feedback can’t be incorporated into the development process.

Agile methods could rectify this by implementing new collaborative and customer-focused processes to product development. Teams could use a centralised system for the development of prototypes, which would be shared internally in a project’s initial phases. They can then conduct beta testing with a select group of end-users, with feedback incorporated iteratively into the final stages. 

Another issue is how increasingly stringent regulations may be inhibiting innovation. Financial firms are set to spend an estimated 10% of their revenue on compliance costs by 2022. The worry is that new entrants into the market may rest on reliable products and methods, rather than pushing the limits of what their industry can offer. 

An agile approach could help companies navigate sudden changes in compliance. By keeping regulatory project scopes high-level, product development teams can adjust their processes in line with shifting regulations. Another benefit would involve stripping projects back to a core team. This could help stem the rising cost of compliance, by streamlining resources and expediting the decision-making process.

Agile innovation in marketing 

According to RSM, where marketing fell behind most was their use of technology to improve the efficiency and effectiveness of their business processes. It appears that the industry is in a similar position to the financial sector; despite many technological solutions, internal processes are proving to be a barrier to long-term innovation.

One particular area of improvement is how marketers use data. The emphasis appears to be on data collection rather than data usage. According to Clicktake, 40% of marketers acknowledge that there are barriers to turning data into actionable insights. The need for data-driven insights goes beyond transforming the customer experience. Are marketing teams sitting on data that can help sales teams (or vice versa?)

Fortunately, things seem to be moving in the right direction. The adoption of ‘agile marketing’ has increased from 32% in 2019 to 42% in 2020. Real-time data analysis is crucial for successful agile marketing, allowing for rapid market forecasting and flexible decision making. 

Marketers looking to benefit from agile data analysis can start by using a Customer Data Platform (CDP). These platforms collate data from downloads, clicks, deliveries, returns and many other customer interactions to provide a ‘360-degree view’ of the overall customer experience. CDPs have the potential to transform MarTech stacks in 2021, by de-siloing data across multiple departments. Teams therefore can not only make quick decisions based on actionable insights but adjust their ongoing projects, based on a holistic understanding of the overall customer experience. As more and more data is accumulated across different teams, marketers can make incremental progress towards their innovation goals.

Agile innovation in real estate

The real estate industry doesn’t seem conducive to agile methods at first glance. The industry is conventionally slow-moving. Profit is made from a small number of high-value deals, which involve lengthy negotiations and require large amounts of capital to be invested upfront. The real estate market has operated in this way for quite some time, but what happens when the market is thrown into a state of unprecedented flux? 

Agile processes can help real estate teams adjust to new circumstances, and this will undoubtedly be facilitated by technology. The real estate market is notorious for the slow adoption of technology. According to Deloitte’s report on the commercial real estate industry in 2021, only one-third of surveyed industry leaders believed they had the resources and skills to ‘operate a digitally transformed business.’ 

There are several ways in which the property market can use technology to become more agile. The first way is by embracing virtual viewings, which will undoubtedly save time and money on travelling to and from locations. The second is implementing cloud-based storage and property management software. This will provide easy access to key documents such as contracts and inventories, whilst also streamlining tasks such as maintenance and collecting rent arrears. Ultimately, by expediting these types of processes, companies can channel more of their resources in growing their portfolio and refining their value proposition.

While making business processes more efficient is certainly a priority, the biggest impact an Agile would have on real estate is transforming the customer experience. For example, rather than locking clients into lengthy unyielding contracts, companies can introduce more short-term leases. This will satisfy customers and allow for iterative feedback from tenants, whilst also helping real estate companies to diversify their portfolio. 

Finally, companies could devise a new tiered structure to property maintenance or lease agreements. This is common amongst many service providers but is yet to gain traction in the real estate market. Again, this would provide customers with greater flexibility and help companies stand out amongst competitors, whilst also opening up new opportunities for aspiring investors to get onto the property ladder.

Making a business case for agile methods

One of the key takeaways of this article is that agile methods can help many industries bolster their innovation efforts. It is apparent that these methods are applicable in more ways than what was thought at the time of their conception. Therefore, technical leaders can make a case for their usage across their entire organisation, not just within their specific team.

When creating a business case for agile methods, the first step for leaders is to compile a series of metrics that best represent their team’s success. Examples may include lead and cycle time, throughput (especially if you can easily quantify projects using visual tools such as a Kanban board) and Customer Satisfaction Score (CSAT). 

Once leaders have settled on their metrics, they must then identify exactly what they believe is responsible for their team’s success. How does their approach to managing projects differ from other teams? Can their success be easily compared and attributed to core processes? It is also crucial that their value outweighs any execution costs. This can be calculated by measuring the time it would take to facilitate the widespread use of agile processes against the resultant increases in project turnaround time and customer satisfaction. 

Finally, a successful business case must have a main measure of success. Leaders must understand exactly what constitutes innovation in their organisation. Is it increased revenue or market share, or is it launching new products to the benefit of customers and end-users? From there, it’s simply a case of connecting the dots between the initial metrics, a specific range of agile methods and this final overarching goal. It is this type of clear and cohesive narrative that will maximise chances of stakeholder buy-in.

One of the main benefits of an agile approach is that value is delivered in short and regular cycles. This value will ideally offset the costs of projects so that stakeholders realise the benefits of agile processes as early as possible in the implementation process. As previously mentioned, innovation is often achieved incrementally. With each completed project comes benefits and learning experiences, and it is their cumulative impact that will propel your organisation towards long-term innovation and success.

Conclusion

If companies are to succeed in their innovation efforts - innovation cannot be something that’s mentioned often in board meetings yet constantly on the backburner. Without a cohesive, quantifiable definition, there will continue to be a disconnect between how companies perceive themselves as innovative and the reality. 

In a similar vein, for any new process to have a tangible impact it must be implemented not as a ‘cut and paste’ exercise, but as measured organisational change. This could include the phasing out of outdated technology, or the active de-siloing of valuable customer data. 

Ultimately, many leaders’ first instinct may be to hold on to tried-and-tested methods. However, by using agile methods, they will have the freedom to adapt to fluctuating circumstances, whilst still pursuing continuous improvement. Hope remains that it will not just be a case of ‘adapt and survive’, but adapt and thrive.

About the Author

Alex Chenery-Howes is a Marketing Executive at Idea Drop. Idea Drop offers companies an end-to-end innovation management platform to help them discover, refine and execute new ideas from across their organisation.