CMO Guide to: Creating Business Models with Agile Approach Methods
In my previous post about Agile approach, I showed you why it is considered a viable approach to business today. Today, I want to focus on the role of the Agile approach in creating business models. (I actively participated in the creation of business models as a CMO and consultant for 10+ years. The content of this post is based on an article I recently submitted to the scientific journal.)
In this post, I’ll show you:
- What Agile is and why it is so important today,
- What type of business models derive from the Agile approach,
- Key differences between organizations that implement Agile and those that don’t.
What is Agile?
The Agile approach to project development first emerged as a methodology for software development projects. However, it is now increasingly used in sectors outside of IT.
In today’s on-demand, dynamic economy, businesses need to rely on methods that allow them to shape their potential for change and continuous development.
Consumer trends change quickly and organizations that want to survive on the current market need to learn how to identify consumer needs and preferences and put them into action.
My analysis of almost 50 organizations operating in various industries shows that the Agile approach comes in handy in transforming business models and defining potential directions for organizational development.
My analysis led me to the following differentiation of modern methods that are supported by Agile approach.
Agile approach and supported by it methods
Looking at these different methods, it is clear that they all depend on main assumptions of Agile approach:
- iterative verification of business model,
- customer orientation as the main organisational asset,
- emerging company’s goal based on changing customers needs.
Environmental analysis or opinion polls were key for strategic management a few decades ago, but today they are no longer viable. Instead, organizations need to identify customer purchasing decisions as quickly as possible and respond to customer needs to survive on the market.
Agile and Organizational Time Horizon
Analyzing companies that incorporated elements of the Agile approach to their business models, it is clear that one of the most representative features of that strategy is the adoption of a specific time horizon.
When the organization’s strategy aims to design long-term activities, the business model becomes nothing else than a presentation of how the organization can operate. Preparing such a strategy requires a lot of time and the result is a large document volume complemented by an analysis of the organization’s environment and its long-term goals.
However, designing a strategy for the next five years in the current economy is relatively risky.
Consumer needs and preferences may change dramatically as new technologies enter the market and become commercialized. And organizations need to find a way to instantly respond to these changes. A five-year plan won’t allow them to do that efficiently.
That’s why an increasing number of organizations are now turning to the methods I’ve described above – because they embrace the central characteristic of Agile, the ability to quickly identify a customer problem and come up with a solution.
Organizations that embrace the Agile approach and implement technological solutions that gather customer data and allow responding to it in a timely manner will gain an immense competitive advantage.
Companies that fail to make the most of these digital insights will, on the other hand, find it hard to survive on the current market.
Since the Agile approach in business modeling requires the support of the right technological solutions, organizations should start looking for products and vendors who will enable them to fully embrace digital transformation and deliver products that match the needs of their target.
Jira is one of these solutions. Have a look at this white paper that shows why Jira is the best tool for supporting Agile team management.
If you’d like to learn more about how implementing technological tools can change your team’s workflows and organizational structure, get in touch with our consultants.
At Deviniti, we are used to providing organizations with technological frameworks on which they build their competitive advantage and deliver value to their customers.
Here are some sources on Agile in business I recommend:
Blank S.G., 2006, The Four Steps to the Epiphany Successful Strategies for Products that Win, lulu.com.
Cooper R.G., 2016, Agile-Stage-Gate Hybrids, Research Technology Management 59 (1). Dikert K., Paasivaaraa M. Lassenius C., 2016, Challenges and Success Factors for Large-scale Agile Transformations: A Systematic Literature Review, The Journal of Systems and Software 119.
Idzikowski W., Perechuda I., 2017, Wykorzystanie podejścia zwinnego z branży IT do tworzenia modeli biznesowych organizacji sportowych (The Application of the Agile Approach from IT to Creating Business Models in the Sports Industry), Wroclaw UE Publishing, forthcoming.
Ignatius A., 2016, Toward a More Agile Future, Harvard Business Review.
Kumar V., 2008, Managing Customers for Profit: Strategies to Increase Profits and Build Loyalty, Pearson Education, Inc.
Laloux F., 2015, Reinventing Organizations, London: Nelson Parker.
Maurya A., 2012, Running Lean: Iterate from Plan a to a Plan That Works, O’Reilly Media.
Muduli A., 2013, Workforce Agility: A Review of Literature, The IUP Journal of Management Research 12 (3).
Nir E., 2014, Hooked, How to Build Habit-Forming Products, Penguin.
Onken M., Campeau D., 2016, Lean Startups: Using the Business Model Canvas, Journal of Case Studies, 34 (1).
Pope-Ruark R., 2015, Introducing Agile Project Management Strategies in Technical and Professional Communication Courses, Journal of Business and Technical Communication, 29 (1).
Ries E., 2013, What Large Companies Can Learn from Start-ups, interviewed with J. Euchner, Research Technology Management, July-August.
Ries E., 2011, The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses, Crown Business.
Sinek S., Start with Why, How Great Leaders Inspire Everyone to Take Action, PENGUIN GROUP,
Wendler R., 2013, The Structure and Components of Agility – A Multi-perspective View, Informatyka Ekonomiczna, 28 (2).