As per the CHAOS 2009 report, 70% of projects worldwide fail due to project management issues. The CISQ 2020 report states that substandard software quality led to a cost of around $2.08 trillion for the United States in 2020 alone.
The rationale behind the failure of project management involving long-term planning and fixed requirements is straightforward: the market evolves at a pace that outstrips the adaptability of any predetermined plan.
In "Black Swan", Nassim Taleb illustrates the constant flux of the world and the market. A company's ability to adapt to these changes is crucial for maintaining a competitive edge.
Capers Jones' research emphasizes that approximately 20% of all software defects are attributed to errors in requirements. Furthermore, requirements are often incomplete and undergo changes at a rate exceeding 2% per month.
Undoubtedly, traditional project management has not met the needs of the industry due to the rapid and constant changes in the world. Relying on fixed requirements, contracts, and strict adherence to them is no longer feasible.
Recognizing the perpetual pace of change, the Agile Manifesto was created to revolutionize product development. The Agile Manifesto introduces an approach based on four fundamental principles, enabling more effective competition in the ever-evolving market:
Individuals and interactions over processes and tools
Working software over comprehensive documentation
Customer collaboration over contract negotiation
Responding to change over following a plan
The Agile approach in product development led to the creation of a new category of products: Agile products.
Agile products possess distinctive features:
- An Agile product has an indefinite lifespan, constantly evolving and adapting as long as there is demand.
- Agile products can be altered easily and inexpensively, with the cost of change remaining stable over time.
- Agile products consist solely of essential functionality, catering to the client's specific needs and eliminating unnecessary components.
- Agile products maintain high standards in both product and technical quality.
- Agile products receive frequent updates, sometimes even on a daily basis.
- Clients are the primary stakeholders for Agile products.
- Agile products are developed by driven and motivated teams.
Contrast Microsoft Office with Google Chrome: Microsoft Office launches their suite of applications every two to three years, whereas Google Chrome rolls out significant stable updates every six weeks, which are automatically installed for users.
Undoubtedly, the Google Chrome browser exhibits a more Agile product approach.
An Agile product can be viewed as an ongoing service continually offered to clients. Unlike a specific version of Microsoft Office, Agile Product features are consistently added, modified, or removed based on the evolving understanding of clients' needs through continuous collaboration.
An Agile product is developed not according to a predetermined multi-year plan, but rather by constantly incorporating client feedback and aligning with the founders' vision.
Low cost of change
Agile products are constantly evolving, and the cost of change remains consistently low. This is achieved by the team's unwavering commitment to maintaining high internal technical quality.
In Agile products, the concept of 'technical debt' is virtually nonexistent, as any debt would hinder the pace of change and escalate the cost of modifications.
Teams responsible for creating Agile products typically exhibit self-organization, designing and continually adapting their processes to suit the specific context and time period. Team autonomy is a crucial element for this approach. Imposing processes or tools by management can render teams less agile. Instead, management trusts these teams to understand their work and to modify processes or tools as required.
Teams developing Agile products are typically cross-functional, possessing the necessary expertise to communicate with clients, understand their problems, create solutions, and validate them with the clients. Coordination within a single cross-functional team can be more efficient, resulting in reduced wait times and ensuring that every change is cost-effective.
Features which no one uses are waste.
In Agile products, functionality is not added based on the assumption that 'someone will eventually need this.' The demand for rapid change necessitates that the product remains as streamlined as possible while meeting clients' needs. Typically, the more features a product has, the higher the support costs and the slower the implementation of any changes.
Functionality which is not needed is either modified or eliminated.
Additionally, backlogs should not have years of work planned in advance.
High product and technical quality
Product quality reflects the degree of alignment between client desires and the final output. Direct and ongoing collaboration with clients enables the company to create precisely what is needed for them.
By not adhering to a predetermined multi-year plan with rigid deadlines, the company can concentrate on delivering what clients require at the moment and swiftly address any bugs or issues as they arise.
Successful Agile products employ a zero-bug policy in conjunction with DevOps practices and continuous automated testing.
Frequent and rapid updates are fundamental to any Agile product. It is essential to deliver value to clients as soon as possible, as only they can determine if the new features address their issues. Clients can only provide feedback on the quality of these features after using them.
Many Agile products do not employ versioning; they simply have a current version. Numerous Agile products update not only daily but also whenever there is something to deliver. The practice of CI/CD (Continuous Integration/Continuous Deployment) is common among successful Agile products.
Clients are the main stakeholders
Clients determine the quality, and collaboration with clients helps identify the upcoming modifications needed. Ultimately, clients are the ones paying for the service or product.
Product is built by motivated teams
Effective collaboration with clients and among team members cannot be imposed by management; research shows that extrinsic incentives can be detrimental and that intrinsic motivation consistently leads to superior outcomes in intellectual work.
Agile product management emphasizes granting teams autonomy, mastery, and purpose, as these elements are the strongest predictors of robust intrinsic motivation.
Furthermore, management concentrates on eliminating demotivating factors (like inadequate compensation or insufficient access to quality tools) or elements that divert team members' attention from their work towards other concerns (such as navigating bureaucratic hurdles).
An Agile product team's emphasis on maintaining high quality (both in product and technical aspects) enables team members to take pride in their work outcomes and enjoy the process. Research shows that happiness and enjoyment fosters long-term stability and performance within the team.
Overall Agile approach benefits
- low turnover
- high product quality
- happier clients
- high speed of change
- lower cost of building and support
Low employee turnover
According to research conducted by Gallup, US businesses experience an annual loss of approximately one trillion dollars as a result of voluntary employee turnover.
Agile products are developed by teams that maintain continuous collaboration with clients, allowing the employees to witness the impact of their work. This, in turn, boosts motivation and job engagement. Numerous studies [1, 2, 3] emphasize that increased motivation and job engagement lead to a decrease in intentions to leave the job.
Reduced employee turnover results in lower long-term costs associated with product development.
High product quality and happier clients
According to HBR, quality cannot be enhanced instantly; instead, it should be embedded in the production process and fueled by close cooperation with clients
Agile products typically exhibit higher quality, and research indicates that superior product quality leads to an improved company reputation. This enhanced reputation attracts more customers and fosters better customer retention.
Furthermore, Agile products meet clients' needs and preferences more quickly, resulting in greater client satisfaction. Research suggests that satisfied clients are more likely to be profitable. Profitable clients tend to remain with the company for longer periods and display increased loyalty to the organization that creates the product.
High speed of change
Agile products are designed to accommodate continuous change: from close collaboration with clients on an almost daily basis to deploying new features as soon as they are ready.
Agile products and Agile teams inherently possess a high speed of change. McKinsey highlights that a short cycle time, or rapid development speed, is a crucial competitive advantage in the marketplace.
Lower costs of building and support
Agile products are developed with an unwavering emphasis on technical excellence. By minimizing or eliminating tech debt and defects, and removing unnecessary functionality, product complexity is significantly reduced, which in turn lowers the cost of support.
The cross-functional nature of Agile teams reduces coordination expenses, and work processes are continuously changed and adapted to be as contextually optimal as possible. Close collaboration with clients enables the development of precisely what is required, minimizing expenditures on unnecessary features.
Backlogs for future tasks are kept to a minimum, ensuring that there is minimal investment in preliminary work that may become outdated due to market fluctuations.
Ultimately, it's up to each entrepreneur to determine how to manage their company and which products to create.
As Dr. Deming, the pioneer of Quality Management said, ‘It is not necessary to change. Survival is not mandatory’.
- CHAOS 2009 report
- The Cost of Poor Software Quality in the US: A 2020 Report
- The Black Swan: Second Edition: The Impact of the Highly Improbable
- Software Requirements and the Ethics of Software Engineering
- Is Intrinsic Motivation Better Than Extrinsic Motivation?
- Happiness and the productivity of software engineers
- This Fixable Problem Costs U.S. Businesses $1 Trillion
- Who takes the lead? A multi-source diary study on leadership, work engagement, and job performance
- The relationship of engagement, job satisfaction and turnover intentions
- Managerial support for development and turnover intention: Roles of organizational support, work engagement and job satisfaction
- Quality Is More Than Making a Good Product
- Reputation and Product Quality
- Pillars of customer retention: An empirical study on the influence of customer satisfaction, customer loyalty, customer profitability on customer retention
- Competing in a digital world: Four lessons from the software industry