If a company wants to be fast on its feet, transform end-to-end customer experiences, and continuously outpace competitors, it needs more than lots of agile teams. A truly agile enterprise requires that the company's top officers--most, if not all, of the C-suite--embrace agile principles, too. In this article the authors describe how such an agile leadership team functions, how it differs from the conventional corporate-style executive committee and from other agile teams, and what agile means for senior executives' day-to-day work lives. The job of a conventional agile team is to create innovative solutions to a problem--be it the need for a new product or service, a better business process, or an advanced technology to support new offerings. The job of an agile leadership team is to strike the right balance between standardizing operations and pursuing innovation. Most agile team members dedicate virtually all of their time to their agile roles, but that's not possible for executives. They have to simultaneously build and run the agile enterprise operating system, oversee business units and functions, serve as mentors and decision makers, and handle the crises of the moment.
When implemented correctly, agile innovation teams almost always result in higher team productivity and morale, faster time to market, better quality, and lower risk than traditional approaches can achieve. What if a company were to launch dozens, hundreds, or even thousands of agile teams? Could whole segments of the business learn to operate in this manner? As enticing as such a prospect is, turning it into a reality can be challenging. Companies often struggle to know which functions should be reorganized into multidisciplinary agile teams and which should not. And it's not unusual to launch dozens of new agile teams only to see them bottlenecked by slow-moving bureaucracies. The authors, who have studied the scaling of agile at hundreds of companies, share what they've learned about how to do it effectively. Leaders should use agile methodologies themselves and create a taxonomy of opportunities to set priorities and break the journey into small steps. Workstreams should be modularized and then seamlessly integrated. Functions not reorganized into agile teams should learn to operate with agile values. And the annual budgeting process should be complemented with a VC-like approach to funding.
Over the past 25 to 30 years, agile innovation methods have greatly increased success rates in software development, improved quality and speed to market, and boosted the motivation and productivity of IT teams. Now those methods are spreading across a broad range of industries and functions and even reaching into the C-suite. But many executives don't understand how to promote and benefit from agile; often they manage in ways that run counter to its principles and practices, undermining the effectiveness of agile teams in their organizations. From their work studying and advising companies that have successfully employed agile methods, the authors have discerned six crucial practices for capitalizing on agile's potential: (1) Learn how agile really works; (2) understand when it is appropriate; (3) start small and let passionate evangelists spread the word; (4) allow teams that have mastered the process to customize their practices; (5) practice agile at the top; and (6) destroy corporate barriers to agile behaviors. They expand on each, providing executives with a practical guide for accelerating innovation and profitable growth.
A quarter century into the digital revolution, many companies still agonize over whether to invest significant resources in digital capabilities. Meanwhile, customers--who are used to weaving their digital and physical worlds tightly together--wonder why companies haven't done the same. The author and his colleagues at Bain have worked with and studied hundreds of companies around the globe that are trying to cope with the swiftly changing marketplace. Most industries, he writes, are still in the early stages of what he calls "digical" transformation--and the greatest barrier they face is inexperience with its execution. Drawing on Bain's study of leaders from 20 global industries, he presents five rules that can help: (1) Build your strategy around digital-physical fusion. It can be your new competitive edge. (2) Add links and strengthen linkages in the customer experience. (3) Transform the way you approach innovation. (4) Organizational separation is just an interim step. (5) Build a digical-savvy leadership team that includes the CEO. Commonwealth Bank of Australia, Nike, Disney, and Burberry are among the companies whose efforts in this realm have paid off mightily.
During a recession, when many companies face declining revenues and earnings, executives often conclude that innovation isn't so important after all. According to the authors, that's because it isn't integral to the workings of most organizations, so the creativity that leads to game-changing ideas is missing or stifled. Rigby, Gruver, and Allen, all partners at Bain & Company, point to the fashion industry as a model. Every season, successful fashion companies must reinvent their product lines - and thus their brands - or face certain death. They manage this constant challenge by creating unusual partnerships at the top that consist of an imaginative, right-brain creative director and a commercially minded, left-brain brand CEO. The authors call these alliances "both-brain" teams. Some famous examples exist outside the fashion industry: Steve Jobs and his COO at Apple, Tim Cook; the creative Bill Hewlett and the savvy David Packard; Bill Bowerman, the former track coach who developed Nike running shoes, and his business partner, Phil Knight. But fashion has gone the furthest to incorporate both-brain partnerships in its organizational model. Gucci Group and others have learned to establish and maintain effective partnerships between creative people and numbers-oriented people; to structure the business so that the partners can run it effectively and are clear about which decisions they own; and to foster left-brain-right-brain collaboration at every level in order to continue attracting talent. What makes these partnerships work? The authors have identified seven characteristics of successful partners: They are aware of their own strengths and weaknesses, have complementary cognitive skills, trust each other, possess raw intelligence, bring relevant knowledge to the team, speak to each other frequently and directly, and are highly committed to the business and each other.
Scenario-planning tools are getting better, and companies are using them more effectively to prepare for an uncertain future, according to the latest results from Bain & Company's ongoing 14-year survey of corporate tool use.
Standardization has been a powerful strategy in consumer markets, but it's reached the point of diminishing returns. And diversity is not the only chink in standardization's armor: Attempts to build stores in remaining attractive locations often meet fierce resistance from community activists. From California to Florida to New Jersey, neighborhoods are passing ordinances that dictate the sizes and even architectural styles of new shops. Building more of the same--long the cornerstone of retailer growth--seems to be tapped out as a strategy. Of course, a company can't customize every element of its business in every location. Strategists have begun to use clustering techniques to simplify and smooth out decision making and to focus their efforts on the relatively small number of variables that usually drive the bulk of consumer purchases. The customization-by-clusters approach, which began as a strategy for grocery stores in 1995, has since proven effective in drugstores, department stores, mass merchants, big-box retailers, restaurants, apparel companies, and a variety of consumer goods manufacturers. Clustering sorts things into groups, so that the associations are strong between members of the same cluster and weak between members of different clusters. In fact, by centralizing data-intensive and scale-sensitive functions (such as store design, merchandise assortment, buying, and supply chain management), localization liberates store personnel to do what they do best: Test innovative solutions to local challenges and forge strong bonds with communities. Ultimately, all companies serving consumers will face the challenge of local customization. We are advancing to a world where the strategies of the most successful businesses will be as diverse as the communities they serve.
Disappointed by the high costs and elusive benefits, early adopters of customer relationship management systems came, in the post dot-com era, to view the technology as just another overhyped IT investment whose initial promise would never be fulfilled. But this year, something unexpected is happening. System sales are rising, and executives are reporting satisfaction with their CRM investments. What's changed? A wide range of companies are successfully taking a pragmatic, disciplined approach to CRM. Rather than use it to transform entire businesses, they've directed their investments toward solving clearly defined problems within their customer relationship cycle. The authors have distilled the experiences of these CRM leaders into four questions that all companies should ask themselves as they launch their own CRM initiatives: Is the problem strategic? Is the system focused on the pain point? Do we need perfect data? What's the right way to expand an initial implementation? The questions reflect a new realism about when and how to deploy CRM to its best advantage. Understanding that highly accurate and timely data are not required everywhere in their businesses, CRM leaders have tailored their real-time initiatives to those customer relationships that can be significantly enhanced by "perfect" information. After they've succeeded with their first targeted CRM project, they can use it as a springboard for solving additional problems. CRM, in other words, is coming to resemble any other valuable management tool, and the keys to successful implementation are also becoming familiar: strong executive and business unit leadership, careful strategic planning, clear performance measures, and a coordinated program that combines organizational and process changes with the application of new technology.
Companies in many industries are feeling immense pressure to improve their ability to innovate. But executives know that the best ideas aren't always coming out of their own R&D labs. That's why a growing number of companies are exploring the idea of open-market innovation--an approach that uses tools such as licensing, joint ventures, and strategic alliances to bring the benefits of free trade to the flow of new ideas. For instance, when faced with the unanticipated anthrax scare last fall, Pitney Bowes had nothing in its R&D pipeline to help its customers combat the deadly spores. So it sought help from outside innovators to come up with scanning and imaging technologies that could alert its customers to tainted letters and packages. In this article, Bain consultants Darrell Rigby and Chris Zook describe the advantages and disadvantages of open-market innovation and the ways some companies are using it to gain competitive advantage. Creative types within a company will stick around longer if they know their ideas will eventually find a home--as internal R&D projects or as concepts licensed to outside buyers. However, the authors warn against entering into open-market innovation without properly structuring deals: Xerox and TRW virtually gave away their innovations and had to stand by while other companies capitalized on them. The company with the most powerful assets will have the greatest growth potential.
Conventional wisdom says that layoffs are a necessary evil during economic downturns, but new research shows that shareholders tend to punish companies that invoke layoffs solely to cut costs.
This is an MIT Sloan Management Review article. Many companies proudly think of themselves as innovative. The great majority of them, however, are adept at producing only sustaining innovations--products or services that meet the demands of existing customers in established markets. Few companies have introduced genuinely disruptive innovations, the kind that result in the creation of entirely new markets and business models. And, yet, the motivation to pursue such innovations should be urgent. In almost any industry, the most dramatic stories of growth and success were launched from a platform of disruptive innovation. Clayton M. Christensen of Harvard Business School, Mark W. Johnson of Innosight in Woburn, Massachusetts, and Darrell K. Rigby of Bain & Co. are close observers of innovation successes and failures at large and small companies. Drawing on a decade's worth of research, they offer two sets of litmus tests that senior managers can use to shape business plans to improve their chances of success. Following a detailed exploration of the litmus tests, they try out their ideas in a hypothetical example that asks whether Xerox could disrupt Hewlett-Packard's ink-jet printer business. They conclude by outlining the process any company needs to institute if it wants to create an engine capable of building new disruptive businesses over and over again. If senior managers pursue the path outlined here--and if the growth businesses they start or acquire are truly disruptive in character--it will be less difficult and risky than many have supposed to create wave after wave of new corporate growth.
Customer relationship management is one of the hottest management tools today. But more than half of all CRM initiatives fail to produce the anticipated results. Why? And what can companies do to reverse that negative trend? The authors--three senior Bain consultants--have spent the past 10 years analyzing customer-loyalty initiatives, both successful and unsuccessful, at more than 200 companies in a wide range of industries. They've found that CRM backfires in part because executives don't understand what they are implementing, let alone how much it will cost or how long it will take. The authors' research unveiled four common pitfalls that managers stumble into when trying to implement CRM. Each pitfall is a consequence of a single flawed assumption--that CRM is software that will automatically manage customer relationships. It isn't. Rather, CRM is the creation of customer strategies and processes to build customer loyalty, which are then supported by the technology. This article looks at best practices in CRM at several companies, including the New York Times Co., Square D, GE Capital, Grand Expeditions, and BMC Software. It provides an intellectual framework for any company that wants to start a CRM program or turn around a failing one.
Drawing on extensive research of Fortune 500 companies that have lived through industry downturns and economic recessions over the past two decades, Darrell Rigby, a director of Bain & Company, reveals how companies need to go against the grain of convention and exploit industry downturns to harness their unique opportunities for upward mobility. The author explains that every downturn goes through three phases. He examines each phase and shows how successful players navigate the huge waves of a downturn. Smart executives, he says, don't panic: they look bad news in the eye and institutionalize an approach to detecting storms. Rather than hedge their bets through diversification, they focus on their core businesses and spend to gain market share. They manage costs relentlessly during good times and bad. They keep a long-term view and strive to maintain the loyalty of employees, suppliers, and customers. And coming out of the downturn, they maintain momentum in their businesses to stay ahead of the competition they've already surpassed. Every industry will face periodic downturns of varying severity, says Rigby. But executives with the vision and ingenuity to take unconventional approaches can buoy their companies to new heights.
Management tools, such as strategic planning, benchmarking, pay-for-performance, outsourcing, customer segmentation, reengineering, balanced scorecard, and total quality management, garner considerable attention in the popular management literature. Companies throughout the world spend millions of dollars each year implementing a dozen or so of these tools. This survey examines the usage of these tools over a seven-year period, assesses user satisfaction with the tools, and attempts to correlate tool usage with company performance. Identifies tools that have been consistently used over time as well as those that seen to have been passing fads.