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Darrell Rigby
February 24, 2016
Most executives I talk to understand very well that digital technologies are
permeating nearly every function of nearly every business. And yet many fall
prey to two harmful myths.
Myth #1: You will die without a digital strategy. This myth is generally
accompanied by scary stories, such as how Amazon devoured Sears. But digital
technologies are no more strategies than electric power, telephone
communications, or any other advanced technology. They are powerful tools that
deserve prominent placement in the toolbox. But they should not replace all the
other tools or the skilled strategists who know where and how to use them.
In fact, hordes of so-called digital disruptions fail every year precisely
because they lack effective strategies. Consider eToys, Napster, and Pixelon.
Now analysts are predicting the bursting of another tech bubble, with plenty of
dead unicorns. Several argue that Sears s outsized bets on digital technologies
are actually hastening its demise rather than avoiding it.
So forget the myth. The key to success is always an effective business strategy
bolstered by adroit applications of empowering tools which now include
digital technologies.
Myth #2: We must all become experts in digital. The fallacy here lies in
believing that every individual or organizational unit must be self-sufficient
in digital technologies. Executives who buy into this myth set up their own
shadow IT organizations, introducing extraordinary complexity into the digital
architecture. And then they re surprised when they suddenly encounter issues of
integration, enterprise security, customer privacy, and regulatory compliance
all the things that enterprise IT experts must worry about.
Clearly, people and organizational units should learn to recognize
opportunities for digital technologies, know how to engage true experts, and
get comfortable using digital tools. But this is very different from learning
to design and develop software programs.
Once you have discarded the myths, what would be a better approach? Take a page
from the playbook of the most successful digital-native companies. Build your
strategy on a foundation of continuous innovations, both new products and new
processes. Test those innovations quickly, and pursue only those that work.
Integrate your digital skills with operations, marketing, and all the other
kinds of functional expertise a business requires.
The key to this approach is the agile team.
Agile whose varieties include scrum, lean development, and kanban is a
systematic methodology of innovation that has long been popular in software
development. A company creates a small group of people dedicated to a specific
project. The team is self-managing and cross-functional; it includes all the
skills it needs for the job. It breaks the project up into small modules and
attacks the highest-priority items in time-limited bursts called sprints. When
it has completed a module, it tests the results with internal customers, end
users, or both. It carefully tracks its accomplishments and setbacks, usually
reviewing each day s progress in a brief daily standup meeting. And it is held
strictly accountable for results.
In most situations, research shows, agile works better than traditional methods
of project management. It s quicker. It s less prone to catastrophic failure.
It boosts team happiness and engagement, no small matter in this war-for-talent
era. It also produces better business results, particularly in highly dynamic
industries. The popular music-streaming service Spotify, for instance, relies
on innovations produced by self-managing agile teams known as squads to
compete successfully with larger and better-funded rivals.
Companies outside the digital realm often find that agile isn t a complete
stranger it has been there in the IT department all along. National Public
Radio (NPR) is an example. For more than 40 years, the network developed new
programs the old-fashioned way. Producers came up with ideas and pitched them
to executives. Those who got the green light hired the staff they needed,
created extensive programming, and geared up for a big launch all in strict
secrecy. Meanwhile, NPR s reps tried to sell the show to local stations, hoping
that enough stations would buy in to cover the show s costs. The process was
slow, ex pensive, and risky.
Looking for more and better innovation, NPR s board asked the programming
department to come up with a new approach to devel oping shows. Eric Nuzum,
then vice president for programming, was already intrigued by striking improve
ments in NPR s Digital Media department, which had completely revamped the
organization s website in a relatively short time. So he turned to colleagues
there for inspiration, and they described the agile approach. Nuzum and several
others began thinking about how to apply agile principles to programming and
other projects at the network.
Today, agile teams are producing all sorts of innovations at NPR, helping the
organization maintain its unique place in American media. One team adopted
agile practices to manage the creation of a new digital archive of more than
750,000 records. Another applied the methods to optimize the breakdown of a
typical hour between national news and local material, such as news, traffic,
and weather.
In program ming, the network now creates a small number of pilots with a
minimal staff and then begins iterating. Show developers gather feedback from
local program directors. They ask listeners for critiques and suggestions,
often through social media. The process is quick, public, and relatively cheap.
NPR developed programs such as the TED Radio Hour and How to Do Everything (a
podcast) at one-third previous cost levels. Because it has spent less money on
development, NPR can feed the program to local outlets free of charge for a
while so that they can build an audience.
Note the lessons here. Spotify, NPR, and all the other experienced agile
practitioners are not relying on digital as a strategy. Rather, digital
technologies are a tool that help them realize their strategy. Nor do they make
the mistake of expecting everyone to be equally tech-savvy. Rather, they rely
on teams whose members include the tech-savvy along with the marketing-savvy,
the finance-savvy, and so on. In short, they don t fall prey to the myths of
digital technology and their businesses are the stronger for it.
Darrell Rigby is a partner at Bain & Company. An innovation expert, he is
author of Winning in Turbulence.