Driving innovation with agile working models

Spotlight explores the driving factors behind a successful transformation project, the benefits and challenges of adopting an agile approach to create a more customer-centric business, and the importance of putting people – and not technology – at the center of every transformational process.

Dr. Christian Legl, Global Vice President, Head of Business Line High-Speed Processing Systems, Currency Management Solutions, and Dr. Richard Schachtner, Head of Program Management, share their insights in an interview.

What exactly does R&D entail in a complex environment like high-speed cash processing systems?

We develop highly complex mechatronic systems with a large amount of real-time and data processing software. In addition, we develop our own sensors using state-of-the-art technologies to measure physical effects on the banknote.

How did you approach such an ambitious project?

Dr. Legl: We had to define why we were undertaking this transformation in the first place. If you don’t have a clear goal, then introducing an agile methodology won’t work. Aligning with management was essential, as in general, agile methodologies are a strategic decision backed by the leadership. Once we had refined our objectives, we defined our working principles with representatives from all levels and areas, resulting in a clear vision. Only then we could roll out the agile principles across all affected departments, emphasizing two-way communication and coaching for all staff levels. During this process, we discussed our values and goals while actively listening for any necessary adjustments. One of the values that was repeatedly raised was openness, which for me closely relates to a so-called error culture. 

Dr. Schachtner: We implemented the project using external guidance from experts. They not only advised on the practical implementation of the SAFe [Scaled Agile Framework] but also on communication strategies and addressing the cultural changes. We also held workshops across the hierarchy, which helped us create a vision for future leadership. The outside-in perspective was very helpful. 

How important is it to cultivate a healthy error culture?

Dr. Legl: Errors are a natural part of the innovation process. The important thing is not to try and avoid them but to treat them as opportunities to learn and create a better product. This message was emphasized by professor Jan Hagen of ESMT Berlin, whom we brought in to advise us on error culture. Fostering a healthy culture of learning from our mistakes encourages developers to take technical risks and test new ideas, without the pressure to get it right first time. Our goal is to establish an environment where an unsuccessful attempt is viewed not as a failure, but as a lesson for future improvement. Such an environment is vital for technological innovation. 

What were some of the benefits and challenges of adopting agile methodology in R&D?

Dr. Legl: In software development, agile methodology aims to deliver a product at the end of each sprint, be it every two or every four weeks. Of course, this isn’t feasible in mechatronics, due to the need for parts manufacturing and assembly. Nevertheless, the principles of agility still apply. Every task can be broken down into smaller steps, and each can be assessed according to its unique acceptance criteria.

This is important because people often associate agility with chaos, but in fact it is the opposite. With an agile approach, you are more transparent, more flexible, more structured, and more efficient. Agility is pure structure – if executed correctly. To do this, you must first establish the iterative process and goals. Then you do the same thing over and over again, setting up tasks to implement new functionality, defining acceptance criteria, developing the new functionality, and evaluating whether or not your goals have been met. And if not, how do we change that?
 
Product development projects can span three years, which sometimes leads to procrastination – what we call the “lazy student syndrome.” When you have three years, you always think you have loads of time. Breaking the project into smaller iterations helps create focus and build a sustainable working pace. This approach benefits employees because they can track the progress of their work through each iteration. 
 
I should stress that the point here isn’t to expose employees who fail to meet targets; rather, it’s about understanding why the targets were not achieved. We then use that insight to improve our planning until we find the right rhythm.
 
Dr. Schachtner: When adopting agile practices, it’s important to have a master project plan. It needn’t be overly detailed, but it should guide our projects. For instance, if we anticipate testing in nine months, we should start preparing today. Agile teams need to be able to adapt every few weeks. However, without a plan, we might progress quickly but not necessarily in the right direction. Hence, this master project plan provides the structure within which we apply the agile approach.

How well did the employees adapt to the transition?

Dr. Legl: It takes time to change organizational culture. There are the early adopters and those who follow. And some think the process was better before – which of course is also a valid opinion. Or, as Karl Valentin put it, “In the past, even the future was better!”

But we tried to match individuals with projects that used the methodology they are comfortable with. This versatility was made possible by putting people at the center of the transformation – rather than the other way around.

I also would like to highlight a nice aspect, that some of our most experienced individuals, even those nearing retirement, eagerly championed the change. The transition wasn’t always smooth sailing, but this is normal. It’s clear that this new approach is our path forward.

Dr. Schachtner: I completely agree that age doesn’t dictate how one adapts to new ways of working. Importantly, those who don’t fully embrace the changes aren’t any less valuable or appreciated. They operate differently in this evolving workspace, and they also contribute immense value to an organization. 

Can you give an example of improved customer-centricity?

Dr. Legl: Today our developers can use the digital hierarchy to trace back to the customer’s functionality they’re working for. We’ve structured our requirements management to describe the customer use case at a high level, which then breaks down into individual features and user stories. This way our employees always understand the customer benefit of their work, highlighting the structure and effectiveness agile working brings when combined with digitalization.

Are the clients also seeing those direct benefits?

Dr. Legl: Our regular sprint transitions have been very revealing. These meetings, where we showcase our achievements and the new functionalities, have offered our internal clients, like our sales teams, real insights into our processes. They’ve come to understand the complexity of our features and appreciate our efforts. And moving forward we plan to involve our customers more and more in our sprint reviews.
 
The transparency has definitely helped, even with our more risk-averse clients. They are starting to see the strength of our products. We’re leveraging our strong customer relationships to involve them in our process early on. We show them our achievements and ask for feedback: Is this what you envisioned? What are your thoughts? How could we adjust it? We’re in the early stages of intensifying this feedback loop, but the potential is huge due to our strong client relationships. So, yes, our customers are seeing the benefits, and we plan to enhance this interaction more and more.

Dr. Schachtner: What we are also seeing is that our sales teams see how many people are working on the project. I want to quote a colleague who said, “I didn’t know how many people were working for me.” So, now they understand both the effort and the content much better, which adds value to their interactions with our customers.

Finally, where does the journey go from here?

Dr. Legl: My vision for our future is one where our development process works like a production line in a factory, or like baking pretzels, to use a familiar Bavarian metaphor. In this scenario, a customer places an order (or “pulls” a requirement) and this order travels through our development “factory,” being formed and finished just like a pretzel in a baking process.
 
I understand that development isn’t exactly like factory work, but the principles of efficiency, flow, and customer satisfaction still apply. In this vision, were able to quickly meet each new requirement, with our team enjoying the process as much as our customers appreciate the result.

Dr. Schachtner: We will have achieved true agility when we move like a flock of birds. When all follow the same path without much apparent need for coordination.

Our sincere thanks to Dr. Legl and Dr. Schachtner for the interview and their great insights!

Published: 21/11/2023