Agile Enterprise: How Business and Customers Drive Change

Greetings
2
©2018 MATRIX Resources, Inc.
Gervais (Jay) Johnson
Sr. Director, National Agile Practice at MATRIX

Question:
What is Customer First to you?

Customer First Company and Organization Design
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Customer First Organization:
More than CRM
More than SalesForce
More than Customer Support
More than Help Line
More than Digital Marketing
More than Social Media
More than Digital Experience
“Our company is customer
first because we do……”
Pete Mehr, PhD, has over 15 years of experience in the life sciences industry, the last six years at Merkle. Currently the Chief
Strategy Officer, Life Sciences

Customer Organization = Real Behavior
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Most effective Customer First Companies are:
1. Organizationally Structured for Customer
First
2. Everyone in the company knows their
customers, products, and strategy
3. Talk to and know customers, and are
customers themselves
4. Prove through their actions that they care
about their customers
5. Able to adapt quickly to customer needs
and trends
6. Practice Business Agility

Customer for Life
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Customer Life Time Value (CLV)
“How effectively innovation investment
increases customer health and wealth”
“Our customers become much more
valuable when……”

Value Creating Customers
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Value Creating Partners
Vs
Value Extraction Targets

Customers and Business Tightly Coupled
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Customers provide rich directional
information:
Ideas
Evangelism (NPS)
Reduce Costs
Collaboration
Experimentation with New Products
Provide Data
Show the new

Potential Customer and Customer Delight
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What is the difference between the potential
customer lifetime value - when we do
something - versus when they do it?
We vs They
Typical vs Best

Customer Intelligence
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Quantitative and Qualitative Information
Surveys
Focus Groups
Customer Panels
Digital / Site Analytics
Call Center
Support Center
Marketing Analytics
Social Media
Data Mining and Science
Behavior Analysis
Ethnography Studies

Customer Journey
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Customer Journey Maps
Holistic Customer Experience Visualized
Focus on Customer Experience and Inbound
Identify New Customers
Align Product to Customer
Create Customer First Mindset
Capture Perceptions, Needs, Expectations,
Emotions
Leverage Call Center and Support Information
Develop/Leverage Personas
Leverage Performance Metrics

Customers, Markets, and Businesses Can Be Created
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A study from Harvard Business Review Analytic
Services and the Genpact Research Institute found the
biggest obstacle to accelerating the pace and impact
of digital transformation is the inability to
experiment quickly. Design thinking and rapid
prototyping enable even the largest enterprises to
innovate like start-ups and to develop breakthrough
customer experiences.
There are practical, business benefits to this approach.
According to a 2014 assessment by the Design
Management Institute, design-led companies like
Apple, IBM, Nike, and Whirlpool outperformed the
S&P 500 over the past 10 years by 219 percent.
IDC says that banks which ignore digital
transformation will perish. Forrester research found
that only 18% of U.S. brands provide good or excellent
customer experiences.

Question:
What is Business Agility to you?

Business Agility
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1. Employee Happiness – Individual and
Networked, Collaborative and
Accountable, Engaged and Introspective
2. Customer Delight – Exponential Change
with customer part of the Organization
Ecosystem
3. Learning Community – Safe to Unlearn
and Leadership as a Service
4. Disrupting Stability – Create, Grow,
Balance, Reinvent, Always Relevant
5. Social Purpose and Meaningful Culture –
The Giveback Brand
Smartest Person in the Room is the Room

The Age of Agile
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1. Law of the Small Team
2. Law of the Customer
3. Law of the Network
Agile management is at odds with much of what is practiced in public corporations and taught
in business schools

Business Agility = New Organization Creating Customer -
Social First Culture 16

Business Agility Personality
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Traits:
• Building the Right-Thing – Customer Value.
• Building the Thing-Right – Excellent Customer
and Business Outcome.
• Building at the Right-Speed – Exceeding
Customer Demand.
Highly engaged people relentlessly focused on customer value, continuously improve operations using
empiricism while swiftly embracing change within a sustainable business model.

Business Agility is Holistic
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Ways of Working:
• Principles based to allow for case by case
flexibility.
• Applicable holistically without pre-determined
application.
• Focuses on mindset change first, as opposed to
detailed process adoption.
The approach of adopting a unique set of Enterprise-based Agile values and principles to an
organization’s holistic needs. (as opposed to those of only technology based solutions.)

Business Agility = Innovation and Stability
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Question:
What is Design Thinking to you?

Design Thinking
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“Design thinking is a human-centered
approach to innovation that draws from the
designer's toolkit to integrate the needs of
people, the possibilities of technology, and the
requirements for business success.”
Tim Brown, CEO of IDEO
“Design is the process of understanding
customer needs and then creating a product
or service—physical, digital, or both—that
addresses their unmet needs.” McKinsey &
Company

Design Thinking
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“Design thinking is a user-centered approach
to problem solving that fosters innovation,
which provides competitive advantage, and
competitive advantage can make it rain.”
Ryan Wright, MATRIX
“Design is the human centric and analytically
informed innovation across physical, digital,
and service solutions resulting in business
success and social impact.”
Gervais Johnson, MATRIX

Examples of Companies that Perform Customer-First and Design Thinking
Very Well….
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Most companies 10-20 years behind
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“The S&P 500 companies that invested most into design
processes, capabilities, and leadership over the past
decade, including design stalwarts such as Disney, Nike,
and P&G, outperformed the rest of the index by 211
percent.
What our research demonstrates, however, is that many
companies have been slow to catch up. Over 40 percent
of the companies surveyed still aren’t talking to their end
users during development. Just over 50 percent admitted
that they have no objective way to assess or set targets
for the output of their design teams.”
McKinsey & Company, Business Value of Design Study

What Does Design Thinking
Accomplish in an Organization?
• Customer Delight
• Customer/Market Creation
• Cultivates Curiosity
• Encourages experimentation
• Increases collaboration
• Tears-down silos
• Spreads ideas like a virus
• Allows “Go big and go fast”

Design and Agile Convergence
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Discovery and Delivery Agile and UX

Design and SCRUM
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“ Together we’ve been
working to build a framework
that spells out — step by step
— how scrum and UX design
integrate. One exercise we
did individually was to
overlay UX and Design
activities on top of a well-
founded model of scrum. The
diagram is my attempt at that
exercise.”
Jeff Gothelf & Josh Seiden
Customer Intelligence Customer Interaction

Design is a critical part of a successful organization
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According to the IBM 2017
Global C-suite Study,
"Organizations of all sizes are
prioritizing personalized
customer experiences. The
enterprises that most
effectively deliver on this
imperative are using design
thinking to manage complexity,
orchestrate across channels
and truly understand their
customers’ motivations.”
IBM 2017 Global C-suite Study

DESIGN IS AGILE AND AGILE IS
D ES I G N

Key elements of a great design organization
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• Cross Functional Teams
• Interdisciplinary Team Members
• Team Garage Space
• Cultural Phenomenon
• Customer Centric
• Technology & Engineering Leadership
• Continuous Design
• Qualitative and Quantitative
• Analytical Decisions
• Experimentation and Prototypes
• Design and Outcome Measurements

Question:
How is Design executed within your company?

Design Thinking At Apple
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After Steve Jobs returned to Apple in 1997 (upon Apple’s
acquisition NeXT), he started to apply the design thinking
characteristics discussed above, which reflected his vision for
Apple products. The vision discussed below was used to form
Apple’s strategy from 1997 until today.
Steve Jobs applied design thinking by focusing on:
• People’s needs and desires, rather than only the needs of the
business
• Building empathy by helping people to love Apple products
• The design rather than the engineering work; designers
consider both the form and the function of the product
• Building simple yet user-friendly products rather than complex
hard-to-use products

Design Thinking At Apple
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“Most people make the mistake of thinking design is what it
looks like. People think it’s this veneer — that the designers
are handed this box and told, ‘Make it look good!’ That’s not
what we think design is. It’s not just what it looks like and
feels like. Design is how it works.”
Steve Jobs
Reference
http://creativeselection.io/
https://www.designorate.com/design-
thinking-case-study-innovation-at-
apple/

Design Thinking At Amazon
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Amazon eCommerce
Amazon Web Services
Amazon Alexa
Amazon Fresh
Amazon WholeFoods
They have a track record of delivering
breakthrough experiences which
creates disruption opportunities. You
can learn more about Amazon’s
experimentation culture and why Jeff
Bezos says, “It is always day 1 here”
Forbes has written about the 12
major industries which Amazon has
disrupted and/or is trying to disrupt.

Design Thinking at PepsiCo
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“To a certain extent. When you’re a CEO, you can’t break
too many stereotypical expectations. I wish you could, but
you can’t. In those days, there was a well-defined
conservative stereotype, so everything I did was breaking
the framework. I played in a rock band. I climbed trees. I
did stuff that made my parents wonder, “What the hell is
she doing?” But I also was a good student and a good
daughter, so I never brought shame on the family. And I
was lucky that the men in my family thought the women
should have an equal shot at everything. I’m still a bit of a
rebel, always saying that we cannot sit still. Every morning
you’ve got to wake up with a healthy fear that the world
is changing, and a conviction that, to win, you have to
change faster and be more agile than anyone else.”
Indry Nooya

Design Thinking at PepsiCo
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“There’s a fine line between innovation and design. Ideally, design
leads to innovation and innovation demands design. We’re just
getting started. Innovation accounted for 9% of our net revenue last
year. I’d like to raise that to the mid teens, because I think the
marketplace is getting more creative. To get there, we’ll have to be
willing to tolerate more failure and shorter cycles of adaptation.”
Do you feel that companies have to reinvent themselves every few
years, that competitive advantage is fleeting?
“No question about it. It’s been a long time since you could talk about
sustainable competitive advantage. The cycles are shortened. The rule
used to be that you’d reinvent yourself once every seven to 10 years.
Now it’s every two to three years. There’s constant reinvention: how
you do business, how you deal with the customer.”
Indra Nooya
Reference
http://design.pepsico.com/
https://hbr.org/2015/09/how-indra-
nooyi-turned-design-thinking-into-
strategy

Design Thinking at Intuit
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“In a very short period of time they learned that many more
people were interested in buying just one seat, or three seats. As
a result, after further testing, they changed their policy to sell
individual and smaller numbers of seats. What was the result of
this small customer-centric, quick prototype test? A $10 million
increase in sales in the first year.”
“Intuit’s finance organization recognized that 25% of their
customers didn’t update their credit cards in time and were cut
off from service……the group ran a series of small experiments on
how to keep contact information up-to-date and to find better
ways to communicate with their customers. The company
estimates recovering approximately $8 million a year in lost
revenue, simply by improving communication and engagement
with customers in keeping billing information up-to-date.”

Question:
How is innovation part of your way of working?

Technology Epic Failures
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Technology Epic Failures
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Technology Innovation Philosophy
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Innovation/Invention Depends on Problem
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I found that every innovation strategy
fails eventually, because innovation is, at
its core, about solving problems — and
there are as many ways to innovate as
there are types of problems to solve.
• Facebook Hacker Week
• Google Innovation Think Day
• Intuit Innovation Day
• Multiple Company Innovation Centers
• Adobe Kickbox
Reference
https://hbr.org/2017/06/the-4-types-
of-innovation-and-the-problems-they-
solve

Innovation from Customer Collaboration and Validation
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Customer Development is a four--
-step framework developed by
Steve Blank to discover and
validate that you have identiﬁed
the market for your product, built
the right product features that
solve customers’ needs, tested the
correct methods for acquiring and
covering customers, and deployed
the right resources to scale the
business.
Reference
https://kickbox.adobe.com/

Business Agility + Design + Cynefin Complexity Framework
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Innovation Aligned to Company Life
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Initiation
Expedition
Formation
Validation
Stabilization
Acceleration
Crystallization
Expansion
Conservation
Finish
By Jurgen Appelo

Business Agility Ecosystem
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Business Agility is Holistic
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“IT needs to
move faster”
“Legal needs to
participate more”
“Audit needs
to be more
flexible”
“Delivery and
Support are not
in sync ”
“More HR
Support is
needed”
A Holistic Agile approach
recognizes there are
individual issues but starts
with the whole organization
in mind in order to improve
every part as opposed to just
one.
Holistic Agile principles are
also designed to be utilized in
every part of the
organization regardless of
interaction with IT.

References
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https://businessagility.institute/
Serious Play and Who Do You Want Your Customers to Become
and Innovation and Hypothesis by Michael Schrage
The Age of Agile by Stephen Denning
Mapping Experiences by Jim Kalbach
Designing the Invisible by Lara Penin
Branded Interactions by Marco Spies
Innovators Dilemma by Clayton Christensen
Management 3.0 by Jurgen Appelo
Startup. Scaleup, and Screwup by Jurgen Appelo

Thanks for attending today’s Seminar!
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Be on the lookout for an email with a link
to access the slide deck.
Attend Lean-Agile Frontiers October 28-29:
http://agileenterprise.engineering/
Send any additional questions to
Gervais.johnson@matrixres.com.

Agile Enterprise: How Business and Customers Drive Change

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