Three Levels of Optimization
Agile is pervasive and changes organizations, some more, some less. The same way as there are different levels of Agile planning (daily commitment, sprint, release plan, product roadmap and product vision), there are different levels of optimization an organization can achieve by applying Agile and principles based on the Lean Startup.
When a development team implements an Agile framework such as Scrum, it starts optimizing a number of its practices, which has certain benefits. However, because the focus is only the development team and not the larger organization, the level of optimization achieved is limited. The Agile team is embedded in an organization that doesn’t holistically apply Agile principles, therefore the optimization is limited to the technical team and hopefully the Product Owner, which is the only part of the team intersecting with the non-technical part of the business. While this yields some benefits, they are limited.
When the whole organization “is Agile”, it becomes possible to optimize the entire business, which includes the Development group, the Product organization and even Finance and senior management as well as other related parts of the business. At this level, the whole business is optimized to deliver on business value, the product roadmap and vision. Many organizations stop here, but on 2nd thought, the optimization is often still based on internal assumptions. The organization delivers those projects and features that it thinks will produce the highest business value and deliver the best business results. (The Product organization is pretty certain it knows exactly what features the customer base needs and works with the development organization to ensure those assumed high-value features are delivered first.) These assumptions may or not be correct.
Only once actual results after release to the customers are measured and fully understood can an organization truly optimize real business outcomes and validate the internal assumptions with external results. That’s where applying principles of the Lean Startup are helpful and allow an organization to release an MVP (minimally viable product), gather systematic feedback and then pivot on the information received if necessary. Only once those features hit production can those assumptions be given the litmus test of real customers and revenue plans be turned into actual dollars.
The bottom line is this: We obviously don’t want to practice Agile just at the team level. Many companies have understood that and strive to transform themselves to Agile organizations in a more holistic manner. While this is great, the true optimization of actual business results comes from optimizing for actual, validated customer outcomes and market adoption. Product life cycle approaches such as the Lean Startup are therefore complementary to Agile and needed to achieve the best possible business results.