Why Agile Development Leads to Business Success

Business flops result from three big mistakes that companies make repeatedly, says Rita Gunther McGrath, associate professor at Columbia University Graduate School of Business. They accept untested assumptions about their new ventures as facts, they don’t validate those assumptions against changing business data, and they don’t adapt their plans in light of feedback from the market.

It doesn’t take long for companies to turn their guesses into gospel—a mere six weeks, McGrath finds. In her book, Discovery-Driven Growth: A Breakthrough Process to Reduce Risk and Seize Opportunity, she suggests processes for evaluating a new venture’s progress and for updating operations based on what they learn.

The practices McGrath lays out are closely correlated with the way practitioners of agile development plan and build new systems. Key elements of both agile IT processes and agile business environments include agreeing on what success looks like, defining metrics to track progress, and setting up checkpoints for reviewing deliverables before throwing more money into the venture.

Agile IT = Agile Business

The similarity is no accident. Most business activities are completely intertwined with and utterly dependent on information technology. There’s no meaningful distinction between IT and business operations. Business agility goes hand in hand with agile development techniques to deliver the systems new ventures require.

Constantly assessing what works and what doesn’t keeps failures cheap. Companies can afford a lot of them—and in the process find the winners that make all the experimentation worthwhile. It’s the only way to navigate through—and succeed in—a constantly changing economy.

Michael Hugos is principal with the consultancy Center for Systems Innovation. This article is adapted from his blog, “Doing Business in Real Time.”.