Agility – How the Achievement of Corporate Goals Can Be Supported by Using the Agile Method Scrum
Today, markets are characterized by constant change. According to Dühring (2020, p. 2), it has been apparent since the early 1960s that entrepreneurial activities are becoming increasingly dynamic, competitive and complex. In the meantime, however, the degree of uncertainty, inconsistency, speed and complexity has reached new dimensions. Companies are faced with the challenge of mustering the flexibility and dynamism necessary for long-term success. To meet these challenges, science postulates that companies should act in an agile manner in order to achieve sustainable success in the future (Overby et al. 2006, p. 120).
That is why many companies are using agile methods to meet this constant change and its challenges. According to the 14th Annual State of Agile Report (Digital.ai 2020, p. 2), Scrum is the agile method most frequently used by companies. This agile method was therefore used as an example to examine how agile methods potentially impact the achievement of corporate goals in general and those in the financial industry in particular.
This article is based on the contents of the bachelor thesis of our former intern Cedric Moser, who wrote his bachelor thesis in the field of agile transformation. The thesis deals with the question of which corporate goals can be achieved more effectively through the use of Scrum and which corporate goals banks pursue through the use of Scrum.
Before going into more detail about the influence of Scrum on the achievement of business goals, we would like to take a closer look at Scrum as one of the central agile methods.
Scrum – A Brief Overview
Scrum was already used in the early 1990s as a process framework for processing and coordinating complex products. Scrum is defined as a “framework within which people can address complex adaptive problems, while productively and creatively delivering products of the highest possible value” (Schwaber & Sutherland 2017 p. 3). Already in its early days, Scrum was used globally, among other things, to develop software and hardware for companies. Due to the increasing market, technology and environmental complexity, Scrum manifests itself as very useful in dealing with the complexities of the software or hardware development process (Schwaber & Sutherland 2017 p. 3-4).
Scrum is a framework that is primarily used in product development and project management for the collaboration of interdisciplinary teams. Scrum regulates the necessary roles, meetings and techniques of the team so that it can follow a clearly defined work process based on agile principles in order to be able to react flexibly and quickly to changing requirements (Diehl 2019). What differentiates Scrum from classic project management is the self-organization of the individual team members, as there is no longer a project management that distributes tasks to the team members. Furthermore, Scrum does not include classic project phases, but so-called “sprints”. These are short iterations of one to four weeks in which a product increment is developed. The goal is to have a potentially deliverable product at the end of each sprint, which is developed further and further as the sprints progress until it is completed (Inwerken 2021).
Scrum proves to be particularly effective in iterative and incremental knowledge transfer within a company (Schwaber & Sutherland 2017 p. 3-4). Through the interdisciplinarity and close collaboration in Scrum teams, the individual team members learn a lot about the specialist areas of their team colleagues and can thus communicate and collaborate ever more effectively. For example, the implementation of domain-specific requirements in software can be significantly improved if the domain expert and software developer are familiar with the requirements, opportunities, and constraints to which each other’s work is subject. Scrum provides the framework within which a variety of processes and techniques can be applied to keep the development of new products or features as flexible and adaptive as possible.
But Can Corporate Goals Be Achieved More Effectively Through Scrum?
For a detailed consideration of corporate goals, Kocian-Dirr (2019, p. 153) suggests categorizing them into economic, social, and environmental goals based on entrepreneurial aspirations. According to Moser (2021, pp. 23-24), economic goals found in the literature are the intention of increasing profits, increasing sales, gaining market share, optimizing costs, increasing innovation, increasing profitability and shortening time-to-market. Social corporate goals include, for example, ensuring the social interests of employees (e.g., continuing education measures), increasing customer satisfaction and loyalty, increasing employee satisfaction, and taking social concerns into account (also often referred to as corporate social responsibility) (Moser 2021, pp. 24-25). The third category of corporate goals, environmental corporate goals, includes lower resource consumption, minimization of pollutant emissions, and waste prevention (Moser 2021, p. 25). In this context, the selection and prioritization of the respective corporate goals depends on the preferences of the company, the influence of relevant stakeholders, such as the state, employees, customers and affiliated companies, as well as the social framework conditions (Kocian-Dirr 2019, p. 153).
According to Joiner (2019, p. 2), a focus on agility can benefit the achievement of various business goals. For example, international studies show that more agile companies have better business performance (Joiner 2019, p. 3). The results of a study by PMI (2017, p. 2) support these findings. The research found that 92% of executives surveyed believe that agility and the use of agile methods such as Scrum are critical to achieving business goals. An analysis of the specialist literature reveals that the following corporate goals can be better achieved through agile methods in general and Scrum in particular (Moser 2021, p. 32):
- Increased revenue: Agile companies can increase their revenue compared to the time before the introduction of Scrum (Joiner 2013, pp. 48-53; McKinsey 2006, pp. 3-4).
- Gaining market share: The application of agile methods such as Scrum has positive effects on the market share of companies (Joiner 2013, pp. 48-53; McKinsey 2006, pp. 3-4)
- Cost optimization: Agile methods can significantly reduce costs while achieving higher quality (Leffingwell 2007, p. 11)
- Increasing profitability: The use of agile methods has a positive effect on profitability (Joiner 2013, pp. 48-53)
- Increasing the ability to innovate: According to a study by McKinsey (2006, pp. 3-4), many executives are convinced that agility increases a company’s ability to innovate.
- Shortening time-to-market: Time-to-market and the productivity of a company can be improved by using agile methods such as Scrum (Leffingwell 2007, p. 11).
- Increased customer satisfaction: Higher productivity and higher quality of output through the application of Scrum ensure high customer satisfaction (Joiner, 2013, pp. 48-53).
- Increasing employee satisfaction: According to Wolf (2018, pp. 11-12), Scrum has a positive effect on employee satisfaction.
The analysis of the specialist literature shows that various corporate goals can be better achieved with the application of Scrum. However, the question arises whether and to what extent this also applies to companies in the financial industry. Therefore, Cedric Moser used expert interviews to validate the results with representatives of various financial service providers. The results are presented briefly below (Moser 2021, pp. 39-40).
Influence of Scrum on the Achievement of Business Goals in the Financial Industry
The experts stated that they can basically confirm that the achievement of corporate goals can be positively influenced by agility.
A list of the corporate goals named by the experts and their relevance is shown in Figure 1.
The business objective most frequently cited by the experts as being better achieved through Scrum is the reduction of time-to-market. This is in line with the findings of the specialist literature, which describes reduced time-to-market as a key benefit of agility. Banking products that are available on the market generate a return more quickly, which in turn means added value for the banks. One expert explains that a non-agile approach within a financial services company takes an average of 18 months from idea generation to product delivery. With the help of agile methods such as Scrum, the time required could be reduced to 12 months, according to the expert. In the future, it is expected that only 9 or 6 months will be needed to realize a product idea.
Furthermore, agility makes it possible to respond better to the needs of the customer and to bind the customer to the company by means of precisely tailored solutions. The iterative approach of Scrum makes it possible to respond more flexibly to customer needs. In addition, agility can drive the goal of increasing sales. The increase results from the fact that the financial service provider can perceive changes in the market or customer requirements more quickly due to its proximity to the customer. This allows new markets to be developed and more of a customer’s potential to be tapped, as products and solutions can be provided in a more demand-driven manner. An example of tapping into a new market in the financial industry is trading in cryptocurrencies, which more and more investors are interested in and which the Stuttgart Stock Exchange and Deutsche Börse now enable (Börse Stuttgart 2020; Deutsche Börse, n. d.). An example of innovation to exploit customer potential in the same market is offered by the expansion of the distribution channels of most financial institutions to online or mobile channels and, more recently, the embedding of offers in the customer journey – embedded finance. Furthermore, agility also favors cost reductions. Being close to the customer avoids misallocations, which increases a company’s efficiency. This results in a cost-saving effect. The experts also state that process optimizations driven by agility lead to a further reduction in costs. Process optimizations result to a large extent from the alignment of Scrum teams, coordination of individual delivery results in the project plan and flexible allocation of capacities. Apart from the economic business goals, according to experts, employee motivation is increased by the self-organized way of working in Scrum teams.
The positive influences of Scrum on corporate goals mentioned in the specialist literature have been confirmed by the experts. Nevertheless, it is important to mention that during the transformation process, companies are faced with major challenges, as this is accompanied by many changes. Companies at the start of an agile transformation process should take into account that organizational resistance can occur, e.g., resistance from employees, and a necessary training period for agile methods is required. In the short term, this can have a negative impact on the achievement of corporate goals. Nevertheless, agility represents an important supporting factor in the medium to long term for achieving corporate goals.
 Cedric’s bachelor thesis titled “Agility – Achieving Business Goals with the Agile Method Scrum. An Analysis on the Use of Scrum in the Banking Industry” was written in May 2021.
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