2020-3799-AJBE-SME – 01 JUL 2020 1 Integration of Agile Approaches in SME´s 1 Product Development: Demand Analysis and 2 Concept Development 3 4 5 6 In times of a complex, uncertain and dynamic world with increasingly faster 7 product life cycles agile approaches in the early phase of product development 8 are demanded in small and medium sized enterprises (SME's). Despite the high 9 demand, there is still no generally valid and need-specific solution concept for 10 the integration of agile approaches due to different company specific 11 requirements such as the level of maturity, experience and application purposes. 12 Within this research, the question about the actual needs as well as the 13 corresponding design of a concept for integrating agile approaches in product 14 development for SME requirements is tackled. In order to identify exisiting 15 challenges in the field of agile product development an empirical study with 16 eleven mechanical engineering companies is conducted and analyzed. By using 17 agglomerative-hierarchical clustering, three distinct types of SME’s with similar 18 needs are structured. As a result, this research proposes a systematic procedure, 19 enabling SME’s to be clustered by their needs and enable the integration of 20 agile approaches trough a problem-oriented roadmap with specified 21 recommendation of actions. Enhancing the integration and application of agile 22 approaches effectively in product development projects, the level of agility 23 appropriate to the situation and needs must be identified and introduced. 24 Therefore, the potential that arises from the process-oriented support of the 25 product development teams in the early phase of innovation projects will be 26 outlined. 27 28 Keywords: Agile approaches, needs analysis, clustering, product development, 29 mechanical engineering 30 31 32 Introduction 33 34 Many SME´s are confronted to counter the pressure of the VUCA 35 (volatile, uncertain, complex, and ambiguous) world (Nandram, Bindlish 2017) 36 and aim at integrating agile approaches due to the necessary adaptivity and 37 flexibility (Dose & Drexler, 1988; Kastelle, 2013). Especially in the early 38 phase of product development, where the product gets initially designed and 39 can usually still be flexibly adapted, the use of agile approaches can be of great 40 advantage (Albers, Heimicke, Mueller, & Spadinger, 2019a, 2 f.; VersionOne 41 Inc., 2019). According to different studies these advantages are increased 42 flexibility to respond to changes and handle complexity, increased transparency 43 and improved communication within the development teams as well as an 44 improved satisfaction of customer needs (Atzberger, Nicklas, Schrof, Weiss, & 45 Paetzold, 2020; VersionOne Inc., 2019; we.Connect, 2018). 46
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2020-3799-AJBE-SME – 01 JUL 2020
1
Integration of Agile Approaches in SME´s 1
Product Development: Demand Analysis and 2
Concept Development 3
4
5
6
In times of a complex, uncertain and dynamic world with increasingly faster 7
product life cycles agile approaches in the early phase of product development 8
are demanded in small and medium sized enterprises (SME's). Despite the high 9
demand, there is still no generally valid and need-specific solution concept for 10
the integration of agile approaches due to different company specific 11
requirements such as the level of maturity, experience and application purposes. 12
Within this research, the question about the actual needs as well as the 13
corresponding design of a concept for integrating agile approaches in product 14
development for SME requirements is tackled. In order to identify exisiting 15
challenges in the field of agile product development an empirical study with 16
eleven mechanical engineering companies is conducted and analyzed. By using 17
agglomerative-hierarchical clustering, three distinct types of SME’s with similar 18
needs are structured. As a result, this research proposes a systematic procedure, 19
enabling SME’s to be clustered by their needs and enable the integration of 20
agile approaches trough a problem-oriented roadmap with specified 21
recommendation of actions. Enhancing the integration and application of agile 22
approaches effectively in product development projects, the level of agility 23
appropriate to the situation and needs must be identified and introduced. 24
Therefore, the potential that arises from the process-oriented support of the 25
product development teams in the early phase of innovation projects will be 26
& Leffingwell, 2018). Nevertheless, there are many open questions how 24
companies, especially SME, can successfully integrate agile approaches, since 25
there are mainly company-specific best practices available for certain agile 26
methods. These are only suitable for specific companies after thorough 27
examination, major adjustments and are therefore not easy to transfer. To 28
ensure a situation- and need-specific integration of agile approaches into 29
organizations the needs and organizational structures must be taken into 30
account. Thus, the research question arises, what are the current challenges of 31
companies by the implementation of agile approaches in product development 32
and which support is needed in their business situation? This research 33
investigates the actual challenges and potentials in order to identify which 34
concepts of support are applicable. Build upon these findings requirements are 35
derived for an overarching concept to enable the implementation of agile 36
approaches in product development according to the situation and needs of the 37
companies. 38
The applied methodical research approach is based on the four phases of 39
the Design Research Methodology (DRM) and intends a scientific and 40
structured research to ensure a scientifically sound result (Blessing & 41
Chakrabarti, 2009; Lind, 2017, p. 39). In the first phase, the theoretical 42
foundation is built. In order to form a theoretical basis for further research and 43
to identify the research gap, the status quo of the product development 44
integration measures of agile approaches and methodical support roles are 45
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presented on the basis of benchmark analysis and method comparisons through 1
literature research. 2
To guarantee a company-specific and up-to-date practical concept, the 3
second phase, Descriptive Study I, is realized by an empirical study in the 4
specification of 11 expert3 interviews of different companies in the mechanical 5
engineering context. For this purpose, three hypotheses for different types of 6
companies with similar needs were derived from the theoretical results and 7
validated with the empirical study of the 11 qualitative expert-interviews: 8
9
1) SME´s have the core need to integrate and apply agile methods as 10
efficiently as possible on a smaller scale in order to realize innovations 11
with limited resources due to their scarcity of resources.4 12
2) SME´s without agile experience have the core problem of not having 13
enough know-how to implement and integrate agile methods in their 14
company.5 15
16
Within the Prescriptive Study, the analysis of the obtained data, whereas 17
the main focus will be to determine requirements and criteria for the different 18
company situations. A clustering of the heterogeneous individual companies 19
based on this enables the development of a cluster-specific integration concept 20
with problem-oriented recommendations for action. Here, the agglomerative 21
method of hierarchical clustering is used, as this approach enables an 22
increasing number of clusters with decreasing distance, in order to select the 23
smallest possible number of clusters that makes sense and to ensure that the 24
concept can be generalized and transferred to different companies. Since the 25
empirical data are available in categorical form, they are loaded into a Python 26
script and normalized on a scale of 0-1 with a min-max transformation to 27
scientifically prepare and enable the answers to be interpreted.6 The scaled data 28
is then divided into clusters using the linkage method.7 By using the Ward 29
distance method to define the distance in the linkage procedure, thus two 30
clusters whose increase in variance by merging them is the smallest, are 31
combined into one common cluster (Cleff 2019, 417 f.). In order to be able to 32
make a meaningful evaluation regarding its performance, the developed 33
3E.g. head of product development, product developer with agile experience, agile coaches
working in the product development 4This hypothesis is based on the characteristic of SME’s compared to large corporations to
have scarcer resources. Accordingly, it is in their increased interest to apply agile methods
without high capital expenditure and to develop innovations as efficiently and effectively as
possible. 5This hypothesis is based on the assumption that some SME’s have neither the capacity nor the
know-how to deal with the implementation and application of agile methods. 6The min-max rule thus sets the highest value of the variable (in this case per column in Table
6) as 1 and the lowest value of the variable as 0. Using this formula, the data produces is scaled
and normalized data, which now successfully lie between 0 and 1 and can therefore be
processed further. Narang 2017, S. 614. 7An agglomerative clustering algorithm, in which each object first forms a cluster and then the
clusters that have already been formed are gradually combined into larger and larger clusters
until all objects belong to one cluster)
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concept was applied at a practical workshop, according the Descriptive Study 1
II. Against this background, the results were evaluated and action measures are 2
derived (Lind, 2017, 39 f.). 3
4
5
Results 6
7
Current Challenges of Companies by the Implementation of Agile Approaches 8
in Product Development 9
10
To ensure a situation- and need-specific integration of agile approaches 11
into organizations, the needs and organizational structures must be taken into 12
account. In order to identify current challenges of companies and their need for 13
support the truth content of the presented hypotheses are investigated by 14
analyzing the 11 expert interviews. The results of the study, which have been 15
redacted for data protection reasons, are illustrated in the line chart below (see 16
Figure 3). The line graph illustrates the identified and evaluated problems in 17
the application of agile methods in the product development of eleven 18
machine-engineering companies. On the abscissa the identifies problems are 19
listed and the ordinate describes the severity of the encountered problem using 20
the Likert scale (1 being very weak and 5 being very strong). 21
22
Figure 2. Data Analysis of Problem fields in Agile Integration and Application 23
24 As a result of the qualitative data analysis the following can be noted: The 25
problems a company faces in integrating and applying agile methods do not 26
depend on the size of the company, but mainly on the predominant degree of 27
agile methods and the process-related obstacles in the companies. Employees 28
find it difficult to escape the familiar hierarchical structures and to deviate from 29
the usual waterfall methodology. The hypothesis analysis of the collected 30
4 3
2 3
2 3 3
4
1 1
4
1 1
4 3
2 2
4
2 3
2
5 4
3 4
3 4
2 2
4
2
5
2 2
4 5
4 4 3 3 3
4
2 2 2 2 2 2 2 3 3
2 3 3 3 3
1 2 2 2 2
1 2
3 2
3 3 2
3 3 4
3 4
2 2 2 3
Company 1 Company 2 Company 3 Company 4
Company 5 Company 6 Company 7 Company 8
Company 9 Company 10 Company 11
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empirical data thus shows that the hypotheses are not completely consistent. 1
For example, there are SME´s as well as large corporates with process-related 2
obstacles when using agile methods. 3
Furthermore, it is noticeable in the graph that all companies have serious 4
difficulties with the lack of know-how of agile methods in product 5
development. However, the need for agile know-how as well as the need for 6
better communication between and in agile teams are current problems but 7
must first be considered individually for all companies and cannot simply be 8
categorized. A derivative is the existing lack of understanding of the purpose 9
and added value of agile approaches and accompanying methods for the 10
projects, which prevents their successful application. 11
The study results show a need for support by the application of methods 12
and tools in the early phase of the product development. Even with the 13
understanding of the methods it is difficult to apply them in the right situation 14
to help the development team to increase their ability to innovate. The 15
application of the right methods in time comes with the big challenge of 16
implementing the appropriate degree of agility that is suitable in the 17
corresponding situation. 18
Additionally, the challenge arised, that most of the experts had parallel 19
responsibility for an agile project and incidentally tasks of series development. 20
To manage the challenge of running the operating business with incremental 21
improvements as well as simultaneously exploring new possibilites can be 22
assigned to the difficulties of an ambidextrous management. To handle these 23
two action-oriented ways of thinking at the same time a support regarding the 24
priorization and practical realization would be very valuable. 25
According to the pre-formulated hypotheses three clusters of companies 26
would result with the respective assumptions. Since the hypotheses could not 27
be fully confirmed in the empirical study and companies also show problems in 28
unforeseen fields, the sole consideration of the number of employees and the 29
agile degree of the company as a clustering dimension is not sufficient to carry 30
out a clear clustering. This allows two conclusions to be drawn for clustering. 31
First, the number of clusters cannot be determined a-priori. Secondly, 32
clustering must be designed in an interpretable way. Finally, companies that 33
are as similar as possible should be grouped together in order to be able to 34
derive cluster-specific action measures that really address the problems for the 35
respective cluster. 36
37
Derived Cluster-specific Concept for Integrating Agile Approaches 38
39
With the described status quo in the state of the art as well as the analysis 40
result of the current challenges and needs for support, the research gap in the 41
area of implementing agile methods in different companies is shown. With the 42
derived requirements for an overarching concept to enable the implementation 43
of agile methods in product development a problem-oriented concept is 44
developed build upon three parts (cluster allocation, cluster-specific roadmap, 45
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exemplary tools and methods) in order to meet the needs of the companies (see 1
Figure 4). 2
3
Figure 3. Cluster-specific concept for agile integration 4
5 6
1st Part of the Concept: The Problem-oriented Clustering 7
8
After applying the ward method, explained in the methodology, the 9
clustered companies are presented in a dendrogram (see Figure 5). To 10
determine the optimal cluster number and thus the final clusters, a dividing line 11
must be drawn where the heterogeneity (the increasing distance) increases the 12
injections (the number of clusters). Here the Elbow plot is created as it can 13
indicate when such jumps occur (Cleff 2019, p. 418.). Under consideration of the 14
elbow plot and previous knowledge of the analysis of the surveys (Kassambara 15
2017, 101 ff.), three clusters were formed ex-post as a result. 16
17
Figure 4. Dendrogram of Aggloerative-hierarchical Clusterin 18
19 20
The resulting cluster allows allocation to groups of companies with similar 21
agility needs and forms three clusters with following features: 22
2020-3799-AJBE-SME – 01 JUL 2020
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Table 1. Resulting Cluster 1
Cluster 1:
No or few agile
experience
Cluster 2:
Agile experience without
procedural obstacles
Cluster 3:
Agile experience with
procedural obstacles
• Degree of optimal agile
product development
unclear
• Know How - Lack:
Organization and new
methods
• Lack of communication
between product
development teams
• Lack of personnel
resources
• High risk
• Agile know-how usually
through internal training
• Lack of understanding
and application of agile
methods
• Goal: Extend the
methodology toolbox
(e.g. SAFe approach) for
optimized and integrated
product development • Communication
problems
• Know How - lack in
agile methods (quality
assurance is missing)
• Procedural obstacles
• Product Owner is the
Manager (not always
suitable)
• Management support
missing (necessary for
fundamental change)
• Organizational
structures/projects set too
late for agile application
2
2nd
Part of the Concept: The Cluster-specific Roadmap 3
4
To integrate agile methods in a problem-oriented way, corresponding 5
cluster-specific roadmap are formed based on the findings of the clustering and 6
state of the art problem solving methodologies. The diverse problem severity is 7
of the three differentiated clusters is analyzed in addition with the clustered 8
findings of our empirical study and theoretical approaches. Based on this 9
knowledge cluster-specific approaches and recommendations for action are 10
derived to ensure a problem-oriented integration of agile approaches. 11 12
Figure 5. Roadmap to integrate agile methods for Cluster 1 13
14 15
The graph illustrates the four steps of the concept with its in- and output 16
for integrating agile methods into the product development by the example of 17
the first cluster with no or few agile experience. Exemplary tools and methods 18
which are suitable in this steps are represented by the gears below the steps. 19
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The first step consists of a two-way needs analysis in which both, 1
management and product development, analyze what their needs are in the 2
actual situation and whether agile approaches are the right solution. If agile 3
approaches have been chosen with the help of an suitable method, the second 4
step is to build up the know-how of agile approaches and appropriate methods 5
and tools to create the resources for their application. The third step is a first 6
test sprint of the chosen agile approach (due to the lack of experience of the 7
cluster) with recommended methodological support. In the last step the test 8
sprint is post-processed and the new status quo is validated. The involvement 9
of the management is recommended for a comprehensive understanding of all 10
stakeholders and for decision-making in the area of budget or personnel. After 11
the evaluation of the last step, the optimal degree of agility should be reached 12
or the process starts all over again with the determined changes. 13
14
3rd
Part of the Concept: Tool and Methods for Integrating Agile Approaches 15
16
For assistance, a collection of tools and methods for implementing the four 17
roadmap steps in the concept are also added as the third part of the concept. 18
Examplary methods and analysis tools are SWOT-Method or Co-Creation 19
model for the need assessment in the first step of the roadmap which are 20