Five Common Success Factors When Transforming Traditional Retailers Through an Agile Management Approach

Five Common Success Factors When Transforming Traditional Retailers Through an Agile Management Approach

From contributing author, Charlie Wärendh 

With the rise and dominance of fast-fashion retailers and digitally native vertical brands over the past decade, taking an agile approach to how product is designed, created, and delivered is imperative to be competitive.  The benefits of applying an agile management approach—a modern and iterative management approach that focuses on continuous improvement, rapid decisions making, and autonomous and empowered teams—are clear: increased speed, productivity, transparency, and employee satisfaction; decreased cost, redundancy, and micro-management.  Yet, several traditional retailers fail to transform to fully agile organizations because they are too rooted in old structures and old ways of working.  From our experience, brands can make the transition to be fully agile if they take a wholistic approach, and we’ve seen five common success factors:

Establish a North Star and a clear path to get there — Each brand needs a clear vision and a clear strategy to achieve that vision. Equally important, however, is establishing a culture willing to embrace an agile approach (e.g., continuous improvement, progress over perfection, continual feedback loops, etc.).  One brand president we worked with established this by constantly reinforcing, “We’re not paid to be right all the time…. We’re paid to learn quickly.”  He brought that mentality into everything the brand did, and encouraged his leadership team to follow suit.  This set the tone from the top for the brand’s agile transformation, and set the expectation that the process would be a constant permutation versus a final destination.

Build a structure that will promote and enable agile thinking — Designing an organization to drive an agile culture is critical.  Accessing both the hard and soft skills of the leadership team is critical from the beginning of the agile transformation — and getting the right leaders in place is one of the clearest indicators of a successful transformation.  With the right leaders in place, the brand can focus on the rest of the organization.  From our experience, reducing layers and creating an organization that has cross-functional clarity enables small, fully empowered, pod-based teams.  All of this requires tough decisions, but it’s important to have a sturdy foundation for a successful transformation.

Create the environment what will allow an agile approach to thrive — How individuals and teams appear on an org chart is different from how they interact in real life.  It is important to create an environment for success by focusing on details such as cross-functional team seating, spaces to encourage teaming, the technology teams use for collaboration, etc.  We recently worked for a client with bi-coastal operations: some functions on the West Coast while others on the East Coast.  Working with the brand’s leadership team, we made the call to consolidate the team to one coast and then helped manage the integration.  The end result was a co-located team that could now focus more on in-person cross-functional collaboration, rapid decision making, and innovation — while reducing redundancy and overall cost.

Re-review all processes in the context of agile — Once the structural bones of the organization are in place, the true value of agile can be unleashed by adjusting the operating model across the entire organization.  Each team should relook at processes, roles & responsibilities, and systems / tools in the context of agile to implement change using a continuous approach mindset.  How can leaders empower their teams?  How can organizations reduce layers of decision making?  How can teams make decisions quickly while balancing risk appropriately?  How are learnings incorporated back into the process?  Every part of the operating model needs to be re-evaluated and evolve.

Apply agile to all parts of the organizations — The best way to implement agile is to use an agile methodology to do so.  All parts of the organization—from Design and Product Development to Finance and HR—should consider how they can apply an agile methodology in their function.  With one of our clients, we built a pod-based team structure to quickly design and implement a major HR initiative.  Similarly, we established a small cross-functional team—consisting of members from the Strategy team, the Operations team, and the business team—to build out 1-to-3 year category plans in order to fully flesh out and operationalize the brand vision at a category level.  Both examples thrived since leaders gave the teams a clear goal and full autonomy to achieve it.

The formula for success isn’t the same from one company to the next, but there are some clear success factors: set a clear vision, encourage a resilient culture, put the right leaders in place, build the flat and pod-based team structure, establish the right environment, and continuously re-evaluate every aspect of the operating model.  And throughout the entire agile transformation, it is always to remember that it is a journey, not a destination — and perfection can be the enemy of progress.

Charlie Wärendh is a management consultant and retail strategist based in San Francisco, CA.