Member Article

How to build an agile business

In a world where the customer is increasingly dictating the terms on which a retailer must engage with them, the retailer’s systems and, more importantly, the processes that drive them, are no longer fit for purpose. Aside from the high cost of maintaining legacy, those systems are simply not agile enough to respond to the demanding, unpredictable and sophisticated consumer.

Bolting more point solutions onto legacy only makes things worse, because the retailer simply ends up with an even more unmanageable environment, while the core business problems go unaddressed. Worse, different departments that need to come together around the needs of the consumer and collaborate are unable to do so, because they are using systems and processes that have been built up over years based on siloed working practices and a different definition of retail, which is now past its sell by date.

Innovation is therefore a victim to the shortcomings of both systems and processes.

The received wisdom for many years now has been that the legacy needs to be protected and extended. I entirely disagree. Too many retailers invest valuable resources into technology that is no longer fit for purpose, and this creates a situation in which they spend all their time maintaining what they have in place, and are therefore unable to drive their business forward with the agility needed to meet the demands of omnichannel shoppers.

A better objective for retailers should be to replace their legacy technology. The immediate focus can then be on introducing new processes that address the needs of the customer, rather than the shortcomings of the business, without disrupting the existing environment.

To understand how innovation is possible within their current infrastructure, retailers first need to look at the challenges and misalignments that are preventing them from using their technology to full effect at present.

As I’ve already mentioned, one of the key obstacles that stand between retail organisations and business agility is siloes – between systems, between processes, and between people.

In a large organisation, it is to be expected that there is multiple investment in technology. However, without communication and understanding of what these investments are, how they work together, and how they will benefit the business as a whole, retailers can find themselves in a situation where disparate solutions are not working together to full effect – or, worse, proving counter-productive.

For true innovation, retailers need to ensure that they have the processes in place to seamlessly connect their systems and people, in order to enable agile decision-making based on consumer demands. After all, there are many companies that use the same technology with different levels of success; it is the processes that underpin their usage that determine their effectiveness and return on investment.

By taking a step back and looking at their end-to-end infrastructure, retailers can gain a better understanding of how their business solutions communicate, and how they can transform them to connect both with each other and the users within their organisation.

From there, they will be able to identify and prioritise not only their new technology needs, but a set of processes to overlay this technology, which will enable the innovation needed to become more agile when serving customers. This is what I call the ‘innovate, don’t renovate’ approach.

The benefits of innovation

Adopting an ‘innovate, don’t renovate’ approach to business agility has a number of benefits for retailers. For starters, it does not waste money on making adjustments to legacy technology that is already incapable of meeting their needs, and will only become more inadequate over time.

Secondly, taking a green field approach to innovation produces significant and rapid results. Many retailers have held back from replacing their technology ecosystem in a single project under the misconception that no technology vendor is capable of delivering such radical change. This is simply not true. With the right partner, inputting new systems and best practice processes can generate tangible change in as little as six months – and a better functioning business can immediately improve its offering to the end consumer.

Finally, focussing not just on the technology, but the processes that enable their workforce to use it effectively, sets retailers up for long-term success. By addressing the core challenges that are preventing innovation, retail organisations can give themselves the flexibility needed to scale and develop their business as their customers evolve, to meet their needs long into the future; whatever those needs may be.

Frank Lochbaum is Managing Partner at KPS Consulting, experts on designing, building and implementing the processes retailers need to operate profitably in a multichannel world.

This was posted in Bdaily's Members' News section by Reporter .