Agile principles: Customer satisfaction

In our new series, we analyse the principles of the Agile Manifesto in detail, according to their original purpose, what they tell us about the agile mindset and about which organisations and industries agile might be appropriate for.

The main goal of agility is customer satisfaction

Although the Agile Manifesto is not a difficult read, it is often misunderstood. One of the possible reasons for such misunderstandings are the unfortunate inaccuracies in the official translations. We’ll point out a few such inaccuracies in order to emphasise the original meaning of the principles, using the Hungarian translation.

The first principle of the Manifesto reads:

“Our highest priority is to satisfy the customer through early and continuous delivery of valuable software.”

The (unfortunately inaccurate) official Hungarian translation:

“Legfontosabbnak azt tartjuk, hogy az ügyfél elégedettségét a működő szoftver mielőbbi és folyamatos szállításával vívjuk ki.” (Our highest priority is to achieve customer satisfaction by delivering working software as early and continuously.)

There is a serious logical flaw in the Hungarian translation: it suggests that in Agile the customer being satisfied is not enough, we also need to make sure we achieved customer satisfaction in the way described above. There is no such aspiration, the relationship is in fact reversed. The goal of agility is a satisfied customer. And the realisation of agility is that early and regular value delivery is the key to customer satisfaction.

Software?

As we discussed in our previous article, although agility was born in the software industry, and therefore unfortunately often uses software terms, it has proven and still proves to be successful day in and day out in many other industries. For our readers from other industries, we recommend replacing the word “software” with the term “product”.

Is a satisfied customer really more important than anything else?

The purpose of a business is to make profit. Obviously, if a company is not making a profit, i.e. it is continuously generating a loss  or even if it is just running at zero, then it is not worth maintaining. Investors will withdraw their capital and the company will eventually go bust. It would therefore be obvious that agility should recognise this and make profit generation the main objective of the organisation. But why does agility put customer satisfaction before profit generation?

In his book Radical management, Stephen Denning examined well-known, publicly listed companies. He divided the companies into two groups based on their public slogans and mission statements from their websites: one group admittedly focused on profit and the other on customer satisfaction. Denning then looked at the change in share prices for each group. The results were striking: while the share price of profit-oriented companies remained at best stagnant over the long term, the share price of customer satisfaction-oriented companies rose significantly. So it seems that the key to financial success is indeed a satisfied customer.

Early delivery

Why is early delivery important? In other words: in which areas is quick delivery important?

In complex areas, where the design, function, composition or use of the product is not trivial, early delivery can be a major advantage. Indeed, early delivery provides the opportunity to validate the product concept as soon as possible. The later a complex product meets a real customer, the higher the risk that the product will not meet the customer’s needs, and thus the capital invested in its design and development is wasted. Early, rapid delivery is designed to minimise this risk.

If, for example, your company produces graphite pencils, a proven product that has been around since the 1800s, early delivery and rapid customer testing is of course unnecessary. We know what we are doing, we know why, how and for whom, we just need to produce the pencil and sell it. However, if your product is innovative in any way (even a new potato-chip flavour is innovation), it is already worth approaching customers as soon as possible and testing the product concept.

Continuous delivery

Once we have validated our initial decisions and the basic product concept with early delivery, it is essential that we continue to validate the evolving product regularly throughout product development to check the impact of our subsequent decisions. We cannot expect that every decision we make during product development will be correct and will increase customer satisfaction. However, if we receive feedback from customers with sufficient frequency, the impact of any wrong decisions can be minimised.

The importance of early and consistent delivery is also underlined in the third principle of the Manifesto:

“Deliver working software frequently, from a couple of weeks to a couple of months, with a preference to the shorter timescale.”

It is important to emphasise that the recommended frequency in the Manifesto is a tried and tested timeframe in the software industry. In other industries, a different frequency may be appropriate. In general, the goal of agility is to deliver in the shortest possible timeframe in which real value can be produced.

Value

The principle under consideration requires not only early and continuous delivery, but also early and continuous delivery of a valuable product.

The Hungarian translation is not entirely adequate in this case either. To say that the product “works” is a step in the right direction, but it does not fully capture the original idea.

What do we value in agility? The definition is simple: value is what the customer perceives as value. Value is a product that the customer understands, can try, can use, and has an opinion about.

In many industries, the development of a product involves the production of so-called by-products in addition to the product itself. Such by-products can include a detailed design, a specification, tools, packaging, etc. While all of these may be necessary, at the birth of Agile in the software industry, these by-products were often given more attention than the product itself. Agility therefore emphasises that the purpose of delivery is to deliver value to the customer. And even if the production of by-products is essential in our process, we should always subordinate them to the production of the valuable product and concentrate our resources on the valuable product as much as possible.

The key agile metrics

It is clear from the above that the most important metric in agility is the product itself and its evolution from delivery to delivery. This is underlined in the seventh principle of the Manifesto:

Working software is the primary measure of progress.

In addition to a more detailed discussion of Agile principles, you can also learn about other agile metrics in our Scrum / Agile Elevation training.