The Anatomy of Agile Innovation: Who Does it Better?

July 10, 2020 1:40 pm

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What Can Established Companies Learn from How Start-Ups Do Agile Innovation?

When you see the word ‘start-up,’ what comes to mind? The term has been thrown around so much recently that without a proper definition It becomes useless. However, their recent success makes us ask: What Can Established Companies Learn from How Start-Ups Do Agile Innovation?

In short, start-up Is a small business. We can adapt the two-pizza rule into the general terminology: start-ups have a founder, are new enough not to be the entrenched company, and they are small enough for everybody to at least know everyone else’s’ name.


Start-ups are also back scratchers. They fill a niche in the market and solve problems that no one else can get quite right. These problems can be as simple as you want, like booking a ticket or ordering a taxi. Start-ups come In and add something unique into the market, that either Improves user experience, or offers a solution for a fraction of the price.

There are valuable lessons that established, or call them bigger If you want, companies can learn from the smaller ones. But before they do, we need a reality check.

Indeed, It Is Important to remember that most of the new players, start-ups, actually fail. In fact, many never achieve size big enough to even be tracked, so we only see the survivors. This Is called the ‘survivor bias.’ According to The Ehrenberg-Bass Institute for Marketing Science: ‘Small brands are able to post higher percentage growth than large brands because any growth is from a low sales base. But they are also more likely to fall completely out of the market than big brands.’

Despite this, many believe that these small brands are, Indeed, doing something right. Is It digital marketing? Size? Tactics? What Can Established Companies Learn from How Start-Ups Do Agile Innovation?

Market observations Indicate that common causes of Innovation failures are:

1.      Lack of Agility

Making money Is the objective of every business. Start-ups with their limited resources cannot afford to waste time on products that are just not worth launching. Using agile approach, they gather the necessary knowledge In early stages and make some tough and quick decisions along the way. Because not doing so, can mean failure.

On the other hand, established businesses have a vast portfolio of products and services with more resources. So why do they struggle with product Innovation? Firstly, they skip the market research to test the product’s potential and don’t have the capacity to make necessary changes In the process. Secondly, they heavily rely on their Internal sales estimates that are on average 45% lower than the actual sales in the first year.

Therefore, being agile means choosing your battles wisely and spending time on things that will drive growth and revenue. Successful businesses make hard decisions backed up by data and are able to adapt quickly to market changes.

2.      Lack of R&D

47% of Innovators have admitted that product testing Is the most neglected stage of product Innovation when speed to market Is a priority.

Start-ups don’t wait till they are ready to launch a product before they start validating It. They do their homework early and Identify the right opportunities. Throughout the whole process they continue testing and optimising It. Having the right data and Information allows them to move faster and make smarter decisions.

On the other hand, many established companies neglect the research and product validation stages with the objective to push the product to the market quickly. However, almost 40% of professionals believe that this process has no clear benefits and Imposes extra costs to the business.  

The Anatomy of Agile Innovation

Source: Melgarejo, R., Malek, K., (2018) Setting the Record Straight on Innovation Failure, Copyright © 2018 The Nielsen Company (US), LLC.
*FMCH represents established companies

All In all, all businesses and innovation projects should leverage the best practices and consider the following:

  • Gather enough knowledge to set a right business direction and use quantitative forecasting to predict business outcomes
  • Do not neglect the research phase but make decisions based on reliable data
  • Make sure you have a minimal viable product (MVP) before hitting the market.

Do you have a project in mind? Are you looking to work with an agile software development company? We’d be happy to discuss your project! Contact us today to speak to a business expert.

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