Insight Blog

Agile vs Waterfall: A Business Approach to Value Creation.

by David Alhadeff

February 22, 2018 | Project Management

Value Creation should ultimately define your program delivery approach.

As a response to the market driven disruptions that impact business, companies take on internal projects that are complex in scope, large in scale, and usually developed through a “waterfall” project methodology. The ultimate transition to new ways of working and the achievement of newly realized benefits at the end of the project aptly resembles the rush of a waterfall off a mountain cliff. The longer timeframes engage a broad array of stakeholders and provide a level of quality control that allows for course changes triggered by new assumptions, while maintaining an ability to meet the economic goals of the initiative. There has been an increased emphasis over the last few years on a more iterative, Agile delivery approach to improve project results.  The primary catalyst for this change is the marketplace’s impatience for, and shareholder anxiety about, accelerated value creation. The idea behind Agile delivery is that an iterative approach to product/service development or process change accelerates “failure”, leading to earlier improvements that yield faster economic returns. Agile project delivery can reduce risk, increase visibility and quicken business value through continuous and evolving development.

While the mechanics (and the terminology) associated with each of these project delivery approaches vary significantly, the risk profiles are quite similar. Both project delivery methods face the same set of controllable variables that will either support or constrain success … how well we communicate with impacted stakeholders, how actively we involve leaders, how effectively we train people on new roles and responsibilities, and other organizational considerations. Training for an Agile program might take place at the end of each “scrum” or product iteration rather than before go-live of a “big bang” waterfall implementation. Fewer global sponsors are asked to continuously engage in each iteration of an Agile project rather than utilizing a broader group of leaders that are lightly engaged throughout a waterfall project. In essence, the two delivery methodologies have more in common than not. While there is no question that certain industries align better to a particular delivery methodology, we believe that the primary focus of project leaders should be less around the determination of the optimal methodology and more around a clear strategy on value creation.

Both Waterfall and Agile delivery methodologies can satisfy the economic needs of the business by putting in place the project management and change management disciplines to drive value creation. One recent client of ours was trying to determine which delivery approach they would deploy on a global supply chain initiative. They wanted to report legitimate, positive gains along the way rather than after a new system had rolled out to a number of regions throughout the world. They ultimately concluded that by assigning a dedicated task force to identify and pursue value creation opportunities within a waterfall initiative, they could have the best of both worlds. They could accelerate the economic return on their investment and, in fact, execute a project methodology and build a system in a manner that best aligns with their global footprint. Their delivery approach was not one or the other, but rather they leveraged the structural aspects of waterfall with some of the organizational aspects of Agile.

Business leaders are accountable for creating measurable value or profits for the business. Historically, that priority was accomplished by continuous improvement over time centering on selling more and/or spending less. Over the years, however, enterprise projects and programs have become the means by which this goal is accomplished. The discipline and evolving complexity around project management has presented new options to an ever-demanding marketplace. If business leaders can keep their eye on the real target, value creation, and allow whatever approach they choose to adapt to that ultimate goal, we can satisfy the needs of all stakeholders.

For more information on how Lake Shore Associates can help you with your program/project management needs, visit www.lakeshore.is. We will be most grateful to work with you.

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