Tuesday, August 02, 2005

Pump Up Your Stock Options With Agile Methods!


David Rico sent around the latest version of his thesis proposal and it makes for an interesting read. Developers in many companies have stock options and want them to have real value. Rico argues that a company declaring publicly that it supports Agile methods can raise its valuation even if it is not executing Agile very well. Furthermore, it enhances their marketing, advertising, and business development programs. Potential customers may exclusively favor firms who outwardly commit to the use of Agile methods.

We already knew that being a Certified ScrumMaster is a career enhancing move. Now we find that it pays to dump that waterfall company and move to an Agile company where the portfolio action is.

Rico, David. Agile Methods for Developing Internet Products, Customer Satisfaction, and Firm Performance. 2005.

The relevance and importance of examining the links between the use of agile methods for developing Internet products, customer satisfaction, and firm performance are high as well. This is because hard evidence of the economic benefits of using agile methods for developing Internet products isn’t the only reason executives and managers may benefit from this study. Firms may also garner many substantial indirect economic benefits from using agile methods to develop Internet products as well.

For instance, it is a well established fact that the stock market rewards firms with higher market valuations for publicly committing to the use of approaches to quality management techniques such as agile methods (Przasnyski & Tai, 1999). Furthermore, the stock market also rewards firms with higher market valuations for renovating information technology infrastructures with greater investments (Davis, Dehning, & Stratopoulos, 2003). What these studies mean is that a firm’s investors may simply reward companies with higher market valuations for simply adopting the use of agile methods for developing Internet products.

But, the benefits don’t merely stop with potentially higher market valuations associated with public announcements of a firm’s commitment to agile methods. Firms may simply benefit from exploiting the use of agile methods in marketing activities, business development proposals, and in their advertising. What this means is that understanding the strategic implications of using agile methods for developing Internet products is extremely relevant and important to managers engaged in business development as well. In other words, merely saying a firm is committed to the use of agile methods may result in more business partnerships, more sales leads, and more contracts for Internet products and services, regardless of the actual commitment to the use of agile methods. For example, potential customers of Internet products and services may exclusively favor firms who outwardly commit to the use of agile methods with new business.

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