Tax versus agile methodologies—friends or foes?

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Tax versus agile methodologies—friends or foes?

Is the design sprint approach an ideal solution to develop better tax services?

Introduction

In recent years, agile methodologies have significantly increased in popularity due to their flexibility and customer-centric approach. Having proved their efficiency, these methodologies are now used in a diverse range of projects, vastly diverging from their original application—the development of digital tools and software. By disrupting the traditional “waterfall” model that requires each project stage to be completed before moving on to the next, agile methodologies are helping organizations tread the troubled waters of continuously evolving business needs and, most recently, the COVID-19 health situation.

Tax activities are highly intricate. Until now, tax organizations have been able to perform tasks linearly, having the right expertise and processes in place and sufficient time on their side. However, with an increasing focus on a user-friendly experience, pressure for faster delivery, increased regulatory complexity and with growing competition, the tax sector is being driven to rethink at least some of their activities and processes. While the design sprint methodology is not a “silver bullet” that solves all needs, it is an additional tool for tax professionals to deliver added value faster and more efficiently by achieving a better understanding of client and market needs.
 

Traditional versus agile methodologies

Companies still commonly regard project management as a mechanical exercise that heavily relies on hierarchy, detailed planning and linear development. When a project’s scope is well-defined and the environment presents no uncertainties and risks, the traditional approach may be a perfect choice[1].

However, recent developments have shown that reality is changing at an unprecedented rate, bringing new risks and opportunities that the traditional approach cannot respond to in a timely manner[2]. Also, the beneficiary may find it difficult to clearly define their requirements upfront, meaning they are likely to change at a later stage. This can lead to delays, confusion and even an undesired product.

These development inefficiencies, customer complaints and financial losses have led to the development of new project management approaches. These aim to increase project adaptability while putting the beneficiary at the core of the solution’s design and development.

The agile approach splits the development of a product or idea into repeated cycles (iterations). This process aims to facilitate the understanding of the project’s general concept, validate it with the main stakeholders, enable the early identification of any changes needed, obtain client feedback throughout the development process, and rapidly implement changes based on this feedback. This process avoids the expensive and, sometimes, irreversible last-minute modifications that are normally seen in traditional project management[3].
 

Design sprint, one of the Design thinking applications

Design thinking is a collection of principles and practices to help understand, address and develop solutions to business and/or client problems. This way of working focuses on understanding and empathizing with an audience, working collaboratively in cross-functional teams and learning iteratively, while never diverging from the main goal.

When employing the design thinking methodology, it is essential to maintain a human-centered focus throughout the process. An empathic approach delivers greater benefits to all stakeholders, whether internal or external. To aid the understanding of concepts and main goals, visual representations are often used to clearly share ideas and develop them collaboratively in multi-disciplinary teams. To ensure a favorable outcome and to reflect on the work performed, the creation work is organized in iterations that allow for continuous feedback from key stakeholders. This results in a continuous adaptation and evolution of the solution, increasing its adoption and success rates[4]
 

How a sector that has zero-uncertainty tolerance can embrace an agile approach?

Like other traditional sectors where service/product development is handled in an authoritative management style rather than taking a participative approach, the same principles have been applying in the Tax sector. Agile methodologies have proven to enhance flexibility, remove bureaucracy and make a company more adaptive to change. Recently, the Tax sector is moving away from the “one size fits all” approach. It is still a common approach to regard project management as a mechanic exercise heavily relying on hierarchy, detailed planning and linear development. In an ideal scenario where the scope of the project is well-defined and the environment presents no uncertainties and risks, the traditional approach may be the perfect choice[5]. Nonetheless, reality is changing at an unprecedented rate, bringing new risks and opportunities that the traditional approach is not ready to address in a timely manner[6]. In such a fluid context, upfront in-detail definition of project details is unlikely, thus increasing the need for flexibility and adaptability. Consequently, as a response to the numerous development inefficiencies, stakeholders’ dissatisfaction and financial losses, new project management approaches have been created. The agile approach aims at increasing adaptability of the project while putting the stakeholder at the core of the design and development of the solution.

The agile approach proposes the use of iterations to facilitate the understanding of the general concept of the project, to validate it with the main stakeholders throughout the development process, to enable the early identification of any changes needed, and to rapidly implement those changes. This will avoid the expensive, and sometimes, irreversible last minute modifications normally seen in the traditional project management[7].
 

Working in sprints in highly regulated sectors—a dream or a reality?

Digital transformation is continually pushing the evolution of our “normality”, making adaptability a key trait that gives sectors a competitive advantage. Regardless of their past relationship with technology, all sectors need to reinvent their ways of working and build capabilities to meet these new requirements.

Given agile methodologies’ proven success when applied to IT product development, other sectors are using this approach to handle the uncertainties and complexities of new project development.  

Tax is a sector where technology is creating new opportunities. As tax is a complex sector that is faced with increasing unpredictability and uncontrolled changes, its traditional and linear analyze-plan-implement approach is unsuited to the current intricate and ambiguous environment. Consequently, working in iterations to design, prototype and test ideas with direct users/beneficiaries could be a more suitable approach to navigate uncertainties, especially those generated by the health crisis[8].

Adaptable organizations, regardless of the sectors in which they operate, move faster and are more flexible when faced with change. When used in Tax, agile methodologies help foster ownership mindsets that lead to increased efficiency and reduced costs while still allowing for responsiveness to increasingly diverse market requests and resilience. Such an approach has an immediate and significant impact on beneficiary satisfaction, employee management, productivity and annual return.

Applied to Tax, a prototype-test-feedback cycle is particularly compatible with the zero-error tolerance applicable in this sector. Receiving early feedback from the industry, local authorities or the client on the products or services under development ensures compliance, while addressing a specific demand and a timely response to particular needs. Rather than having a linear approach that can be lengthy, burdensome and risk to have a delayed response to market or legislative changes, the iterative approach allows for continuous collaboration between tax and the beneficiary.
 

Design sprint in corporations—a proven success

Numerous large organizations have embraced the design sprint methodology. While this approach is particularly used in IT/technology enterprises, such as IBM, Microsoft, Google and Apple, non-tech companies like Procter & Gamble, Bank of America, Deutsche Bank, Starbucks, Uber and Nike are successfully running their operations using design sprint methodologies.

Airbus is another example where agile management and design thinking have allowed teams to develop new ideas within a very tight timeframe. As part of an internal challenge, several small teams within Airbus were given 100 days to work on high-risk, high-gain problems and design solutions illustrated through working prototypes. The results exceeded expectations. The teams produced impressive solutions more quickly and some prototypes were passed on to Airbus’ research and technology department for further evaluation. Part of this approach’s success was the positive engagement of management, as well as the cross-team collaboration, which helped maximize the use of available resources[9].

The banking industry is another sector that is rapidly changing and extremely competitive, with customers continuously changing the way they interact with banking institutions. ABN AMRO describes their new service development approach as being customer-driven, making the design sprint approach the most suitable response to their needs. In an industry that is changing at such a rapid pace in an extremely competitive market, the customers in the banking industry are also continuously changing their ways of interacting with the banking institutions. It is becoming a fact that banking operations are now done increasingly more using a mobile device and internet connection. The design sprint methodology has enabled ABN AMRO to turn their focus on understanding and empathizing with their customers to identify their real needs and define their services accordingly, whether by designing new services or improving existing ones. The build-test-feedback loop has provided the ABN AMRO specialists with valuable input from their clients to validate their ideas, pointing them in the right direction. The results? High customer satisfaction and retention. As a bonus, due to the ABN AMRO applying the design sprint approach to internal projects as well, employee satisfaction and internal efficiency have also significantly improved[10].
 

Conclusion

Design Sprint has found its application in a diverse range of sectors and types of companies – from tech start-ups to pharmaceutical, financial and banking corporations. Some highly regulated sectors have been slower in adopting the design sprint methodology. However, given the adaptability of this approach, the tax, banking and financial sectors have started to embrace agility in their new product and service development practices. As a result, they have achieved greater flexibility in a fast-changing environment while complying with an increasingly complex regulatory framework.

The prototype-test-feedback iterations bring the key stakeholders at the core of the development process, allowing for continuous improvements and ultimately achieving greater customer satisfaction, a competitive advantage and improved internal efficiency.

The tax sector is increasingly looking into new methods to better understand their clients, increase customer satisfaction, improve efficiency and ultimately bring the right solutions to the market at the right time. The design sprint methodology can be the solution to these needs, as long as it is used in conjunction with tax experts who provide the substance of all service offerings.

 

Footnotes

[1] Papke-Shields, K.E., Beise, C., and Quan, J. (2009) ‘Do project managers practice what they preach, and does it matter to project success?’ International Journal of Project.

[2]Fernandez, D.J., and Fernandez, J. D. (2009). ‘Agile Project Management – Agilism versus Traditional Approaches’ Journal of Computer Information Systems, Winter 2008/2009. Vol. 49(2), pp. 10-17.

[3]Fernandez, D.J., and Fernandez, J. D. (2009). ‘Agile Project Management – Agilism versus Traditional Approaches’ Journal of Computer Information Systems, Winter 2008/2009. Vol. 49(2), pp. 10-17.

[4] Sniukas, Marc; Lee, Parker; Morasky, Matt:  “The Art of Opportunity” (2016)

[5] Papke-Shields, K.E., Beise, C., and Quan, J. (2009) ‘Do project managers practice what they preach, and does it matter to project success?’ International Journal of Project

[6]Fernandez, D.J., and Fernandez, J. D. (2009). ‘Agile Project Management – Agilism versus Traditional Approaches’ Journal of Computer Information Systems, Winter 2008/2009. Vol. 49(2), pp. 10-17.

[7]Fernandez, D.J., and Fernandez, J. D. (2009). ‘Agile Project Management – Agilism versus Traditional Approaches’ Journal of Computer Information Systems, Winter 2008/2009. Vol. 49(2), pp. 10-17.

[8] Sniukas, Marc: “How to become an agile, customer-centric and innovative organization”, Nov. 2020, https://www.hrone.lu/actualites/how-become-agile-customer-centric-and-innovative-organization?utm_content=buffer35ba0&utm_medium=social&utm_source=linkedin.com&utm_campaign=buffer

[9] “Sprinting to a decision: A new Airbus approach to innovation is recognised”:  https://www.airbus.com/newsroom/news/en/2013/10/sprinting-to-a-decision-a-new-airbus-approach-to-innovation-is-recognised.html

[10] “Design thinking gives you an edge over your competitors”, by Derek Walter: https://thenextweb.com/worldofbanking/2017/07/31/banks-beat-competitors-with-design-thinking-and-so-can-you/#.tnw_MO5uP3KI

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