A youthful software company takes a flexible approach to serving the insurance industry.

When John Seybold and his partners founded Guidewire Software just 5 years ago, he knew little more about the insurance industry than an informed consumer. But as CTO of the upstart company, he also knew he and the team had to learn quickly if they were going to convince mainstream insurers to scrap their aging mainframes and adopt Guidewire’s Java-based solutions.

Optimize for Flexibility

The team looked at the problem and made a decision. Above all, they would be flexible. Flexible product. Flexible business model. And flexible organization. They expected to gain insights every day from customers, partners and competitors, and wanted to be able to immediately benefit from everything they learned.

The Sprint Team

Guidewire organized around small, nimble project teams. But here comes the twist. A project team’s assignment only lasts a month. At the start of a month, each “Sprint Team” picks from the most important tasks to be tackled. The team selects a leader for the month and devours the task. At the end of the month, the team wraps up the project, reflects on its progress, reprioritizes, picks a new task, and the process starts all over.

Take from the Top of the Backlog

The key to keeping the whole organization moving toward success is the “Master Backlog” of projects. As new ideas are generated and new requests come from customers, they are added to the Backlog. No changes to priorities are made during a monthly sprint. But at the start of each new month, the organization re-prioritizes the entire backlog and assigns only those tasks that top the list to the next month’s sprint teams.

Communicate within the Organization

Mayhem you say? Not really. Every day, each Sprint Team meets for 10 minutes in the morning at the whiteboard to discuss what they did yesterday and what they hope to accomplish today. Individual priorities and performance are as transparent as team performance. Completely transparent. At the end of each month, the teams examine the process to discuss what worked well, what did not work, and what they want to change when they reassemble for the next month’s sprint.

Demonstrate Accomplishment

The success of the process can be demonstrated in the numerous industry awards and client references newcomer Guidewire has already garnered. But Seybold describes an unexpected benefit. “When we first did this, I thought seeing the huge backlog and the small projects we finished in a month would discourage the team. But exactly the reverse happened. They said wow ? we’re in control and look at what we did. It was a real morale booster, and it has continued to be.

Innocence, Learning and Flexibility Combine for Innovation

“Not knowing everything gave us a fresh perspective, says Seybold. “We were able to see things existing players had missed for years, or simply took for granted. And having an organization that could rapidly adapt as we learned gave us the advantage we needed against bigger players.

Guidewire has grown to over 250 people and counts more than 30 international insurers in its growing customer base. Large for a startup, but still small compared with the insurance giants they sell to. Nonetheless, this development process has continued to scale and work for Guidewire ? with no end in sight. Not bad for a company that has yet to hire a middle manager.

Written by Stuart Read, professor of marketing at IMD and Saras Sarasvathy, associate professor of business administration at the University of Virgina’s Darden School.

British Airways Business Life
Stuart Read
Saras D. Sarasvathy
Relevant Principles:
Bird-in-Hand (Means)
Pilot-in-the-Plane (Control vs. Predict)