Adaptive Automotive Development: Faster and more targeted …download.microsoft.com/download/B/C/D/BCD34D39-84DB-4A71... · 2018-10-16 · Adaptive Automotive Development: Faster

Adaptive Automotive Development March 2015

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Adaptive Automotive Development: Faster and more targeted innovations through agile methods Abstract Drive technologies, manufacturer business models, how cars are used and who uses them, even the basic definition of an automobile – all of these things are changing at a very rapid rate. Are the current innovation and development processes fast and flexible enough to deal with these rapid changes? Organizing automotive development so that it works in short cycles across the entire supply chain, constantly getting and applying feedback from the market and the users to quickly develop and test new solutions would be highly recommendable: that is adaptive automotive development. Agile methods, originally used for software development, can help the automotive industry to deal with these changes. Their application doesn’t need to be limited to the development of automotive software. The introduction and consistent use of agile methods for software is a useful first step on the path to an adaptive company. Whitepaper

Version 1.0

Authors1

Christian Binder

Thomas Hemmer

Steffen Kuhn

Christian Mies

Microsoft Deutschland GmbH

conplement AG

Porsche Consulting GmbH

Elektrobit Automotive GmbH

1 In alphabetical order


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What challenges does automotive development cur-rently face? In California and Nevada there are now (semi-) autonomous cars made by Google, Audi and Daimler on the highway and soon they will be on all other streets as well. Maybe you will be passed by a Tesla Model S, a completely electric sports car. These are the facts of today, facts which automotive experts considered impossible a few years ago. New players on the market such as Tesla and Google (and in future perhaps Apple, Uber and Amazon) are proving to the automotive industry how quickly innovations powered by electronics and software can be put on the street. Original Equipment Manufacturers (OEM) and their suppliers are facing huge challenges creat-ed by fast-paced progress in electronics and software. The value-added chain is changing. The permanent interconnectedness of mobile online services, for example, makes new, sometimes surprising, business models possible. A large part of the knowledge of internal combustion en-gines, hydraulics and gears that comes from the “mechanical world” may quickly become obso-lete. Skills that have been built up over decades are no longer an unbeatable competitive ad-vantage. Quite to the contrary, rigid existing organizational structures and cultures carry the risk of hindering corporate developments. Since software is becoming more and more important for product differentiation, software de-velopment is becoming more and more a core skill for automobile manufacturers and automo-tive suppliers. Agile development methods, carried into the automotive industry through the growing importance of software, are a big challenge and a huge chance – even beyond ques-tions of software development. Currently the market still accepts the traditional development cycles of the large automotive brands. However, more and more customers are now used to the much higher rate of innova-tion offered by the consumer electronics industry. On the whole, companies in the automotive industry will, in future, have to exist in markets that have a much greater dynamic than the mar-kets do today.


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How can car manufacturers and suppliers exist in high-

ly dynamic markets?

Image 1: A high level of insecurity can only be dealt with through versatility and speed Source: Porsche Consulting, photos: Fotolia

Vision “Adaptive Automotive Development” In markets with a high level of insecurity and dynamism, methods that enable quick adaptation to changing conditions have a decisive advantage for ensuring lasting success. These methods can be divided up into four areas: 1. Quick validation on the market New product concepts are quickly tested on the real market or on a test market. This approach goes far beyond carrying out studies and the validation of unsellable prototypes. 2. Flexible products Products that can be adapted to the customer´s needs, ideally by the customers themselves. This recipe for success helped smartphones win out over traditional mobile phones. 3. Flexible processes Processes and methods can be changed or replaced without any significant delays and the necessary tools quickly supplied. Deviations from defined processes are possible in order to try out new things. Depending on the demands, better known solutions can be combined or a new solution can be found. 4. Flexible organization Small, self-managed, well-networked organizational units can be quickly reorganized. A unit-specific culture that best fits the employees and the tasks of each group can, may and should develop in each unit and lead them to maximum productivity.


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Where does the automotive industry stand today? Automobile companies are being asked to critically compare the status quo with the demands of highly dynamic markets. The following questions are a suitable place to start. Fast validation on the market How long does it take for a new or changed function to become visible to the customer? In which areas would a shorter turnover be useful and doable? Can new functions be quickly and easily integrated into models that have already been

shipped? What percentage of functions has a feedback channel that shows how often the function is

actually used by the customers and how satisfied they are with it? How high are the development costs for functions that the customers do not know or do not

use? Example: basic and premium versions of a car radio – do the users notice the difference?

Flexible products

What percentage of functions a car offers can be changed after it has been bought (e.g. up-grade of an infotainment system, personalization of the man-machine interface, integration of new devices, telephones, etc.)?

How difficult is it to get rid of malfunctions found by the owner (e.g. replacing software at the garage)?

Do we still need rigid interfaces (e.g. mechanical switches with permanent markings)? Flexible processes

How long does it take to get new tools, for example for software development?

Is it possible for any team to try out things outside of the defined process and then to report on it?

How flexible can processes be coordinated with partner companies and suppliers? How long does it take to define, apply for, agree on, authorize and implement changes in an

established process? In what areas does this slow down development? Flexible organization

How quickly can employees build an “ad-hoc team”? How can teams quickly access all relevant information? Are the experts networkers or keepers of the knowledge? Do the established structures allow for the fast implementation of necessary new functions

and business models? How can new ideas be developed inside the company as quickly as they would in a start-up? The answers to these questions show how much transformation individual automobile manufac-turers and their suppliers still need to go through.


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Have there already been similar transformations?

Image 2: Lean principles for just-in-time production systems. Source: Porsche Consulting

After the industrialization of the automotive industry, driven by the ideas of Henry Ford, western automobile companies such as Porsche went through a further important transformation about 20 years ago. “Lean Thinking”2 [Lean] swept through the industrial world and lead to an unheard level of efficiency. The lean approach was first used for automobile production and was then adopted for other areas, where it is still being used and further developed today. The success of this approach can be seen in the fact that today, lean principles are being applied in the product creation pro-cesses of all automotive companies. The transformation to adaptive automotive development using agile methods poses a similarly large challenge for the manufacturers and suppliers – with just as much potential for increasing efficiency.

2 Derived from the Toyota Production System (TPS) and the Toyota Product Development Sys-tem (TPDS)


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Image 3: Comparison of vehicle assembly at Porsche AG in the years 1991 and 2013 and the change in production time during that time. Source: Porsche Consulting

Lean and successful – those are the attributes that are associated with Porsche today. That was not always so: at the beginning of the 1990s, the sports car manufacturer was going through a crisis. A radical change in thinking and a restructuring were necessary. And it was successful. After only three years the turnaround was completed with the help of the lean meth-ods. The successful restructuring also lead to the creation, in 1994, of a new subsidiary: Porsche Consulting. The management-consulting firm now works for large corporations and mid-sized companies in all industries around the world. The experts for operative excellence help their clients to avoid waste and to become more efficient.

Is lean no longer enough? Looking at the near future, who are your customers going to be and what will be of value to them? Will cars even be sold to individuals, or perhaps only to car sharing companies? What functions are important to the vehicle user when the car can drive autonomously? Lean princi-ples do not help to answer questions such as these facing the automotive industry. Using the lean approach, companies pursue the goal of giving their customers the greatest val-ue without wasting resources. In a stable market this approach also works well in development. Then, using traditional market research, the customer value can be determined and the goals for further product or service improvements determined.


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The high pressure to innovate in a more and more dynamic automotive environment entails the ever-growing risk of not meeting the demands of the market. The risk is greater…

the more dynamically the market demands change

the more assumptions that are made

the more extensive the assumptions are

the less evidence you have for the correctness of your assumptions

the longer the assumptions are not checked Lean production identifies seven different kinds of waste and shows how to deal with them and be more efficient. Analogous to this, adaptive development leads to a strengthening of a com-pany’s innovative prowess by combating unproven assumptions through a fast validation on the market.

How do you get a fast market validation?

Image 4: Prove or refute business hypothesis

In his Build-Measure-Learn Cycle [Startup], Eric Ries describes a way to achieve a fast valida-tion on the market. For each new product concept, a so-called “Minimum Viable Product” (“MVP”) is developed and brought to market/tested on the market as quickly as possible. The MVP of a product or function is its minimum functional scope that still promises to deliver added value and which allows a validation on the market. From the market resonance it is possible to very quickly come to conclusions as to the direction the product should go for its next iteration. It is only then (in short iterations) that further func-tions should be added to them, as quickly as possible, to be tested on the real market. Market resonance is then measured by turnover.


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In the automotive industry, the measurement of market resonance is mainly possible through short-cycle measurement of the turnover (for first time sales). Turnover resulting from services, mobile on-line services, and in-car purchases will become more important. The collection of user data will help to steer investments so that they are used for functions that are important to the users. It would be possible, for example, to give two user groups different ranges of func-tions in order to find out which functions are used more often [A/B-Test]. The data on the usage pattern is collected through the feedback channel of a mobile online connection.

How can agile methods help?

The shorter the Build-Measure-Learn Cycle is, the more effective it is. Agile approaches such as scrum in software development help to shorten and optimize the “Build” part of the cycle [scrum]. Here, small increments of the software are developed and tested in short iteration cy-cles. At the end of each iteration, feedback on the generated software is obtained from the in-ternal or external client. In addition, the team evaluates the work done with the current process and takes measures to improve it. In this way it is possible, for example, to validate assumptions with respect to the acceptance of functions within the space of a few days.

Image 5: Agile development and the Build-Measure-Learn Cycle complement one another

Vision Role of agile methods

Fast market validation Agile principles ensure fast, short functional spurts while maintaining full quality.

Flexible products Agile development enables fast product changes, even after a sale, if this is supported by the product structure.

Flexible processes Agile processes support an explorative approach.

Flexible organization Agile culture blurs hierarchies and departmental borders and pro-motes cross-functional cooperation.

The practical realization of lean principles Many practices have been created in the “agile world” of software development that systemati-cally apply known lean principles to areas outside of production. These practices have been proven to work within the framework of global projects and while meeting their high levels of regulatory demands. An example is the concentration on the delivery of customer benefit while at the same time reducing waste in the development process. The result is a very tight inter-meshing of product management, development and testing with a maximum reduction in speci-fications.


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New models for more productive cooperation between knowledge workers Intrinsic motivation [Drive] is now recognized as a key factor in productive knowledge work. For decades it has been a well-known fact that attempts at extrinsic motivation for creative tasks can actually reduce motivation. Nonetheless, even today it is still possible to find personal an-nual goals in the creative area that are tied to bonus payments. In an “agile culture” counterpro-ductive measures such as these are replaced by team goals, short cycle feedback, social con-trols and small but effective motivational measures. Variable goals

Why are there hardly any projects in the automotive industry that achieve their goals using the planned resources? Often it is assumed that the defined processes were not adhered to. How-ever, the real reason can often be found in poorly defined goals. A project is, by definition, unique and in some sense it always enters unknown territory. At the beginning many of the basic conditions and demands are unclear. Goals set for costs, output and time are thus difficult to achieve. The Variable-Scope-Principle used in agile development allows for a more flexible handling of goals and leads to more successful projects. Further observable advantages in agile transformations carried out so far

Methods Advantages

Efficiency and effec-tiveness

Planning and specification: the long-term perspective only has a rough analysis; the short-term perspective has a very detailed analysis and planning.

In the case of later changes in demands there is less planning and specification work that has to be discarded.

Strict prioritization of demands based on business value

Concentration on marketable customer benefits

Cross-functional teams with a high degree of self-organization and permanent communication

Direct cooperation of various functions avoids the time and information loss usu-ally associated with handovers.

Short planning and implementa-tion cycles, short daily alignment in the team (daily stand-ups)

Loss created through forgetfulness and procrastination are minimized

Permanente transparency of the project status in the entire team

Reduction of management complexity

Short feedback cycles Fast check of assumptions with respect to customer wishes

Time-to-Market/ Time-to-Quality

Error free operation has prece-dence over starting to develop new functions

No “technical debts”, no growing “mountain of mistakes”

Frozen-Zone principle: no change in prioritization within a development iteration

Concentrated work, less time and energy for re-planning

Motivation and Team Spirit

Team goals instead of individual goals

Productive cooperation instead of ob-structing competition

Mutual problem solving, “swarm-ing”

Quick solutions instead of blaming

Short feedback cycles Less frustration that usually comes from large amounts of unnecessarily invested time and energy (e.g. due to ambiguous specifications, new planning)


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To facilitate the further spread of agile methods in the automotive industry, there are three core questions that must be answered and which we will look at in more detail. Does agile software development work in the automotive industry? Does agile software development work in large corporations? Do agile methods work outside of software development?

Does agile software development work in the automo-tive industry? Agile software development is already being successfully used by automobile manufacturers and suppliers, but not extensively. Often unsuitable cooperation methods and contracts be-tween OEM and suppliers prevent their implementation. The introduction of agile software development is more difficult in the automotive than in the IT industry due to a number of factors: “Mechanical” culture Hierarchical relationship between OEM and suppliers, multilevel supply chains Long validation cycles Definition of the sample phases is oriented on metalworking tools Rigid processes Traditional project planning Classic contracts Established process maturity models (e.g. CMMI, Spice) Complex cooperation models in the supply chain Multiple development partnerships instead of “simple” customer-supplier relationships Teams are split across various firms and locations (even internationally) OEM acts as customer and sub-supplier at the same time Legal and normative parameters Quality norms Safety requirements (functional safety according to ISO 26262, product liability) Due to the great advantages afforded by agile software development, these factors should be seen as challenges and not as a justification for a rejectionist attitude [Myths]. The automotive industry still needs to discover (e.g. through “Build-Measure-Learn”) where agile methods bring added value and where they do not.


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Image 6: Combining lean principles and agile elements in the Elektrobit Lean Development Model. Source: Elektrobit

With its 1400 employees, Elektrobit Automotive GmbH develops software solutions for the au-tomotive industry. Step by step, starting in 2013 and with the support of Porsche Consulting, their software development was restructured using a model that combines agile elements with lean principles. An important success factor in this change is the greater responsibility carried by the teams – combined with an increased transparency, especially with respect to the progress of the pro-jects. This latter point has led to a significant increase in interest in agile methods by the auto-motive industry. With the growth in trust by the OEMs there has also been an increase in will-ingness to enter into “agile” contracts, thus making the entire process a bit more efficient. Challenges in the introduction of agile methods caused by cross-location and cross-company teamwork were counteracted by measures such as new team structures and tools for the man-agement of agile projects. Through the customized use of agile methods it was possible to achieve a synchronization with the predefined sample phases of the OEMs.


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Does agile software development work in large corpo-rations? Today there are already numerous reports available on successful agile transformations in large international corporations. One example: The Microsoft Developer Division develops and distributes software development tools including cloud services. Team Foundation Server and Visual Studio Online are used as a service around the world by millions of developers. An own agile development process, derived from Scrum, combined with innovation governance based on telemetric data, enables short development cycles and fast feedback loops based on actual use.

Image 7: Continual learning from users and use Source: Microsoft Developer Division

The teams are largely autonomous and can, for example, decide which agile practices they want to use. The company determines the rolls, the organizational structure and tact. New space concepts give the teams ideal conditions for cooperation The transformation to a more adaptive and agile organization is understood to be a continual journey. The changeover in culture to an “agile mindset” is seen as a central challenge that must include all employees from the developers to the top management levels. The agility gained in development facilitates shorter delivery cycles. This changes how the services are run, which is generally referred to as DevOps.


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Image 8: Comparison of the cycles before and after the agile transformation for the software development tool Visual Studio Source: Microsoft Developer Division

Do agile methods function outside of software devel-opment? The “emancipation” of agile methods from the area of software development and its move to other areas has been carried out, from what the authors of this white paper have seen, rather more hesitantly in the automotive industry than in others. A few automotive companies have successfully applied agile methods to hardware and system development as well as other com-pletely unrelated fields (e.g. machine construction). From what we have experienced, many agile methods can be adapted to areas outside of soft-ware development with very little time and effort. Suitable for the first steps in this direction are methods to improve transparency, cross-functional cooperation and for the introduction of fast feedback on all levels. The realization of more complex agile principles, such as the introduction of the pull principle or the application of variable scope to electronics and mechanics becomes much easier when these new features start showing their first successes.

How do you introduce agile methods in a corporation? In companies that develop software, the logical way of starting an agile transformation is to change how the company develops software. For this area there is already a broad body of knowledge based on the successful transformations of other companies. Companies that have their software developed by sub-contractors can choose an agile supplier in order to profit from their experiences. As a further step, the interface to the supplier should be changed to fit the agile process. Processes, plans and contracts must be changed accordingly in order to be able to attain a truly agile way of working together with the supplier.


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Companies that are not directly involved in software development should start with the help of external coaches who bring basic knowledge of agile methods into the company. While there is now extensive literature on agile software development, the knowledge and the experience of transferring this to other areas is not to be found in books. The coaches should have experience in introducing agile methods in non-software areas. Changing an entire organization “top-down” in one fell swoop has proven to be not worthwhile. It is far more promising to find motivated employees for a limited task and to give them the sup-port of the management and external coaches when introducing agile methods into their teams. These “agile experiments” are the nucleus for the further “viral” spread of the practices through-out the entire company. After a phase of exploration and motivation it is necessary, especially in large corporations, to move into a phase of consolidation and scaling. This way the agile methods spread through the company faster and unnecessary conflicts between agile and traditional methods are mini-mized. It is also often advisable to get external support for this phase. The goal should always be to reach a sustainable change in culture so that there is no longer any need for that “push” from the higher levels or from outside the company. The key is to have consistent and regular communication with all the participants. The goal of the changes and how they are to be carried out in the company should be clear to everyone on every level in the company. Possible resistance, both on the team level (“it has always worked well so far…”) and in mid-level management (“what is our future role going to be?”) is best dealt with through an intensive dialogue. Trans-sectoral open space events have proven helpful in working together to find answers to the truly relevant questions. A second important success factor is the intensive inclusion of the client. Only when the client supports the incremental and iterative work can the advantages of the agile way of working be used to their fullest. However, this demands a high level of trust. This trust can be built up in initial pilot projects or phases. In addition, the agile approach should also be taken into account in contract design.


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Summary An increasingly dynamic market demands faster and more targeted investments from auto-

mobile manufacturers. The authors recommend moving the company toward adaptive auto-mobile development in order to be more successful in this environment.

Agile methods, which have proven themselves to be very useful and highly scalable in the IT

industry, can help to achieve the necessary flexibility and speed – not just in software devel-opment.

Numerous success stories of agile transformations prove the viability and the advantages of

this approach. Nonetheless, every organization has to find its own “agile way”. The experiences of the successful introduction of agile methods are available via specialized

consultants and agile communities.

Authors

Christian Binder – ALM Architect, Microsoft Developer Experience

Microsoft Deutschland GmbH Konrad-Zuse-Straße 1 85716 Unterschleißheim Tel. +49 89 31 76-0 [email protected] www.microsoft.com/germany

Microsoft has its own experience of carrying out an agile transformation in a large corporation. It also offers tools for agile software development teams as well as cloud and big data technologies that, among other things, ena-ble quick feedback from out in the field.

Thomas Hemmer – Chief Technology Officer

conplement AG Südwestpark 92 90449 Nürnberg Tel. +49 911 25 50 97 6-0 [email protected] www.conplement.de

As a service provider for software engineering and auto-motive embedded engineering, conplement AG has hands-on experience with the introduction and application of agile software development and the coaching of devel-opment teams that work with the agile methods.

Steffen Kuhn – Senior Experte

Porsche Consulting GmbH Porschestraße 1 74321 Bietigheim-Bissingen Tel. +49 711 911-12 00 1 [email protected] www.porsche-consulting.com

The core mission of Porsche Consulting is the creation of sustainable competitive advantages for our clients through superior operative performance and the ability to react flexibly and quickly to changes.

Christian Mies – Head of Consulting

Elektrobit Automotive GmbH Am Wolfsmantel 46 91058 Erlangen Tel. +49 9131 77 01-0 [email protected] www.automotive.elektrobit.com

Elektrobit Automotive GmbH, with its 1400 employees worldwide, develops software solutions for the cars of tomorrow. As a technology leader, the company works closely with the automobile manufacturers and advises with respect to future systems architecture and agile de-velopment methods and their realization.


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Literature

[A/B Test] http://en.wikipedia.org/wiki/A/B_testing [Drive] Pink, Daniel H.: Drive: The Surprising Truth About What Motivates Us [Lean] Womack, James P. und Jones, Daniel T.: Lean Thinking: Ballast abwerfen, Un-

ternehmensgewinn steigern [Myths] Besemer, Karasch, Metz, Pfeffer: Clarifying Myths with Process Maturity Models

vs. Agile, intacs Whitepaper, 6.8.2014 [Scrum] Schwaber: Agiles Projektmanagement mit Scrum. Microsoft Press, Unter-

schleißheim 2007 [Startup] Ries, Eric: The Lean Startup: How Today's Entrepreneurs Use Continuous In-

novation to Create Radically Successful Businesses [Drive] Pink, Daniel H.: Drive: The Surprising Truth About What Motivates Us [TPDS] Morgan, James M. und Liker, Jeffrey K.: The Toyota Product Development Sys-

tem: Integrating People, Process, and Technology [TPS] Ohno, Taiichi: Toyota Production System: Beyond Large-Scale Production

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Adaptive Automotive Development: Faster and more targeted …download.microsoft.com/download/B/C/D/BCD34D39-84DB-4A71... · 2018-10-16 · Adaptive Automotive Development: Faster