Today’s car customers expect more than a personal mode of travel. Instead, cars are fast becoming “smartphones on wheels,” with new features like over-the-air updates, networked parking, and other connected technologies influencing the in-vehicle experience driving purchase decisions.
Further, the types of vehicles customers can buy are changing. Autonomous driving, electric vehicles, and eco-friendly cars are all becoming part of the car manufacturing landscape.
How can the automotive industry keep up with these demands and continue to innovate? For many, applying agile processes is the answer.
Agile in Automotive
The manufacturing industry at large is no stranger to agile. In the automotive sector, more automotive companies are foregoing traditional waterfall management for the iterative processes built into agile project management. With agile, the focus shifts to frequent delivery in smaller batches, adaptability, team collaboration, and customer collaboration.
There are many varieties of agile methodologies implemented by companies, such as Kanban, Scrum, and Scaled Agile Framework (SAFe). At its core, auto companies seeking to become more agile are doing so to achieve the following goals:
- Better products
- Reduced risk
- Faster time-to-market
Top Benefits of Agile for the Automotive Industry
Put simply, agile offers a secure foundation upon which automakers can build the company of the future. Here are few of the top benefits of implementing an agile framework:
1. Customer collaboration and feedback loops produce better products: Today’s automotive customers expect comfort, performance, and connectivity from vehicles. It’s up to auto companies to decide how to meet these needs while also properly understanding what potential buyers find valuable and the factors driving them to make a purchase. Customer collaboration and responding to feedback is all built into the agile process.
Therefore, agile auto companies are more likely to meet consumer expectations due to gathering feedback early in the product development process and reacting to changing market forces as they emerge. Further, the use of prototypes and MVPs validate assumptions about how the product can meet customer needs. They also lead to increased product quality.
2. Cross-functional teams decrease time-to-market and manage complexity: Cross-functional teams are made up of individuals with different functional expertise who are all working toward the same goal. This model enhances communication, reduces the number of hand-offs, and ultimately aids the team in getting their product to market more quickly and efficiently. In fact, reorganizing employees into product-focused, agile teams can accelerate development cycles by 40 percent and improve engineering and capital efficiency by 25 percent.
Further, cross-functional teams have better alignment, which leads to optimized coordination. With modern-day vehicles now incorporating artificial intelligence, mechanics, software, and leading-edge design, having different functional areas collaborating with each is an effective way to address and manage complexity. Bringing diverse expertise together on one team also can lead to innovation and better use of existing functionalities, ensuring further competitive advantages.
3. Transform R&D operations: Today’s vehicles are more software-driven rather than hardware-driven. In fact, prior to 2020, McKinsey predicted that software would account for more than 30 percent of the total vehicle content by the beginning of the 2020s. It only follows then that automotive companies need to be prepared to produce a lot of new software in a short period of time. For this imperative, agile project management provides a solid blueprint for transforming R&D operations from highly structured to flexible and adaptive.
With agility attributes like transparency, a focus on the customer, shared ownership of projects, and continuous improvement, R&D teams can work in iterative bursts that allow for incremental changes and the discovery of weak spots in the work process. Further, by integrating feedback loops, agile teams can focus on continuous improvement that allows them to quickly refine their product. After undergoing an agile transformation, R&D departments can reduce project risk while increasing the likelihood of meeting customer expectations.
How to Embrace Agile Car Manufacturing
Before auto companies can become agile, upfront planning is in order. To ensure a successful transition, companies should establish clear objectives and follow a strategic approach that works best for their business environment
Here are some steps companies should take:
1. Evaluate the company’s current state: Regardless of industry, the first step in any agile transformation is to evaluate the company’s current maturity level, identify specific business challenges, and analyze the root causes of these obstacles. Once this knowledge is attained, senior leaders can work together to productively align on the objectives agility can help the company achieve.
2. Make sure top management is on board: For an agile transformation to work, senior executives need to support it. During the transition to agile, changes in processes, people, and ways of working will occur simultaneously. Naturally, some resistance is inevitable. Senior leaders, therefore, have an important role to play by defining the new organizational structure; but, they also need to empower people and instigate change from the bottom up.
3. Decide how the transformation will be managed: There are several ways an agile transformation can be managed. For mature organizations, a “big bang” approach – where leaders redesign the organizational structure and the operating model up front while pursuing an agile transformation simultaneously – could be ideal. For companies new to agile, a pilot-led, wave-by-wave approach can be achieved within individual units, allowing the organization to achieve success in a less risky way.
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