December 22nd, 2019 by Alex Voigt
Products look and function similar to the organizations that produced them, be it good or be it bad.
The following article describes one of the hidden secrets why Tesla, as a still new challenger in the auto business, managed to be better than incumbent companies (typically with a century of experience) in almost all aspects of what is of importance for an automaker and its products. It’s not a secret in the sense of well guarded information, and it’s not intended to be one, but even when the founder and CEO talks about it in a broadcasted interview as a key differentiator, it seems no one listens and no one reports about it. Listening is an underestimated art in a time when short, catchy news is consumed like candies without questioning their quality — as long as they taste sweet.
This article is about R&D (research and development), its organization, and why pace of innovation is a function of elimination of constrains. If this sounds chaotic to you, then welcome to the world of creativity, one of the key active ingredients that most automaker departments successfully eliminated from their business. If you want creativity, want to design and develop something new and change the world with something that customers love and that makes a true difference, you better not start your job within an incumbent internal combustion engine (ICE) company.
Creativity is one active ingredient that you need for successful R&D, a sensitive plant that you must nurture and put near the light with water and food, but other ingredients are of similar importance and not at all looked at. Often, this plant dies early within young, motivated, talented engineers at their first jobs, and is gone forever. One additional ingredient of importance is the ability of an organization to motivate — almost reward — failure, trial and error, a miss. Yes, feel free to read that sentence again, because it sounds like a contradiction, but it isn’t.
An employee who tried something that didn’t work out learned more than an employee who didn’t try and played it safe, but the reward system of today’s organizations rewards the one who did not try and punished the one who did. By doing that, all she or he learned was lost for the company, and likely also in the future, a real cost for the company instead of a gain. Getting recognition or being rewarded is, since humankind has walked on earth, the biggest positive for an individual that you can imagine, and it comes in different forms. One we use today frequently is money, but more important is a recognition from someone who is close to you and respected, like a mentor.
While the employee who took a risk to, for instance, design a breakthrough likely is laughed at, others who over the years didn’t take any risks may be more likely to be promoted. And, over time, you have supervisors, managers, and executives who teach everybody from experience not to be creative, not to take any risks. With that you have a working receipt for not improving outside of your status quo, which is exactly the opposite of what you need. To stay where you are as an organization and not improve is the opposite of what you should aim for. After decades, this “way of working,” or let’s better call it, “way of not working,” is a standard rule not seriously discussed that is only questioned from new employees joining.
Who, from you dear readers, remembers having been told “play by the rules, keep your head down, don’t ask questions and you will do well,” or similar advice
The above is particularly true for companies with a strict hierarchy that you will easily recognize in meetings in which no one dares to have a different opinion from the manager present, highest in rank but not necessarily in reputation or knowledge. If you want a winning organization, you need to reward controversial opinions and bold thoughts regardless of where this leads, and do the opposite with all who “swim with the current.” In Germany, the above is very much a part of our culture and DNA in the automotive industry and its flagship organizations, particularly with Volkswagen and Daimler but also BMW, Audi, and even Porsche. This culture is a huge problem for them to transform their organizations successfully for the challenges they face around battery electric vehicles.
Beside nurturing creativity and rewarding employees to try something new, sometimes allowing risky projects to accomplish something great, a third ingredient is required, which is, “making everybody the Chief Designer.” Organizations tend to work like a family in that you have a natural hierarchy within a group of people you spend time with. You are put in a group of people in which some have supposedly a stronger say than others in most cases, because they earned recognition for achievements in the past.
This structure usually works because it shortens long, complex, and costly decision-making processes, but only in organizations that deal with products of a mature lifecycle curve. If you have a new product or if you are in the midst of a larger disruption, you need to create an atmosphere of everybody having a say and having an equally important opinion. In other words, everybody should be a sort of Chief Engineer or Chief Designer. Once you put all hierarchies aside and get the best from everybody by giving them the ability to shine and win, regardless of the past, you reward the best thoughts and ideas. If you stick with the hierarchies instead, you will more likely lose because of design, simply because the reference of the highest ranked person, what he or she got promoted for, is a product that is not the best any more — even obsolete. Often, these people avoid taking any risks, because they have a lot to lose. People who have a lot to lose are a danger for the success of a company in a time of a disruptive technology shift.
Once you have those 3 ingredients together for a successful R&D process, a 4th requirement needs to be implemented, and that is to not have an R&D department any more. Feel free to read this sentence again as well as you may believe I have lost the last portion of my senses by now.
Having different departments for subsystems of your main product with specialists and asking them for the specifications they need your new designed system to work properly with will limit the ability of your overall organization to develop the best end product. If you allow different departments to define specifications for the product to be developed, you include limitations in it by definition, which makes it inferior versus what you could have designed and developed using exactly the same resources. Defining specifications is a receipt for failure because your specification will never be perfect, and therefore, by definition, false.
To give you an example, instead of getting rid of something or questioning the constrains, the opponent will design towards the constrains instead of questioning those, and will do what he has been asked for, getting a bad result. Constraints are given to you are guaranteed to be to some degree of wrong because otherwise they would be perfect, which is just not possible. To question the constraints is extremely important if not the most important of all. Asking other departments for detailed specifications is like asking the wrong question. Everything in life starts with asking the right question. My first recommendation is therefore to allow the team to take its time investigating if the right question has been asked.
This is not a proposal to get rid of your R&D department, but to get rid of the borders it has with all other departments of your company, like the subsystems of your vehicle with all other systems. Both are the same. Everybody involved needs to understand broadly speaking how all of the systems in the product of your vehicle work. Therefore, you can’t afford to limit them to their core responsibility and department alone. You avoid the sub-system optimization by avoiding sub-system design rewards. All product errors that you find are a reflection of the organization and its errors. Interfaces between subsystems are usually something bad and should be avoided, like when driving a car every interface you literally face is a potential cause of error.
One of the biggest mistakes smart engineers make is optimizing a thing that should not exist, and engineers have a tendency to optimize their sub-system to death by losing sight of the broader picture. Getting rid of a part of the system is something extremely positive, as simplicity often brings new thoughts and ideas to the surface and new solutions appear no one ever thought about.
In today’s organizations, people who propose that the system they design is obsolete usually lose their jobs, either because management agrees or disagrees. If they agree, you just made your work obsolete and there isn’t any more, and if they disagree, they likely lay you off for saying such a thing, which is dumb because those people are extremely valuable but for obvious reasons rare in today’s companies. What I recommend to auto manufacturers is to hire a team that is responsible for getting rid of parts and sub-systems across the board, and rewarding them for it.
Another underrated factor is the speed of design. Auto companies have a history of needing about 3+ years from concept to finishing a design and production starting, which is a timeframe in which everything (including market demands) can change. All of a sudden, your product is old, before even the first customer gets his or her hands on it.
Having fewer parts but the same or better functionality, as described above, will shorten your R&D process in a significant way, and all other elements I talked about in this article can be seen as adding up to make your process and perhaps product lighter, better, and faster.
If a design is taking too long, then the design is wrong. Sticking to a design too long, particularly if it’s complicated, is the wrong thing to do. Dare to throw it away if you can, or at least thrive on deleting parts and processes — better early than later, but dare to do it later too, and never fall in love with something that does not fit into your goal just because it has one thing you like so much. The same is actually true for the stock market.
To abandon a time-consuming design or part is naturally hard if you invested a lot into it, as it’s considered a failure even if it’s actually not. Most people feel so attached to what they invested a part of their life into, even if we talk just about weeks, that the barrier to let it go is tremendous. You will find them fighting for something just to keep the impression it was right, while in the larger context it wasn’t. If those people don’t realize that they are fighting for what they believe is their own good instead of the good of the product and company, you need to consider moving along without them, as they miss the ability to understand the fundamental mission of your organization.
Move along without them like the part that you decided to leave behind. An example of a part that should not exist is a start/stop button in a BEV. As a matter of fact, there is nothing to start in an electric motor, because it’s always ready to go at the moment you close the electric contact and electrons start flowing, which you can do best by pressing the accelerator. You don’t have to tell electrons to move in a current — they do it by definition. To pretend you still need to have a start/stop button makes you look like a fool, or you make a fool out of your customers, and both are bad.
A start button in an ICE vehicle has a meaningful function, because an engine needs to be started to burn and explode a fuel-gas mixture before it can move cylinders and the drivetrain. An electric car does not need to do any of those things. There is no reasonable explanation why on earth BMW, Daimler, Audi, and Porsche (to name just a few) in my home country Germany put a button in a car that actually does nothing but pretending to customers it does something. It’s like cheating — adds costs, complexity, and risk of failure — and most importantly of all, it makes customers believe you don’t understand, as an automaker, what the hell you are doing. The only reason I can imagine to engineer a BEV start/stop button is to expect your customers to be fools.
And if there is one thing the world can’t afford, then its wasted resources.
There are also parts and systems you can’t imagine, not having invented and engineered them previously. Those are the ones passionate engineers should spend all their energy on.
One of those unique items Tesla has released lately is the Cybertruck, and that’s true regardless if you like the design or not.
While everybody talks these days about the stunning design and looks of the Cybertruck (some hate it and some love it), I would like to shed some light on why Tesla is able to attract talent no other automaker can attract, even if they want to. The organization of the company is a, evolving design that determines its products.
This may sound like a bold statement, as at the end of the day it’s only a car, but if you drive one yourself, you realize it’s somehow more than just an ordinary vehicle. Therefore, the question of how it developed into that shape and function is a fair one.
Every car Tesla has ever developed is one of a kind, but the Cybertruck is a true next-level vehicle. Why? Well, I think no one else would have thought up a vehicle that has an exoskeleton, a structure that manages the force and in a similar fashion is the outside skin, in contrast to a frame on the body where the force is absorbed by the frame. It may sound like a small detail, but it has severe consequences and has never been done before.
In nature function dictates design, while it’s tested over millions of years on functionality until it is what we likely would call perfect.
Typically in the auto world, a vehicle design is done by designers in a separated area far away and not often in contact if at all with engineers or even the R&D department because their objectives have been defined by what is considered to be good looking, within measurable parameters.
In nature, any animal that would have been built like that would not survive. I am aware that is another bold claim and its fully okay if you don’t believe me.
Constant improvement is a concept in nature that is undeniably successful. With that being true, why on earth do at least German automakers need 3 years to design and engineer a vehicle that will be years for another 7 years?
How can you possibly, as a German automaker, believe you can compete with a vehicle that constantly changes and gets better while yours is stagnant for 5–10 years?
It’s time to understand the root cause of why the BEVs that are coming to market today fall short of almost everything a Tesla provides.
It’s time to avoid giving quick answers on questions.
It’s time to ask the right question.
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