You might think that advanced industry—a sector characterized by research and development and use of artificial intelligence and other breakthrough technologies—also optimizes the way its R&D organizations work. But continual business and technology trends in advanced industries (AI) have triggered fundamental challenges that require advanced industry innovate in its approach to R&D.
Just consider the three major R&D hurdles automakers confront in designing autonomous cars: more complexity and functional interfaces across projects, especially involving interlinks between software and hardware; amplified change and ambiguity in customer demands; and tighter interaction with an increasingly diverse ecosystem. As a result, decisions take too long, milestones are missed and standard operating procedures are delayed, siloed and fragmented. R&D staff stay in task force mode, and collaboration and job satisfaction diminish.
Early agile models in advanced industry R&D departments are delivering significant impact. We’ve seen a doubling of the time spent on value-add work, speedier decision-making, a 30 percent rise in productivity, increased engineer motivation and enhanced responsiveness to customer demands.
So, what comprises a more effective agile organization that sparks cross-functional collaboration, quick decisions, fresh ideas from anyone, flexible shifts of priorities and resources, and a place that attracts talent drawn to rewarding and fun work?
We can look to other industries such as banking, energy and telecom because they have faced similar issues. For instance, when one banking institution moved to a model where small teams follow a joint purpose and enjoy full end-to-end responsibility, they significantly improved cross-functional collaboration, time to market and customer satisfaction while moving to No. 1 employer of choice from No. 12 two years prior.
From these other industry pacesetters, advanced industry can take agile mindsets, principles and values while tailoring practices and tools to their own R&D realities. If an R&D organization truly wants to change how it operates, it needs to:
- Derive promising learnings from pilots for organizing agile teams and make necessary changes to its “backbone” system, such as budgeting and work allocation processes and alignment of plans and priorities.
- Obtain top team commitment and aspiration for the agile model.
- Drive a systematic roll-out that includes broad-scale capability building.
We do see some winning practices in selected “frontrunner” R&D departments in advanced industry as they pertain to structure, process/technology and people dimensions.
Structure: Create small, stable e2e teams that are accountable and possess a shared purpose instead of organizing by competencies. When priorities change, shift the task, not the people. People should work and sit together in teams but retain a home base within their discipline (e.g., electronics). They assume responsibility for managing common components and setting software and other architectures.
Processes/technology: Work on end products in rapid iterations and quick learning cycles, applying new testing technologies in standardized, not religious, processes. Enlist customers early. Favor more frequent and smaller decision meetings—in a way disaggregate today’s big meetings—that focus on decision-making versus status approvals.
People: Leaders change their style, e.g. visionary, focusing on coaching and problem solving and embedding ownership in their teams. That means asking them to develop their own plans and solutions and focusing on providing a clear framework, including clear interfaces and responsibilities. This requires ensuring a culture with stronger collaboration, more ownership from lower-level team members and risk assumption. Development teams also must step up. As one manager explained, “If your engineers behave as fenced-in sheep and you remove the fence, they will just continue grazing in the same place and nothing changes.”
Most advanced industry players have begun experimenting to determine where and how to apply agile, but they must scale it up for the full impact. Pilot projects prove important to learn whether a concept works, and they can boost enthusiasm. Technology trends will continue and as organizations meet these challenges, a full agile operating model will be required.