Winning practices for agile in advanced industry

From other industry pacesetters, advanced industry can take agile mindsets, principles and values while tailoring practices and tools to their own R&D realities.

Wouter Aghina

Delivers large-scale performance and health transformations, improving performance, changing culture, boosting organizational agility, improving organizational design, and building leadership and frontline capabilities

Kirsten Weerda

Helps clients in multiple industries pursue enterprise agility and flexible organization models; establishes breakthrough accountability to reduce complexity and applies change management approaches to mobilize organization-wide transformation

Henrika Leppla

Agility

Organization design

Culture

June 17, 2019You 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.

Designing flying taxis: Is agile the key to innovative R&D?

Many research and development (R&D) teams find themselves held back by a traditionally siloed structure in a rapidly changing environment, particularly in heavy industries.

We connected with James Arnold, head of design systems and head of process excellence at Lilium—a European company developing the world’s first electric vertical take-off and landing jet—for a first-person perspective on what an agile R&D department looks like when starting greenfield in a highly innovative industry. Arnold and his team recently completed a successful first field test of its all-electric five-seat aircraft and hopes to launch a fully operational flying taxi service in select cities by 2025.

Question: You are a small start-up exploring a very futuristic technology. How are you approaching innovation, and how has experimentation played a part in the process?

Arnold: The history of the development of our aircraft is one of experimentation and iteration. From the very start, our founders worked with physical prototypes to test and demonstrate ideas, and as the company has grown, we have developed many prototypes in increasing levels of complexity. This kind of experimentation—and working towards something that can be tested and learned from—is essential for innovation.

Q: Can you talk about the positive social and environmental impact of this unique mode of transportation?

Arnold: We like to think about the “radius of life.” When you can travel five times faster than you can by typical ground transport, your horizon for commuting also increases by five times. Five times the radius gives 25 times the area and 25 times the possibilities. Or you can gain that time back for yourself and your family and create a big increase in wellbeing. Congestion and ground-level pollution will drop dramatically; cities will become cleaner, greener, quieter and safer.

Q: What characteristics were critical in putting together your R&D team?

Arnold: Research shows the impact of diversity, in terms of outcomes and the positive effect on team interactions. We have people with 30 years of experience working alongside undergraduate interns. We have people from different industries and cultural backgrounds. To benefit from this, we also need people who are open and ready to learn and try new ideas.

Q: How do you manage collaborations to incorporate cross-functional teams for effectiveness?

Arnold: We build our main cross-functional teams around the product breakdown structure; each major aircraft system has a dedicated team. Each team is established from the start of the program and is co-located, with a single day-to-day leader from the systems engineering team. We believe there's a huge increase in effectiveness and efficiency when sitting together vs. trying to collaborate virtually.

Q: How are you looking at scaling the R&D unit?

Arnold: Our goal is to make the foundations, processes, systems, mindsets and skills scalable. This means continuously challenging and improving things like our onboarding process for engineers, day-to-day collaboration and data management. It’s also important to expect and embrace the changes that scaling brings. Different structures and approaches are better for different sizes of teams, and it’s OK to change!

Q: How is agile part of the equation for your team? What principles have been key?

Arnold: One of the original principles of the Manifesto for Agile Software Development—the progenitor of the “agile” concept—is simplicity. Our whole architecture is designed to be extremely simple, and we drive this down into the detailed design of every part. We also work in short, iterative cycles that come to some sort of end product that can be evaluated. The objective is to learn quickly and efficiently, with a short lead time.

Q: The hallmark of agile is to continually evolve. How do you ensure ongoing changes happen while still protecting the agile culture?

Arnold: Due to our extremely fast team growth, we have a slightly different problem. Change is happening and will continue at a breakneck pace for several years. We work to protect and build on our engineering culture but also allow evolution and new people to bring new ideas. To take advantage of this, it’s important to have and reinforce core principles that give a framework but are not too rigid. Sometimes you can embed these principles into processes, but that’s not enough—there needs to be a huge and continuous effort to reinforce the right mindsets.

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.

Winning practices for agile in advanced industry

Designing flying taxis: Is agile the key to innovative R&D?

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