Adaptive Automotive Development: Faster and more targeted innovations through agile methods

a u t o m o t i v e . e l e k t r o b i t . c o m
EB TechPaper
Faster and more targeted innovations
Adaptive Automotive Development:
through agile methods

3
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 innova-
tion 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 develop-
ment, 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.
In California and Nevada there are now (semi-autono-
mous 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 indus-
try 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 created by
fast-paced progress in electronics and software. The
value-added chain is changing. The permanent inter-
connectedness of mobile online services, for example,
makes new, sometimes surprising, business models
possible. A large part of the knowledge of internal
combustion engines, hydraulics and gears that comes
from the “mechanical world” may quickly become ob-
solete. Skills that have been built up over decades are
no longer an unbeatable competitive advantage. 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 development is
becoming more and more a core skill for automobile
manufacturers and automotive suppliers. Agile devel-
opment methods, carried into the automotive industry
through the growing importance of software, are a big
challenge and a huge chance – even beyond questions
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 innovation offered by the con-
sumer 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
What challenges does automotiveAbstract
1
In alphabetical order
development currently face?
March 2015Adaptive Automotive Development
Whitepaper Version 1.0
Authors 1
Christian Binder
Thomas Hemmer
Steffen Kuhn
Christian Mies
Microsoft Deutschland GmbH
conplement AG
Porsche Consulting GmbH
Elektrobit Automotive GmbH

5
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 last-
ing 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.
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.
upgrade of an infotainment system, personal-
ization 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 manufacturers
and their suppliers still need to go through.
How can car manufacturers and suppliers
exist in highly dynamic markets?
Image 1: A high level of insecurity can only be dealt with through versatility and speed Source:
Porsche Consulting, photos: Fotolia
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.

7
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 pro-
duction 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 processes 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.
Have there already been similar transformations?
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 manufac-
turer 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 methods.
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.
Image 2: Lean principles for just-in-time production systems. Source: Porsche Consulting
2
Derived from the Toyota Production System (TPS) and the Toyota Product Development Sys-tem (TPDS)
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
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 principles 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 value without
wasting resources. In a stable market this approach
also works well in development. Then, using traditional
market research, the customer value can be deter-
mined and the goals for further product or service
improvements determined.

9
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
he 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 company’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 validation 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 functions should be
added to them, as quickly as possible, to be tested on
the real market. Market resonance is then measured by
turnover.
In the automotive industry, the measurement of market
resonance is mainly possible through short-cycle meas-
urement 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 functions 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 cycles. At the end of each iteration,
feedback on the generated software is obtained from
the internal 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
promotes cross-functional cooperation.

11
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 meth-
ods bring added value and where they do not.
The practical realization of lean principles
Many practices have been created in the “agile world”
of software development that systematically 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 devel-
opment process. The result is a very tight intermesh-
ing of product management, development and testing
with a maximum reduction in specifications.
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 annual goals in the creative area that are
tied to bonus payments. In an “agile culture” counter-
productive measures such as these are replaced by
team goals, short cycle feedback, social controls 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 pro-
cesses were not adhered to. However, 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
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?
in large corporations?
Do agile methods work outside of
software development?
in the automotive industry?
Agile software development is already being successfully used by
automobile manufacturers and suppliers, but not extensively.
Often unsuitable cooperation methods and contracts between
OEM and suppliers prevent their implementation.
Methods Advantages
Efficiency and
effectiveness
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 usually associated with handovers.
Short planning and implementation cycles, short
daily alignment in the
team (daily stand-ups)
Loss created through forgetfulness and
procrastination are minimized
Permanent 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, “swarming” 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)

13
Image 7: Continual learning from users and use
Source: Microsoft Developer Division
With its 1400 employees, Elektrobit Automotive GmbH
develops software solutions for the automotive indus-
try. 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 projects. This latter point has led
to a significant increase in interest in agile methods by
the automotive industry. With the growth in trust by
the OEMs there has also been an increase in willingness
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 management of agile projects.
Through the customized use of agile methods it was
possible to achieve a synchronization with the prede-
fined sample phases of the OEMs.
Image 6: Combining lean principles and agile elements in the Elektrobit Lean Development Model.
Source: Elektrobit
Does agile software development
work in large corporations?
Today there are already numerous reports avail-
able 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 On-
line 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.
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.

15
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 development?
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
completely unrelated fields (e.g. machine construction).
From what we have experienced, many agile methods
can be adapted to areas outside of software develop-
ment 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 realiza-
tion 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.
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 suc-
cessful 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 ac-
cordingly in order to be able to attain a truly agile way
of working together with the supplier.
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 litera-
ture 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 ex-
perience 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 support 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
throughout 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 minimized. 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 communica-
tion 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.
How do you introduce agile
methods in a corporation?
Summary
An increasingly dynamic market demands faster
and more targeted investments from automobile
manufacturers. The authors recommend moving the
company toward adaptive automobile 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 development.
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.
15

17
Authors 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, Unternehmensgewinn 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, Unterschleißheim 2007
[Startup] Ries, Eric: The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation
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 System:
Integrating People, Process, and Technology
[TPS] Ohno, Taiichi: Toyota Production System: Beyond Large-Scale Production
17
Christian Binder – ALM Architect, Microsoft Developer Experience
Microsoft Deutschland GmbH
Konrad-Zuse-Straße 1
85716 Unterschleißheim
Tel. +49 89 31 76-0
msdnmail@microsoft.com
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,
enable 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
info@conplement.de
www.conplement.de
As a service provider for software engineering and automotive embedded
engineering, conplement AG has hands-on experience with the introduction
and application of agile software development and the coaching of development
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
kontakt@porsche-consulting.com
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
Am Wolfsmantel 46
91058 Erlangen
Tel. +49 9131 77 01-0
marketing@elektrobit.com
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
development methods and their realization.

19
Notes
19
Notes

Adaptive Automotive Development
About EB Automotive
EB Automotive is recognized internationally as one of the most
important suppliers of embedded software solutions in the auto-
motive industry. In addition to the development of products,
EB Automotive also specializes in services and consulting for the
automotive industry, supplying implementations of software
solutions for a broad range of AUTOSAR ECUs, functional safety,
infotainment, navigation, HMI and driver assistance systems.
EB continues to invest in feature integration and development
tools ensuring in-vehicle devices ship in volume earlier and arrive
quickly to market.
Am Wolfsmantel 46
91058 Erlangen, Germany
Phone: +49 9131 7701 0
Fax: +49 9131 7701 6333
sales.automotive@elektrobit.com
automotive.elektrobit.com

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