Since 2003, Business Innovation Prototyping contests the dominant mantra of ‘project management’ in R&D. We do this according mainly to the following principles of: bringing risk into the development; significantly reducing and capping both time and cost: ensuring both supply & demand (50/50); and measuring outcomes over thinking.
About the Company
Founded in 1927, The Volvo Group is one of the world’s leading manufacturers of trucks, buses, construction equipment, and drive systems for marine and industrial applications. The Volvo Group also provides complete solutions for financing and service.
Some of our brands outside of ‘Volvo’ include Renault, Mack, Eicher, Penta, SDLG, Prevost and Nova bus.
In 1999 The Group sold its passenger car division, Volvo Car Corporation, to Ford (USA) who has since sold their interest to Geely Automobile (China) in August of 2010.
The Group employees about 120,000 people, has production facilities in 20 countries and sales in more than 190 markets.
Headquartered in Gothenburg, Sweden. The Volvo Group operates in a competitive industry of transportation with the vision to become the world leader in sustainable transport solutions. The dynamics of the industry continues to bring new challenges.
About the Organisation
Business Innovation Prototypes are conducted by a team of ten people at Tech. Watch and Business Innovation, part of Volvo Information Technology and in turn one of the organisations within The Volvo Group. Volvo IT’s customers include both the internal organisations of The Volvo Group but also many external customers of similar size (Food, Retail, Transportation).
The Team is located in Sweden, France and China and serves the Group across the globe. Although hosted within Volvo IT, all previous Business Innovation Prototypes (BIP) have been developed with a customer outside of our host organisation. The range of areas applied to BIP’s does not have any stated limits with over eighty prototypes developed covering areas from production and logistics to purchasing, finance and health.
Business Innovation Prototyping was first launched 10 years ago by two Managers (at that time, an Executive Management Consultant and the Head of R&D). Their task was just one item from a program of work/objectives launched from the CEO in order to increase (in typical Swe-English!) “Pro-activity” within the organisation and most importantly towards our customers. Outside of the objective to increase 'Pro-Activity" within the firm, the only other specification received by the founding members was that the team should be called and address “Tech Watch and Business Innovation.”
The Tech. Watch function had long been a part of the organisation for as long as anyone can remember, styles vary but it was nothing new as such. But for Business Innovation what the offering and outcome would be was entirely unknown?
It was suggested that an existing team of approximately 30 people, should be taken over. However, to their credit and trust earned through their decorated careers, the founders challenged this recommendation with the CEO, and with his full support the duo where given full command to build the team up as they wished.
Without any previous experience in Business Innovation and Prototyping per se or theory to lean on, the pair leant heavily on what they did have. Experience and understanding of what typically worked and what didn’t in the organisation. Their first steps being asking themselves “OK, what went wrong before?”
- If we do typical R&D… we will do a lot of internal work and not address our customers directly.
- If we run typical projects… we will use a lot of time and money
- If we support projects… we will be sucked up and loose key recourses for up to two years or more at a time
- If we go through the existing channels… it will take time and we will not get the picture of what is it ‘really’ like.
- If we are in the line organisation… we will not be independent to be proactive
- If we are closed... then we cannot collaborate with the necessary partners
The line of questioning also produced many insights, and from here, the construct for Business Innovation Prototyping was formed. By structuring the offering of the team based on challenging the more traditional ways of working it was no surprise the small, independent team faced great challenges of their own with significant internal inertia as many senior figures believing they are ‘wrong’ and ‘it is not the normal way of doing things!’ The internal forces where so strong in fact that if it wasn’t for the strong and direct support from the CEO, the function would not exist today.
BIP shared a symbiotic relationship with the Tech. Watch function. Not only informing each other through the evolutionary nature of development and knowledge creation. The overlap, stronger than originally foreseen, Tech. Watching gave BIP a vision of the future and strategic direction (outside of the firm) and BIP grounded Tech. Watch, in a sense creating artefacts and outcomes that allow people to interact and engage in the area, forcing them to think how this will impact their own future direction and also of course making it more tangible or real, if you like.
Business Innovation Prototyping was founded upon addressing and also challenging the existing ways of working. In hand, that also shaped our solution. The following core principles communicate both the challenges and also how we try to overcome these in the early phases of innovative development.
Core Principles:
Embrace Risk
Risk in development projects is typically forced out in order to give better odds for keeping to a predicated time, budget and quality. However, we always bring risk into a prototype. We embrace risk to encourage bolder ideas and to take steps towards future visions. More to the point, it is not until we are 40% into the prototype, we actually decide upon what we would like to execute upon (i.e. develop).
We can achieve this in two ways. Firstly, we never give our customer the expectation that the outcome will go directly into production. Secondly, through the 50/50 financing we can increase the risk due to our own buy-in, described below.
Partnering: 50/50.
We always make sure there is both supply and demand (i.e. Push/Pull) within each BIP. We provide half of the funding through pitching BIP proposals to our internal R&D fund whilst we ask our customer to match the same amount, to create equal buy in and partnering for the development. If it was fully (100%) funded by the customer we couldn’t take so much risk, however with our team/organisation patnering for 50% this allows us to bring risk into the scope, “stretching” and providing more capital to our customers for more innovative development. If it was fully funded by R&D there would be an internal focus and we wouldn’t not always know if we are “doing the right things”.
Fixed Cost
In all of the more than eighty BIP’s – the team has never asked for more money. Not once. The amount asked for, for each BIP varies a little according to the objective. However it is a very low amount in comparison to a typical project set up. Cost is also a key way to set expectations with the customer/stakeholders.
Time Commitment
If we don’t act fast enough we loose both efficiency (even if it doesn’t cost more) and also you want to ensure you can get your offering to market at the right time, not too late. After a while we found that three months calendar time was generally the ‘right’ amount of time and we now communicate this as a commitment to our current customers. Typically a successful outcome results that the offering comes into production at least two or more years before it perhaps would have, accelerating the development process.
Think Big, Build Small
Prototyping is not just technical development. It is a component of what is achieved however the objective for all prototypes is for business innovation. We therefore always have a future vision that we are working towards and that we base our outcomes/deliverable on (e.g. business models, development plans etc). Although we only execute the key component(s) for the offering.
Focus on End User
A key part of what we do is to focus on the end user. Whether it be through experiencing the opportunity/problem first hand or testing possible solutions on the ground. A focus on the end user is a key ingredient for success.
Be Open
From the start, everything we do is open and avilable to anyone both inside and out of the organisation.
Prototyping the Process
Ongoing development of the process for how we work has been part of the process itself from day one. Starting without any defined methodology, or process, it has been built from the ground up through experience and on frequent and continuous questioning of how we work, what seems to be working and of course what is not. It is an ongoing prototype in its own right.
All prototypes are different but the above are some of the principles we use to help steer and guide our BIP’s.
From an organisational point of view, these principles also give guidance to questions that will always be present within the dynamics of a large organisation. For example: Where should we ‘sit’ within the organisation? What is the correct governance? Should we focus on outcomes or have an ambition to spread the ‘way of working’ across the organisation? Should we be more aligned within the organisation?
The group has been up and running for 10 years now in 2013 and over that time more than eighty Business Innovation Prototypes have been developed.
From a qualitative perspective, for a small number of individuals, the group holds both an established and reputable position within the wider Group. There are many repeat customers, featured work in leading business and industry publications and continued collaboration with other large companies and organisations.
From a more quantitative perspective the break down is as follows:
- 21% directly went into creating new business (products & services)
- 64% added features to new products and/or services, added to, altered and/or repositioned existing strategic roadmaps
- 15% knowledge gain, no further action taken at this time
What is the right balance? Do we have a high or low enough hit rate? What is the right amount of risk we should take? Well, in truth we do not know. The above breakdown was not, and is not a targeted KPI. However we believe the above breakdown, for today, allows for both enough stretching to allow for the uncertainty that comes with innovative development and also to deliver upon offerings that ultimately deliver new business for the company.
Past and Current Team Members:
Mats Folkeson, Jean-Peter Fendrich, Tommy Hansson, Andreas Johansson, Kerstin Hanson, Magnus Kuschel, Peter Fransson, Thomas Hordern, Laurent Geray, Moataz Ali, Aaron Hung, Guillaume Favreau, Stephane Parisot, Ulf Nilsson, Magnus Carlander and Lars Bogren.
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