How to Build a Car Lab: Inside Volkswagen’s Digital:Lab

June 12, 2017 Pivotal Software

A talk with Stephan Hagemann, Director at Pivotal, who leads Pivotal’s engagement with Volkswagen in Berlin

From mobility services to self-driving cars, Volkswagen is staking its future on software. The company recently announced it will hire 1,000 new IT employees with specialities from game development to artificial intelligence. The group’s mobility company Moia, which will provide mobility solutions from fleet-based commuter shuttles to autonomous on-demand transportation, launched in December 2016. Moia is the first Volkswagen brand to not make cars, and software is the fuel that will power it.

Volkswagen’s Digital:Lab in Berlin, a collaboration between Volkswagen and the software company Pivotal, is one of the company’s key software bets. Its function is to take the ideas of Volkswagen’s business units, including its twelve car brands and the new mobility business, and bring them to life faster and more effectively using a disciplined Agile software development process.

At the lab’s official launch in Oct 2016, Volkswagen’s CEO Matthias Müller peered over the shoulders of programmers seated at densely packed desks. Eventually, there will be a network of such labs within the Volkswagen group.

Enabling transformation

A discussion with Stephan Hagemann, a Director at Pivotal and an engineer by trade, revealed how this approach by Volkswagen opens up their team and helps foster a creative environment.

The team here is excited about being part of the transformation that turns Volkswagen from a pure hardware manufacturer to a mobility provider.

Hagemann mentioned how when Volkswagen came to Pivotal—it was because the company’s car brands felt that IT couldn’t deliver new digital services, like parking or predictive maintenance apps, fast enough. Business units often hired external companies to build the software for them instead.

“But we do things faster in Berlin,” says Hagemann. “Companies like Volkswagen are interested in working with us because we enable them. The team here is excited about being part of the transformation that turns Volkswagen from a pure hardware manufacturer to a mobility provider.”

The aim of the Digital:Lab is not just to deliver faster, but to help rework Volkswagen’s overall culture so it can adapt to the digital transformation of the car business. “It’s not the what; it’s the how,” says Hagemann. “We help business units adopt the Pivotal way, which is often completely different from the the way they used to work before. ”

The startup model

The scale of the Volkswagen group is staggering. The company has 600,000 employees who work on a dozen car brands from Škoda to Porsche. Every year 10 million vehicles roll off the assembly lines of its 121 factories. Not exactly a company that seems like it can be run in a flat structure, but “the secret to change,” says Hagemann, “is culture.” And the Digital:Lab, with a mere 50 employees, has a startup ethos that permeates the walls.

Volkswagen employees at the Digital:Lab work in small, self-contained teams of developers, designers, and product managers, and are responsible for the entire lifecycle of the product or service on which they work. This is something of a revolution for Volkswagen, where key product decisions are often made by steering committees at Volkswagen headquarters in Wolfsburg, Germany.

Whenever a Volkswagen business unit wants the Digital:Lab to work on an idea or service, the relevant product manager is sent to Berlin to work directly with the team.

In Pivotal’s software development methodology, team members work in pairs and are regularly rotated through different tasks and pairs in order to distribute knowledge evenly throughout the team. This process makes constant communication essential. Hagemann says: “Over here, communication is really enhanced. I believe this changes culture in a very positive way. ”

At the end of every week, teams hold retrospective meetings on what is working and what should be improved. Feedback from your peers is often more useful than feedback from your boss because your peers are inside the team. They constantly know what’s going on. However, this can be a challenging process for employees coming from corporate culture where such an openness is not commonplace.

“This process is not about casting blame. It is not about getting back at others or getting ahead of them. It is about learning, individually and as a group. We strive to figure out how to improve things next time around, “ says Hagemann.

During retrospective meetings at the lab, the same person who criticises you will often offer to help you too. Hagemann says that this is one of the major differences that clients point out when they come work with Pivotal, and it’s one that makes a lot of people happy.

Ensuring Volkswagen’s future

Hagemann says that the lab can’t scale up or truly influence Volkswagen’s culture if it’s seen as disconnected from the rest of the company. That’s why it’s crucial for the employees at the Digital:Lab still feel like Volkswagen employees. Hence the emphasis on retrospectives, and why managers from Wolfsburg are brought to Berlin, to be able to focus on the goals of the company and get a new point-of-view on the future.

“I believe this style of team is one of those puzzle pieces that companies need to truly digitally transform.” Says Hagemann, “The Digital:Lab is part of the spearhead of future mobility for the Volkswagen group. That’s something that should make them proud — and I’m really proud that Pivotal is a part of it…”

Change is the only constant, so individuals, institutions, and businesses must be Built to Adapt. At Pivotal, we believe change should be expected, embraced, and incorporated continuously through development and innovation, because good software is never finished.

How to Build a Car Lab: Inside Volkswagen’s Digital:Lab was originally published in Built to Adapt on Medium, where people are continuing the conversation by highlighting and responding to this story.

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