How to Build a High-performing Team under Pressure Within an OEM or "One SOP per Day" (Part 2 of 2)
This is the second part of my team's and my journey of becoming a high-performing team in 2018 by finding our vision, our mission and our organization structure, which allowed us to link the corporate world to the agile world. We aimed for one code release per day (called SOP or start of production in Automotive language), which meant we were working under a lot of pressure. But I believe that without the pressure motivating us, we wouldn’t have achieved our goal. So embrace the pressure and read on if you are curious about our journey.
The Prof. Jennewein Framework
I met Jonas and Wolfgang on a warm summer day where I participated in a leadership seminar in a stunning location. Although nearly 50 years old and a well-known professor, Wolfgang appears to be a student in his mid-twenties, full of muscles and energy. Jonas, his assistant was working toward his PhD. I noticed immediately that they feel psychologically safe with each other as they challenge each other’s statements in a positive manner in front of the audience. They respect each other but have enough trust to be open for discussions. Nevertheless, they were there to show us how we can move forward to become a high-performing organization.
They talked about loyalty and trust and touched many other topics. They also presented a trust equation which really impressed me. The trust equation uses four objective variables to measure trustworthiness. These four variables are best described as: credibility, reliability, intimacy and self-orientation. The trust equation has one variable in the denominator (self-orientation) and three in the numerator (credibility, reliability, and intimacy). Increasing the value of the factors in the numerator increases the value of trust. Increasing the value of the denominator - self-orientation - decreases the value of trust. So you can only increase trust in teams, if you minimize self-orientation or simply called egoism. After the lecture, we were asked to fill in this slide over dinner and a glass of wine:
The vision and mission pave the way for clarity while values and (organizational) structure foster psychological safety. It took more than one glass wine but finally I filled it in and was proud of my result:
Vision: Becoming the best Automotive IT in the world by 2025
Mission: C3PS fer Cash
Values: Brave, enthusiastic, team-player and a little bit crazy (creative)
Organization: Two teams – one pre-dev team and one core team
CEPs (I wrote it C3PS) stands for Volkswagen commercial vehicles’ most important target group: Courier, Express and Parcel. It is important to state that all our work is geared toward being economically successfull (meaning generating cash flow). Additionally, CEPs is the short version of “Cloud-based Customer-Centric high-Performing Services being Fast, Easy-to-use and Reliable.” I was convinced that I was a genius finding such a catchy slogan, which could be printed on hoodies, mugs, t-shirts and maybe as a tattoo…. My team, however, gave me their feedback that this unhandy slogan didn’t feel very natural. Regarding the vision, they recommended that I not become too big for my boots. At first, I was disappointed but I quickly recognized that it is hard to define a vision and mission without involving the people who will execute them. I had a crazy vision and a smart abbreviation but it didn’t come from my team.
So we met for a kick-off workshop and looked at our value chain together. Since everyone had read the “Phoenix Project” by now, we all understood that our value chain needed some improvement and that we had to create an IT environment that would allow us to achieve high performance. We defined an optimal version of our value chain and started working in groups, over the next two weeks, to find the appropriate, organizational structure to fulfill this. We concluded that our biggest challenge, to be fast, agile and innovative, lead to our not doing much in-house. Off-site suppliers implemented our product based on our specifications. Each supplier was specialized in one specific component, such as backend or frontend programming. We had to integrate all components to an overall product at the end of the sprint, which grew more difficult over time. Additionally, it was hard for us to estimate the overall complexity of tasks, since they split up into several, component-wise, sub-tasks, which were delegated to the appropriate supplier. We never had a full view of the overall implementation state of any feature. I planned the core team to be the team doing the component-wise coordination of the suppliers. The pre-dev should be able to implement things on their own, adding code to the code-base. But then we learned that this would be difficult in terms of the warranty and product understanding. The suppliers didn’t want us (Volkswagen) changing their code, only to be responsible in terms of warranty and operations. I guess this is pretty understandable. You don’t want Volkswagen to change your code but being sued that your code doesn’t work due to changes you haven’t done.
After massaging this problem over several hours, it was crystal clear to us. We had to perform operations on our own, in-house. Then we would be able to make code changes without the supplier being responsible. But to be able to operate our product, we had to understand it. So we agreed that we had to perform code reviews and we aimed for the code ownership. This became our mission.
In order to operate it efficiently, we agreed that we had to increase the automated testing and continuous integration. Finally, we had a vision: We wanted to release new code at least once a day. Or, in automotive language, we wanted to have one digital SOP (start of production) per day. Our customers would drive to work in the morning and in the evening, on their way home, they would drive with a slightly newer car home, since an update has occurred at some time during the day. We had clarity. We had a vision. We had a mission. But how should we achieve this and convince all our suppliers to go along?
With this question on my mind, I heard the term SAFEScrum when a colleague from a different brand visited us. SAFEScrum is a framework that links the corporate to the agile world. SAFEScrum recommends building cross-functional teams to minimize integration issues. They recommend quarter-wise, on-site planning conferences with all your developers. Now we found an organizational structure that should work us. We invited all our suppliers to our office. We defined six, cross-functional, two-pizza teams (copied from Amazon) and assigned each team a name, team green, team red, and so on. Finally, we assigned a developer of every component to each cross-functional team to foster diversity. Since we committed ourselves on an agile framework, it was logical that our values would have to correspond to the agile manifesto. The four agile values of the agile manifesto are
(1) Individuals and Interactions Over Processes and Tools, (2) Working Software Over Comprehensive Documentation, (3) Customer Collaboration Over Contract Negotiation and (4) Responding to Change Over Following a Plan.
It was incredible. With our eyes wide open, we were able to fill out the slide now as follows:
Vision: One digital SOP (start of production) per day meaning one release per day.
Mission: Own your Code. Own your Data. Own your Product.
Organization: Cross-functional diverse teams. SAFE Scrum. In-house operations.
Values: Agile manifesto
We started another round of work groups to execute the necessary tasks and sent invitations to all our suppliers. The planning conference was a huge success. We were able to clarify the work for the next three months in a way that we were never able to before. We received reliable estimates of the implementation complexity and understood all dependencies among the components. By building cross-functional teams, we were able to eliminate bottlenecks and integration issues. Mind you, none of this wouldn’t have been possible without first having the right people with the right values in place.
Finding the right people with the right values to build a high-performing team
The recruiting started in 2017 when the management board decided to “staff up.” But whom should I hire to develop the digital services of the future? When Wolfgang (Prof. Jennewein) was a speaker at our Volkswagen Commercial Vehicle Management Conference in 2017, he told us that building a high-performing team always starts by hiring the right people, not just the ones bringing great results but also those having the right values. If I should give you only one piece of advice on how to find the right people that will automatically create a high-performing team, my answer would be Values.
You can educate people by giving them training and courses but if their values are not in line with yours or your mission or your project, you’ll have problems. We found this out at Volkswagen commercial vehicles and that is why we look for “nice guys” who have A MEGA K values that we are looking for. What do I mean by A MEGA K values? This means we are looking for people being honest (A), brave (M), efficient (E), together (G) and customer-centric (K). (trust me, the letters match up in German.) “A MEGA K” is a great abbreviation created by our HR department (thanks Caro aka Linchen, Mareike, Clemens, Katja and Prof. Edig!) . Every time I interviewed a candidate, I asked the applicant about their most important personal and professional values. People who produce great results but have the wrong values are people who you don’t want to have on your team. It’s hard to change the values of a person. To find the right people, I gave many presentations at conferences, I published papers and started research projects to get in contact with potential employees. Finally, if you are able to find 3 to 5 gems in the sea of potential employees, they will attract more bright minds with the right values. And being a gem doesn't mean that the candidate must be an A-level or has a university degree. This is why this initial phase is so important. If you hire the wrong people, you won’t be able to grow your team with the right quality and speed.
Pressure matters for becoming a high-performing team
If we didn’t have the initial pressure to meet our SOPs (start of productions of our car models), we wouldn’t have become a high-performing team. Increasing pressure means increasing quality. My PhD-father always said “No pressure, no diamonds”. The reason is that only pressure leads to optimization. If you look at it from a data science perspective, an optimization algorithm always includes a constrained phase (e.g. in terms of time) where an exploration is performed that is finished by local optimization phase. Without this constrained phase, you wouldn’t be able to find global optima. It is similar for startups and corporates.
I had the chance to talk to a very successful venture capitalist, David Belt from NewLab, at the TechFestival 2017 in Copenhagen. He told me that founders continually need stress and “angst” (he used exactly this word, which is the same in German) to optimize from one phase to the next.
They start with the pre-seed or angle round, where they usually don’t have more than € 25,000 at their disposal. After completing this round successfully and increasing revenue by up to € 10,000 per month, they get further funding between €250,000 and € 500,000. This is the next optimization step. After optimizing right in this phase and increasing the revenue by a factor of 10, they are able to enter the next round, called seed A, where they can raise several millions. So it’s not important for a startup to get a lot of money initially. If you get to much money, you don’t have the pressure and will probably you fail. It’s important to be constrained all the time to find clarity about your goals. Clarity? It’s all about clarity!
At the same TechFestival, Professor Geoffrey Barrows, from Ecole Polytecnique in Paris presented a study where he had examined over 20,000 startups (in an anonymized data set), which have passed through structured evaluation processes on the YouNoodle platform. Through a global, multi-year study, his team examined the relationship between evaluation and future success of a startup by correlating future outcome metrics (alive, successful, funding, employees, etc.) and tying them back to their original evaluations. Can you guess what the key takeaway was? If you win a competition, the probability that your start-up survives over the next 5 years increases. So it’s good to win a start-up competition, since this extends your optimization phase. Nevertheless, winning a large-prize competition (offering a prize of more than $10,000 USD) has a smaller positive impact than winning a medium-size competition (between $1,000 USD and $10,000 USD), since it decreases your pressure and reduces your need for optimization and clarity.
But how can you leverage this in a corporate environment, where many small-size projects tend to be better funded than start-ups? You have to set hard deadlines, which have brutal consequences if you miss them! I believe this is the kind of pressure we had which forced us to be clear about our objectives and pave the way for great optimization. We had three hard deadlines (start of productions) last year. Start of production means that car models are produced from this date on. And there is no harder pressure one can suffer from. From this day on, the production plants will start to produce cars. If your work is not completed on time, the production plants won’t be able to produce legitimate cars. This could cost the company approximately one hundred thousand euros per day and employees are sent home earning less money than they may need to feed their families. Can you feel the pressure? If you find yourself under a similar amount of pressure, consider yourself lucky and embrace it. It will help you to grow a high-performing team within a corporate environment.
Do marketing for your team / foster identity
There is a familiar saying, “Do good and talk about it.” When I first heard this quote, I didn’t like it because I thought it instructed people to brag about their accomplishments. But now, I finally understand its importance. Marketing is important to pave the way for growth. As a leader, you owe it to your team. A high-performing team wants to improve, to create greater results and to grow by nature. So you should pave the way for this development as much as you can.
Last year, I had to tell my 3-years old daughter so many fairy tales that I realized many of them are real fuck ups. The main character starts off weak, screws something up but managed to correct him/herself, mature and grow stronger for having the experience. So, I agreed to be one of the first speakers of VWN’s FuckUp night and told the story of how we managed to become a high-performing team under pressure. The concept of a FuckUp night is simple. People – so called “fuckupreneurs” - have some minutes to share the tale of their biggest business failure. Afterwards, the audience can ask questions. I packaged it as a modern fairy tale, since fairy tales transport complex messages in an elegant way (and is very important to big companies in terms of marketing). It went pretty well, and the chief of the management board was present that evening. Being new to the company and open to new ideas, he understood that our journey and lessons we learned the previous year could be leveraged for the entire company. Since then we are in close contact with him and he helps us to clear obstacles.
Last but not least, it’s important to create identification within the team. After working out our mission and vision, the team - especially me, too, who is also part of the them :-) - wanted to have hoodies made with our mission statement printed on the back and our team logo displayed on the front.
Volkswagen does, essentially, the same with their cars. They put their logo on the front and back of each vehicle. It’s free advertising, seen by countless, potential customers every day. Leaving the logo off would be missing out on all that visibility. Likewise, by having these hoodies made, we advertise ourselves and our accomplishments while creating visibility within the company. I brought one of our hoodies to the FuckUp night and gave it to the member of the audience who asked the best question after my lecture. By now, we have printed and sold more than 100 hoodies all over the company.
Finally, we can conclude that becoming a high-performing team depends on building clarity and psychological safety in a team. For clarity you have to define a vision and mission. The grade of psychological safety depends on the right organization structure and values. Leverage a structured framework to find this tuple and set a hard deadline. Pressure will help you to find an optimal result. Last but not least, do marketing for your team.
PS: I love my team!