Early and continuous risk mitigation

To implement the third Agile value “Customer Collaboration over Contract Negotiation”, project managers today use the Lean Startup approach, based on Eric Ries’ book of the same name.¹

“Rather than building something alone in a dark basement, the goal is to get a product into customers’ hands as quickly as possible to understand their needs through tangible experience and iterate your product to meet these needs.

For Tesla, following this approach meant shortening development cycles, forgoing trial production runs and diving straight into full-scale production. That is, full-scale production of a cutting edge product at the edge of feasibility, at volumes 100X higher than they had experienced, using a new and untested production approach. Unfortunately, they don’t call it hardware for nothing… the same rules do not apply.”²

The Lean Startup approach needs to be refined in the context of “hardware” projects.

Practical Agile Principle #3: Apply the Lean Startup approach to EV “hardware” manufacturing projects, shifting the focus from rapid and continuous product delivery to early and continuous risk mitigation.

Early and continuous risk identification and reduction creates the same customer value (customer satisfaction) as rapid and continuous software delivery. It prevents risks and uncertainties from escalating into more serious problems later in the project, thereby increasing the chances of overall project success.

Risks associated with innovation are often among the most important and dangerous risks in projects for several reasons:

• Unpredictability and uncertainty: Innovation, by definition, involves new ideas, technologies, or approaches that have not been tested or widely applied. This creates a high degree of uncertainty and unpredictability.
• High project impact: Failure in the innovation part of the project can have a significant impact on the entire project, including delays, budget increases, and even complete project cancellation.
• Technical complexity: Innovation projects often involve complex technical solutions and require a high level of expertise, which increases the risk of technical problems.
• Financial risks: Innovation work often requires significant investment and failure can result in significant financial loss.

To mitigate the risks associated with innovation, it is important to identify and prioritize individual risks by assessing their probability and impact. This principle is closely aligned with the well-known principle of “prioritize and execute” – identify the most important thing and execute it first. For EV manufacturing projects, this means find the biggest risk in the design, development, procurement, manufacturing, assembly, delivery, installation, acceptance, operation, and maintenance of the EV manufacturing equipment and fix it first. The earlier and more continuously the biggest risks are identified and mitigated, the faster the project progresses, resulting in earlier and more profitable completion.

It is also important to conduct early and frequent risk reviews. A risk review serves as a checkpoint where innovation progress and remaining risks are analyzed, and decisions are made to adjust the project based on the results of the analysis. If the innovation process is successfully validated at this point without significant risks, the project continues to develop and improve the product in the planned direction. If critical risks or failure to meet expectations are identified, the innovation can be pivoted, and the project changes direction.

The more often innovation risks are reviewed, the faster adjustments can be made to the project. For example, Elon Musk at Tesla sets very short intervals between reviewing prototypes of new cars. If the creative efforts of the designers and engineers don’t meet his expectations as a customer, the work doesn’t continue. These regular reviews minimize unnecessary work and demonstrate how to effectively manage innovation processes and get timely feedback. Involving customers in risk reviews ensures continuous collaboration with customers and regular adaptation of the product to changing market needs. It also improves the overall quality and acceptance of the final product and strengthens customer relationships.

Risk identification and review activities create a visual plan that serves as a project roadmap. Each event provides a starting or ending point for innovative and creative processes, facilitating effective management and development of new ideas.

GERMANENGINEER.COM plans and conducts risk identification and review events for EV manufacturing projects, such as:

1. Design Review: Expert analysis of new manufacturing technologies for feasibility, applicability, and effectiveness.
2. Prototype Review: Testing a prototype of production equipment to validate the concept, identify potential flaws, gather customer feedback, refine the design, and create manufacturing specifications.
3. Manufacturing Capability Assessment: Assessing the risks associated with in-house technological capabilities and manufacturing capacity. Includes a cost-benefit analysis.
4. Supplier Capability Assessment: Assess risks associated with component supply, including raw material availability, supplier evaluation and selection.

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1. https://en.wikipedia.org/wiki/The_Lean_Startup retrieved 06/11/2024. ↩︎
2. How Tesla Used Robotics to Survive “Production Hell” and Became the World’s Most Advanced Car Manufacturer retrieved 06/11/2024. ↩︎