Bmw Ag: the Digital Car Project

November 26, 2017 Management

This case is about a firm that needs to change radically its new product development process. The company has been successful throughout its history by developing high quality new products in a traditional way that extended back for decades. Customer demands are pushing for greater variety of products in shorter times. Competitors are responding to these demands and are on the way to cut their NPD process times by 20-30%.

For the Company to get ahead of competitors and put itself as a leader, it needs to drastically redesign its new product development process. As Gilvan C Souza mentioned,1 the speed to market of new products need to match that of the industry category so the company can be successful. 1. What are the competitive challenges of the automotive industry in 1997 and beyond? How is BMW affected? In general, in the last decade the market has witnessed a power shift from manufacturers to consumers.

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The automotive industry did not escape this trend. Customers wanted to have more variety of cars, and more affordable ones without sacrificing quality. In order to meet this demand, automakers started focusing heavily on speeding up their process development as a competitive strategy. Many American and Japanese companies cut the speed to market considerably and were waiting to get into the European market. BMW was lagging behind competitor since its NPD process was very traditional and slow.

The company had a very artistic way to develop new products and there was internal resistance to change it. The threat was clear: either speed up NPD or struggle with competition. 2. How would you evaluate the evolution of NPD at BMW? Although BMW started to change the old process by introducing computer aid technologies at the beginning of 1990s, and even though the NPD process had improved (see page 8 in the case), the engineering lead time didn’t show major improvements.

The competition had much shorter development times than BMW. More importantly, BMW didn’t want to lose the traditional handcraftsmanship that characterized the company. Because of the details they went into the design, NPD was very time consuming and labor intensive. 3. Is BMW top management pacing change in NPD correctly? Too fast? Too slow? I think that the company was in the right track towards the redesign of the NPD process; however, senior management was not completely committed in making the project go.

On page 11 of the case, the author mentions that while engineers and designers were struggling to change development process, top management understood the problem but was more concerned about boosting productivity and efficiency. It passed a year and there was no progress in the new development system. I think it needed to go faster and involve people from executives to every one at the FIZ. 4. As Peter Ratz, what would you recommend to BMW senior management concerning digital and CAS? At this point it is clear that BMW needs to redesign its NPD process to obtain substantial changes in speed to market.

Additionally, it needs to involve engineers, designers, functional managers, senior managers, and executives in the projects. A way to do that is by adopting the innovative CAS NPD process with the flag company car, the 7-series, on the latest and revolutionary platform that was already under development. In this way every body in the company would be committed to make it work. I agree with what John E. Ettlie mentioned in his book (chapter 6, page 9): “there are no ‘failures’ in these cases”.


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