In July we met with Ole Reuss at the Volkswagen AG Digital:Lab in Berlin. We talked about the advantages of agile software development, flat hierarchies and cost effective innovation.
innomaniacs: Thank you Ole, for inviting us to Berlin! Where exactly are we?
Ole Reuss: You’re welcome. We are in an old building located next to the river Spree, it is a Tech and Media Campus. It used to be the location of MTV Germany and is the home of Volkswagen AG Digital:Lab now.
How long have you been here?
Two and a half years. The Volkswagen AG Digital:Lab was founded in 2015 and the operation started in 2016.
How was the Digital:Lab founded?
We said we need to change something in the software development. The workers’ council had and still has very good innovation funds for the future. They really liked our idea and said that they would fund the idea for two years and after that we would need to be in the black numbers. We achieved that. Now the products we develop are financed by our clients, the business departments of Volkswagen Group and brands.
We see digital labs emerging all over the country and in all industries at the moment. What do you think is the advantage of this kind of organization in comparison to departments embedded in a company?
Have you heard about the waterfall method? It’s what big corporates mostly use to develop software. It means that you work on your idea in a linear way. You keep developing for months or even years without evaluating until your idea becomes a product and you deliver it to a client. After such a long time you might find out that’s not what they actually wanted. You never asked them what the users really need in the first place.
We work in a different way. We start with something called scoping. In two or three hours we find out what the goals, non-goals, and risks are. Are we convinced that it is a good or a bad product or are we not sure and have to find out? Then we start to develop in an iterative way. We repeatedly build, measure, and then learn. That’s how we approach each part of the development and like this we avoid to misdirect because we always evaluate. Measuring, user testing and user research are very important for us. All of this leads to a very different way of developing software.
Software development – is that your background?
No, definitely not. I am a TV director and producer. I worked in the media business for 20 years and then decided that I needed a break. To be honest, if you talk about Netflix and fictional movies everything is good but the non-fiction sector in the TV business is not challenging for me anymore. So I said, okay, I quit my job. The guys from the Volkswagen AG Digital:Lab asked me whether I want to join them. I said that I am not a software developer, so what could I do? And they said that they need an ambassador, someone who represents them. We decided to give it a try and as you can see, so far so good.
How many people were here when you started?
We started with one guy and a laptop and soon ten more people. In the beginning we had a corporation with a company from the US, Pivotal. They helped us with a lot of methods and the right mindset. For the collaboration and training on the job one employee from Pivotal and one from Digital:Lab paired together and programmed as a team. This pair programming is what we still do today at the Digital:Lab.
Usually programmers code by themselves. What we do is we always put two programmers together. They work at one computer and one of them is actively programming while explaining what he is doing and the other one is passively asking questions or giving impulses. The roles are changing over the day and so do the pairs within the team. This gives us three advantages. First, the code quality is outstanding because of the four-eyes-principle we always use. Second, programmers transfer knowledge during pair programming. And third, there is never a problem if someone is on vacation or sick because there is no silo knowledge. The whole team always has equivalent knowledge.
How are you organized?
We are around 60 people today and organized around that iterative mindset. We don’t believe in hierarchy that much but rather in roles. We have the roles of software developers, product designers, and product managers. The developer is the so-called “lawyer of the tech“, the interface designer is the “lawyer of the customer and user”, and the product manager is the “lawyer of the business case”. There is no boss in the product team, there is not even a team leader. Like this we have to negotiate and find out what the best solution is. So if the designer and the product manager want to implement a product in a certain way, the software developer might say that it’s not possible. And he can’t simply reject the idea but has to proof why it wouldn’t work. This process leads to a balanced team. The team has to find the best way to implement ideas and products.
Another very important point is that the Digital:Lab is an overreaching department at Volkswagen AG which develops ideas for the different brands and departments in-house. So the branches and departments can come to us with a need or an idea and pitch it. Then we scope it together. We are very honest and say strictly “no” to ideas which we are not convinced to serve any problems for people. We also have the bigger picture of the company in our mind. So if we develop a product for one branch we might be able to adapt it to another one too.
How does the decision-making process in these structures work and what if there is no consent at all in these groups?
They have to negotiate to find the best way. This is very important. Nobody has the authority to say how it has to be done. I don’t believe that there should be no hierarchy at all, though. For processes within the group you need decisions from a manager and there are many departments were hierarchy is eligible, for example the car manufacturing line in the plant.
You said that you were in the black after one and a half years. That sounds like a blueprint for other companies. How did you do this?
The different departments at Volkswagen AG have a budget which they can either use on us or on a third party company. Like this we have to stay competitive as if we would be on the market. Measuring our success is quite easy. When we develop a business case and a minimum viable product which can be tested on the market, the departments which gave us this specific task can see whether the product generates profit or whether it doesn’t.
Besides actual products we mostly develop services in our Digital:Lab. To make sure that our ideas gain profit we not only proceed iteratively but also focus on three more main points. First, the involved people, this is particularly important when developing a service. We separate customers and users, which is a very important step. The customer is paying the service and the user is using it. I for example am paying for a Spotify family account and my girlfriend is using it. Second, for services we also focus on an easy registration experience. Big companies like Apple or Amazon offer one login for many products like movies, music, hardware, etcetera. Third, we need to take care about general data protection regulations. We have a consent team and it is very important for us that people trust us and that we don’t do anything with the data they don’t know about or don’t want.
Furthermore we focus on the people who use our services or purchase goods. We need to know them better. Today only your local car dealer knows you but if you go to a different Volkswagen dealer they don’t know your history. For offering mobility services we need to know our customers and users as good as possible to serve them the best experience.
A very important point for us is that all of our products and services, including software, have the outstanding quality which our customers are familiar with from all our products. To make services possible we also collaborate with other corporates and the task of Volkswagen AG Digital:Lab is to figure out whether services can meet our standards and fulfill customer needs in a way they are used to.
You just talked about B2B services within the platform that you built. With the new Volkswagen Passat for example people get the service of dropping off parcels in their cars’ trunk. Is there something else you are working on right now?
We want to give services to people. And what do you need to give a good service? Right, you need data. Very important for us is something called VCF. It means vehicle connectivity framework. A normal car has about 6,000 to 7,000 sensors. The VCF team is able to gain data from every car and every model since 2009, if the owner consented the use of this data but only for services he likes to use. So if you buy a Polo from 2009 we can make it smart. And to make it smart you need the data from the VCF.
The VCF project is a very good example for how we organize teams. We are convinced that a product team should not be bigger than ten to twelve people (the so called two-pizza team established by Jeff Bezos, the founder of amazon). Due to the raising demand of the VCF project the team got bigger so we split it into two teams. We now have one team for the tech stuff, and one team for the white label app.
Is there maybe one thing you could let us look behind the curtain of what you are developing right now?
Right now when you buy a car you go to a dealer, you touch the car, drive it, and probably buy it. In the future most people will buy cars over the internet. So we try to find out how selling mobility will look like in the future. It’s a huge project but unfortunately I can’t tell you more about it right now.
When I came here, we went to the lab and I saw everybody working, the really open work space, and it felt very international and open-minded. What skills are required to get a job here at your Digital:Lab?
Let me explain how our assessment process looks like. First of all we scan the CV but we usually don’t look at the education as much but focus on the skills. In a preceding Skype call we want to get to know the applicant and communicate how we work in the Digital:Lab. This is very important because our workday is very disciplined and structured. After the Skype call we have a 60 minute coding exercise followed by a full day on which the candidate comes to the lab and works with different developers in the pair programming mode. That’s how it works for developers. For designers and product managers this is a bit different but let’s focus on the developers. It’s very important for us that we see how the applicant does his job, is she or is he communicative, what are the hard skills, how about the soft skills? These things are important for us and here in Berlin we mostly look for senior level people at the moment. We want people who are empathetic and sympathetic. We want to create a culture in which people feel safe, respected, where everyone has a place. And most importantly the team members decides who joins the group. In balanced teams the group members are working together and they know who is fitting the best. I don’t believe in decisions from people who are not affected by it.
What do you believe in?
I believe that a team should be able to choose who they want to work with. Sure, there is no guarantee that this works and maybe a new programmer realizes after a month that the pair programming is not how she or he wants to work but you always have this risk.
Also we have fixed working hours from 8.30 am to 5 pm and the teams usually don’t work after five or on weekends. Some coders prefer to work at night or alone and that’s okay but then they just don’t fit into the Digital:Labs mindset. As a big corporate we have many different departments and software development centers as well with different approaches on the named topics which is important. So if a programmer doesn’t fit into our department she or he can still find the perfect spot in another department at Volkswagen AG. We don’t want to lose people just because the environment is not perfect for them.
You also built Volkswagen AG Digital:Labs in Barcelona and Lisbon, right?
Barcelona is in formation right now while Lisbon is already running with products and with around 30 people. We know that not everyone wants to come to Berlin, although it’s such a cool city. People want to stay where their families are, maybe they have kids who are in a local school already. Lisbon is a very good example because Portuguese tech people are very good and Lisbon is a hot spot right now. So we go to the places where valuable people live and create the perfect situation for both, them and us.
What’s the best part of your job?
I meet so many people who are passionate about what they do. I give you an example. One of my role models is Sascha Pallenberg. Sascha is doing his Job at Daimler with passion and honesty. Thus he is being respected for what he is and does. If i am convinced of what I am doing, communicating it is a pleasure. I would never communicate something I am not convinced of.
- The Digital:Lab works iteratively with flat hierarchies and agile methods like pair programming
- As a part of Volkswagen the Digital:Lab still competes with third-party companies but at the same time meets the internal quality standards
- By expanding the Digital:Lab to new countries the capability increases while keeping the structured culture and workflow
- Ole Reuss on Twitter
- Digital:Lab website