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9-699-044REV:NOVEMBER1,2001________________________________________________________________________________________________________________ProfessorStefanThomkeandResearchAssociateAshokNimgadepreparedthiscase.HBScasesaredevelopedsolelyasthebasisforclassdiscussion.Casesarenotintendedtoserveasendorsements,sourcesofprimarydata,orillustrationsofeffectiveorineffectivemanagement.Somedatahasbeendisguisedforpurposesofconfidentiality.Copyright©1998PresidentandFellowsofHarvardCollege.Toordercopiesorrequestpermissiontoreproducematerials,call1-800-545-7685,writeHarvardBusinessSchoolPublishing,Boston,MA02163,orgoto—electronic,mechanical,photocopying,recording,orotherwise—withoutthepermissionofHarvardBusinessSchool.STEFANTHOMKEBMWAG:TheDigitalCarProject(A)“Looksgreat,”thoughtChrisBangleashewalkedbyapictureofthenewBMW3-Serieswhichwasaboutoneyearawayfromitsscheduled1998launchinGermany.Bangle,aformerWisconsinnative,whobecamethecompany’sdirectorofworldwidedesignatage35,glancedathiswatch.Injust30minutes,hewouldmeetwithotherseniormanagersaboutprojectrecommendationsthatmightrevolutionizethewaycarshadbeendesignedoverthepasteightdecadesatBMW.ThemeetingwasintheinnersanctumofBMW’sresearchandengineeringbuilding,theForschungs-undIngenieurszentrum,knownlocallyasthe“FIZ”(pronounced“fits”).Builtin1987,thismassivebuildingcentralizedtheworkof40facilitiespreviouslyscatteredthroughMunich.AllworkfromproductconcepttopilotproductionoccurredintheFIZ.Butonlyaprivilegedfewoutofthefivethousandwhoworkedinthebuildinghadevervisitedthiscornerofthecompanywherethemeetingwastobeheld.Banglepulledouthiscardkeythatwouldlethimpassthroughasleekspace-agesecuritysystemthatresembledanovalchamber.Afternegotiatingapushcardentrysystem,asetofdoorsslidclosebehindhimandanothersetopeneduptorevealthestylingarea—aworldoffuturevisions,inhabitedbymanylife-sizeclaymodelsofcarsunderdevelopmentthatwouldeventuallycometolifeonroadsofthenextmillennium.BMWhadweatheredseveralstormsoverthepastcentury,almostsplutteringoutofbusinessthrice.Ononehumblingoccasioninthefirm’searlyhistory,itsurvivedbyusingitsmachinerytomanufacturecookingpotsandpans.NowBMWrodehigh,outperformingmanyotherEuropeanautomanufacturers.IthadbecomeoneofthefewEuropeancompaniesconsistentlymakingbothcarsandprofits.Yet,BMWhadoneoftheslowerproductdevelopmentcycleswhencomparedtoitsinternationalcompetitors—aproblemifitwantedtoretainitstechnologicalleadershipandcatertoficklecustomertastes.Thusfar,BMW’scarshadbeendesignedalongthelinesoffineBavariancraftsmanshipthatstretchedbackforcenturies.DesigningBMWcarshadinvolvedmonthsandsometimesyearsofpainstakingiterationsbetweenhand-drawingsandhand-builtclaymodels.Thisprocesswasespeciallybelaboredduringthecreationofanewcarplatform,whichforagivenserieswaslaunchedonlyeverysevenoreightyears,ascomparedwithderivative,incrementalmodelsthatwerereleasedeveryyearorso.699-044BMWAG:TheDigitalCarProject(A)2Banglewonderediftoday’smeetingwouldhelpdecideaboutdoingawaywiththisalmostentirely,andbeginworkfromcomputermodelsonlyasrequiredbythenewdevelopmentsystemthatcalledfora50%timereduction.Hewassurethatmanymiddlemanagerswouldcringeatthethought.Butthedecisionthathadtobemadewasoneofmanagingorganizationalchange:howshouldBMWrolloutitsnewandunprovendevelopmentsystem?ManyinthetopbrassponderedprivatelyaboutwhetherBMWwasreadyforchange.Itscurrentsuccess,afterall,mightproveapotentroadblocktochange.Bangle’colleagueDr.HansRathgeber,theheadofbodydevelopment,hadpointedoutthatBMWwas“blessedwithverygoodproducts,but–becausechangecomeseasierwhenacompanyisonitsknees—cursedbylackingacrisis!”Theday’scrisis,thus,wasthattherewasnocrisis.PerhapstoomanyBMWengineersandmanagersworkedwithabusiness-as-usualmentality.JustafewmonthsagoseveraloftheBMWdesignershadsatthroughapre-screeningfeaturingtheir7-Seriesflagshipcarinthemajormotionpicture,TomorrowNeverDies.Severalhadwatchedproudly,asBritishIntelligenceseniorproductdeveloper“Q”statedtosecretagentJamesBond:“Here’stheinsurancedamagewaiverforyourbeautifulnewcar....YournewBMW750,withalltheusualrefinements....”Andmanyhadsufferedalongwiththeirsilver750iLthrougharainofblowsfromasledgehammer,severalmachinegunvolleysthathadblownoutthewindshield,andaplummetingfallseveralstoriesbeforeacrash-landingintoacar-rentalagency.SomedesignershadwincedtoseetherapiddestructionofthebeautifulcontoursofacarthathadrepresentedseveralyearsoftoilunderBMW’soldproductdevelopmentplanthatinvolvedthousandsofpeoplefromproductconceptiontomarketrelease.Today,Bangle,likeallseniorBMWmanagersremainedawarethatamistakeanywherealongthelongchainofcriticalpointsinvolvedinproductdevelopmentforthenewmodelsmightcauseruinationofamuchslowerbutequallypainfulkind:marketerosion.OnedidnotevenneedtolookmuchfurtherbeyondthispartofGermany—describedasthe“siliconvalleyoftheautomobileindustry”—tofindworldwidecompetition.Just150milesuptheAutobahn,planswereafootatDaimler-Benz,BMW’sbestcompetitor,tola