Why incumbents can't catch Tesla

The subject is “Agile Hardware Development.”

Before I get into the topic, an explanation why my background is useful in understanding the significance of the topic. To skip it, skip to below the dotted line.

As a college dropout I got a job as a programmer at IBM’s Service Bureau in Caracas in 1960. There were very few software applications for sale and certainly no shrink wrapped software packages. Just about every program was custom built to solve a specific requirement. This gave me an insight into a large variety of businesses from a highway toll collection control to TV surveys. When I was promoted to Systems Analyst I got to install computers at a diversity of businesses including a shoe factory, a bank, a GM assembly plant, and the US Steel mining subsidiary, Orinoco Mining. Later, as a sales rep I had for customers a paper mill, a petrochemical plant, and Purina Mills. After quitting the job market I worked as a management consultant for ten years with a large variety of customers including a sugar mill, a truck spare parts supplier, and the Venezuelan Dredging Institute which kept up ports and waterways. Lastly I developed websites for clients on three continents.

While I don’t claim expertise in any one of these businesses I sure got to know how most businesses operate. Maybe more important for this thread is understanding AGILE from a software perspective (my field) and also from a hardware perspective (my customer’s businesses).


The software Agile Manifesto starts here. You can skip to the next dotted line.

Traditional software development was quite cumbersome. Agile is a true paradigm shift in how software is produced. It appeared after I retired, 2001, 41 years after I got my start.

Manifesto for Agile Software Development

We are uncovering better ways of developing
software by doing it and helping others do it.
Through this work we have come to value:

Individuals and interactions over processes and tools
Working software over comprehensive documentation
Customer collaboration over contract negotiation
Responding to change over following a plan

That is, while there is value in the items on
the right, we value the items on the left more.

https://agilemanifesto.org


Joe Justice worked at Tesla and provides insights into how Tesla is different from traditional, incumbent automakers. This is important in understanding why the claim that incumbents know how to make cars while Tesla is just a new kid on the block is misleading. It is precisely because Tesla is not following tradition but an entirely different production paradigm that incumbents have no hope of catching Tesla unless they too ditch the old and bring on the new.

Tesla does not have an assembly line, instead it has a honeycomb of production cells and the robots move the cars from cell to cell. If a cell goes down it does not stop production, the robots take the cars to other functioning cells. This cell structure is what allows Agile Hardware Development to work. Workers at any cell can try new procedures. If the innovation works it is adopted. If not, back to the previous procedure. This allows constant innovation, no need to wait for the next Five Year Plan!

I’ll let Joe explain it… It’s an hour 45 minutes so you better get your popcorn. Some of it is kind of slow…

BTW, this presentation explains why Musk says that Tesla is not the cars but the machine that makes the cars! The Giga factories.

Joe Justice about Agile Hardware Development at Tesla & SpaceX

A live recording of Joe Justice’s (Agile Business Institute) talk at the Agile Hardware Meetup in February 2022 organized by Kathrin Rieken (Jabil Optics) and Christian Müller (proagile.de).

https://www.youtube.com/watch?v=tatpvxq0z_4

Denny Schlesinger

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I downloaded the video. If this is what I think it is, then this is a big a jump for the economy in general as the Ford’s creation of the assembly line.

Just your quick overview reminds me of the difference between the old store and forward method of transferring messages and the packet switching which became the internet.

https://online.umich.edu/courses/internet-history-technology…

That is covered in this free course from University of Michigan.

Cheers
Qazulight

Qaz, I think you’ll be hooked!

Denny Schlesinger

Joe Justice. I watched one of his Tesla-oriented videos a few months ago. It was all self-promotion, namedropping, and handwavy BS from a guy who had worked at Tesla as a contractor for maybe a couple of months. It was embarrassing to watch him pretending that he made some sort of significant impact there.

Is this video any better? All I came away with from the previous one was a conviction that Joe Justice was a jerk and not worth watching.

-IGU-

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Is this video any better? All I came away with from the previous one was a conviction that Joe Justice was a jerk and not worth watching.

If I posted it was I guess I thought it was worth spending the time to write the post and to post it. :wink:

Joe Justice does a lot of virtue signaling in this video as well, not the best part of the video. I noted, “Some of it is kind of slow…”

Denny Schlesinger

Joe Justice does a lot of virtue signaling in this video

No idea what you mean by that. What I objected to was his claiming the successes of others for himself for no apparent reason other than that he happened to be in the vicinity.

Hey, I was at Apple when they shipped the first iPhone. And they couldn’t have done so if I hadn’t played my part well. But that doesn’t mean I was in the slightest way the guy who shipped the iPhone. Joe Justice, if that really is his name, seems to be the guy who would claim credit.

-IGU-

Let me put it this way, I don’t care about Joe Justice, I care about what makes Tesla tick. To get the big picture I collect a lot of information from a variety of sources and try to filter out the bull crap. Dozens or more ‘pundits’ are trying to make a living on uTube and other social media interpreting the news for us the faithful. There just isn’t enough news to cover 24/7 so they have to add lots of garbage to fill the time. What I’m looking at is a curated collage.

One of the many objections to Tesla is that the competition is coming and will eat Tesla’s lunch. For the uninitiated the argument sounds plausible. Some of us have a deeper understanding having observed industry closer up. The purpose of this tread was to present my view of why Agile Manufacturing which Tesla has adopted makes the catching up highly unlikely if the competitors don’t also get on the Agile bandwagon. Joe Justice is not at the center of this universe. You don’t like Joe? Skip Joe.


As I mentioned, I spent part of my life as a management consultant. In that role I had a great interest in how business and industry has developed, why vertical integration gave way to horizontal value chains, now called supply chains. There are many complex reasons but in the end it is the search for efficiency. This decade has shown how too much efficiency can make systems fragile and some Black Swan can then break them.

For reasons unknown to me Elon Musk chose vertical integration for Tesla which is proving to be prescient. For people unfamiliar with business/industry history the move sounds like an aberration. For others the proof is in the pudding, is it working?

Without vertical integration it is very difficult or even impossible to apply Agile Manufacturing because it is not under one roof but distributed world wide under dozens of different managements. The half century old personal computer and the internet helped make horizontal value chains feasible but now the tide is turning back as hardware manufacturing systems learn from software development. For a look at how software was managed 60 years ago I highly recommend The Mythical Man Month. The quote I love, “A baby takes nine months to be born no matter how many women you apply to the task.” While the quote remain true with Agile time can be better managed. Before Agile it was GE’s Polaris PERT/CPM that improved time management. We used it for our major consulting projects and I even taught a course about it.

Progress happens!

Denny Schlesinger

The Mythical Man-Month: Essays on Software Engineering, Anniversary Edition by Frederick Brooks Jr. (Author)
https://www.amazon.com/Mythical-Man-Month-Software-Engineeri…

GE’s Polaris PERT/CPM
https://www.google.com/search?client=safari&rls=en&q…

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The purpose of this tread was to present my view of why Agile Manufacturing which Tesla has adopted makes the catching up highly unlikely if the competitors don’t also get on the Agile bandwagon.

Okay. So that video was just to show what Tesla is doing, and not supposed to be of any particular merit. I’ll skip it.

For a look at how software was managed 60 years ago I highly recommend The Mythical Man Month.

There was a time when I gave a copy of The Mythical Man-Month to every engineer in my group. Most hadn’t read it.

For reasons unknown to me Elon Musk chose vertical integration for Tesla which is proving to be prescient.

Elon Musk chose vertical integration because everything else was far too slow. If you want to fix a problem you have to be able to change things. Changing things that come from suppliers is slow and hard to get right. The original lesson for him was relying on Lotus for the body of the original Roadster. He’s told the story many times that in the end it saved them nothing and they had to redesign everything themselves.

But when software started to become the most important part of the car, vertical integration became imperative. At a minimum, over the air updates are impossible if you don’t control the software on all the parts. And hardening the software/hardware so that it can survive the update process, never failing despite a real world where power goes out and communications are corrupted, etc., etc., is an extremely difficult problem. It’s hard to imagine how extremely difficult it is.

Then add in that Tesla’s policy of continual improvement rather than model years means that each car is effectively a custom build. Well, extreme vertical integration was the only way to go.

-IGU-

6 Likes

There was a time when I gave a copy of The Mythical Man-Month to every engineer in my group. Most hadn’t read it.

Good show! Back in the day it was a brilliant book.

Denny Schlesinger

1 Like

The original lesson for him was relying on Lotus for the body of the original Roadster.

+++
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The original oxymoron in the Automotive World: British RELIABIITY!

sunray
a man with Direct experience

2 Likes

other examples:

https://www.mez.co.uk/lucas.html

Lucas, Prince of Darkness …