As part of my coursework for MIS5102 Process Improvement and Innovation, I analyzed the case study “CarMax: Driving What’s Possible,” which examined the company’s transition from a waterfall to agile approach amid threats posed by disruptive technologies. Below are three key arguments and proposed strategies from my analysis:
1. How an agile approach supports innovation
- Ensuring value for customers and business: The iterative cycles of an agile approach enable fast development of new products and can detect issues early. Pioneered by tech giants in Silicon Valley, this approach ensures products are constantly being tested with customer needs and business objectives in mind.
- Collaborative workflow: A product team structure touts the following benefits: 1) higher productivity/team moral 2) innovation potential since good ideas can come from anywhere in an organization 3) knowledge management and less training since employees are involved throughout process (e.g., some customer-facing associates are included in product teams so that they can flag pain points early and will understand the new capability or app come rollout.)
2. How to mitigate constraints
- Supply: CarMax’s inventory fluctuates based on consumer preferences, seasonality, and market availability.
- Use AI to personalize the online browsing experience and feed desire to buy now versus wait.
- Tech infrastructure: Data storage and application creation can be expensive and time-consuming.
- Buy prebuilt systems rather than build from scratch.
- Move to microservices architecture using Azure.
- Legal compliance: State and local regulations for car buying/selling can be arduous, time-intensive, and paperwork-heavy.
- Automate as much as possible.
- Integrate poka-yoke methodologies (e.g., sequential checklist) to expedite and error-proof processes.
3. How to respond to disruptive technologies and competitors
- Autonomous vehicles: The transition to self-driving cars won’t happen all at once, so CarMax should build up its inventory of manual vehicles, (after strategically surveying/analyzing customer preferences and projecting future demand.)
- Electric vehicles: CarMax should position itself as a leader in used electric vehicles. To expand its inventory, CarMax should invest in tools, training, and internal infrastructure to strengthen its ability to service and recondition EVs.
- Ride sharing: To offset decreasing demand for cars, CarMax should target drivers as potential customers and city dwellers as potential sellers. CarMax could also consider more leasing or long-term rental options.
- Digital-only startups: To compete with digitally native startups like Carvana, CarMax needs to continually improve its digital properties and interconnect them with its physical “experience centers” for a seamless omnichannel experience.
“Overview of Poka-Yoke in Lean Manufacturing.” Lucidchart, 27 May 2020, www.lucidchart.com/blog/poka-yoke-in-lean-manufacturing.
Nelson, Ryan and Wright, Ryan. “CarMax: Driving What’s Possible.” University of Virginia, 26 August 2019, accessed via Harvard Coursepack.
“Essentials: System Development Life Cycle [Guide].” Intellectsoft Blog, 31 May 2021, www.intellectsoft.net/blog/what-is-system-development-life-cycle/.
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