The Code Factory Illusion
(AI-translated content - original DE)
Large-scale digital projects don't fail for lack of budget or insufficient expertise, but due to a fundamental misunderstanding of how digital value is created. Anyone attempting to solve complex software challenges using the linear logic of industrial manufacturing is burning capital rather than creating value.
The evidence is costly: a global giant like VW attempted to build a group-wide car operating system with Cariad and failed in the execution. The Schwarz Group invested roughly seven years and half a billion Euros in an SAP migration, only to eventually pull the plug on the project. In both cases, they scaled before the problem had been validated.
The Legacy of the "Factory Mindset"
The mental model of industrial manufacturing still dominates the boardroom. A need is identified, a solution is planned on the drawing board, budgeted over five years, and the mandate is then handed down to IT.
IT is frequently misconstrued as a mere "delivery unit": the board feeds requirements in at the top ("We need a unified car OS", "We're rolling out SAP"), and expects a software product to drop out at the bottom.
This model works brilliantly for building factory halls or optimising supply chains. In software development, however, it is toxic.
The cardinal error in projects like Cariad (VW) or eLWIS (Schwarz Group) wasn't the technology itself. The mistake lay in the fact that a concrete solution was ordered at the decision-making level before the actual problem—and the technological realities—had even been validated.
Huge organisations are built (5,000 employees at Cariad) to implement an assumption that may have been wrong from the start. Scaling takes place before validation.
The Gap: Lost in Translation
Here lies the core problem in implementing digitalisation projects: a critical entity is missing. The "translation competence" between business vision and reality.
Strategy consultants deliver brilliant market analyses and targets ("You need to gain data sovereignty"), but often lack a feel for the technological complexity of implementation.
System integrators thrive on executing these mammoth projects. Their business model is often based on volume. They have little economic incentive to tell a board member: "You don't need 500 developers for this; you only need 50."
But who tells the CEO that the envisaged IT solution makes no commercial or technical sense? Who tells the board: "Yes, the goal is right, but the route you're picturing is a dead end"?
This is precisely where millions of Euros are buried. The entity that views technology and business not as separate silos, but synchronises them, is missing.
The Necessary Paradigm Shift: Validation Before Scaling
Companies wishing to avoid this trap don't need another "Code Factory" blindly churning out tickets. They need a strategic anchor point that comes into play before actual development begins. Whether this is achieved through an internal specialist unit or a specialised external partner, the approach must change radically.
1. Challenge the "Why" (Strategic Clarity) What entrepreneurial goal are we really pursuing? Is VW really after a central OS, or is it actually about user experience and data sovereignty? Is Lidl after SAP, or efficient processes? It often turns out that the "solution" the board has in mind isn't the most technologically efficient path to the goal. Blindly executing requirements must be replaced by questioning the intent.
2. Radical Validation (Technical Honesty) Before hiring hundreds of developers or restructuring organisations, hypotheses must be tested in short cycles. Instead of massive programmes, we need small, interdisciplinary units testing different solution approaches against each other. Investment must go into gaining insight, not into assumptions. A shift towards evidence rather than gut feeling.
3. Scale What Works (Efficient Execution) Products, projects, or business models are only ramped up once strategic clarity and technical honesty have led to a shared understanding. This step-by-step approach minimises the risk of sunk costs. It reduces investment risks and safeguards company health. Scaling becomes a calculated decision based on proven success, not a whim.
From Ordering to Shaping
The failure of IT projects like Cariad or eLWIS is less a lack of leadership competence, and more the application of the wrong management instrument. People attempt to solve complex, adaptive problems with the methods of linear industrial processes.
To succeed in the digital age, decision-makers must stop ordering software like components. They need partners—be they internal confidants or external specialists—capable of translating their business visions into functioning realities. Partners with the courage to question a request in order to save the company from expensive wrong turns.
At LOX Solutions, we believe: Successful digitalisation does not begin with writing code or hiring software developers. It begins with the unvarnished truth about the problem and the courage to validate before pouring the concrete.