1 EVOLUTION OF FLEX-FUEL TECHNOLOGY: A CASE STUDY ON VOLKSWAGEN BRAZIL Autoria: Abraham Sin Oih Yu, Paulo Tromboni de Nascimento, Lydia Lopes Correia da Silva, Alceu Salles Camargo Júnior, Cleber Marchetti Duranti, Carlo Borsoi Moura ABSTRACT This research analyzes, from a technology management perspective, the technological evolution of flex-fuel engines (capable of running on a mix of gasoline and ethanol in any proportion) in Volkswagen do Brasil (VWB) since 2003, the year the first Brazilian flex-fuel vehicle was launched by VWB. By 2009, 90% of new cars sold in Brazil were flexible-fuel vehicles, and Volkswagen has the largest share of this market. Flex-fuel technology has been under constant improvement since then and VWB has been one of the leaders in advancing the state of the art: it launched the fourth generation in 2009. The present research tracks changes in the subsystems of VWB’s flex-fuel engine by adapting the framework for dominant design proposed by Murmann and Frenken (2006). They employ the concept of pleiotropy to distinguish or classify components into core and peripheral elements. Murmann and Frenken (2006) define the technical characteristics of a product’s components and subsystems as the “genotype”, and the product’s service features or attributes (which they compare to biological traits) as its “phenotype”. The Design Structure Matrix (DSM) is a representational tool that managers can use to identify and model technical design interdependencies among subsystems and components of a complex innovation process, such as flex-fuel engine product development (Eppinger, 2001). There are several indications, but no definitive conclusion yet, that the degree of interdependence of a subsystem, as defined in a DSM, may be a reasonable proxy for pleitropy. The data were collected through two means: 1. Review of Brazilian trade journals, specialized magazines in automotive technology and public presentation materials of VWB and other companies’ managers and executives; 2. Interviews with managers and engineers of VWB, Bosch, Magneti Marelli and Delphi, who participated in the design, testing and production of these new subsystems and components. The DSMs that describe the evolution of the two VWB flex-fuel engines from 2003 to 2009 are the direct results of these interviews. Our application of an established technology management tool - DSM - and the Murmann and Frenken (2006) framework provides an alternative method to define core and peripheral subsystems. In our approach, the degree of interdependence represents the number of affected subsystems requiring modifications and / or adjustments due to the technical alterations in one of them. It can therefore provide relevant information in planning product strategy - development and launching of products generations – and therefore properly directing organizational capabilities and investments. This paper then discusses the challenges faced by the VWB design managers in trading off engine performance, development costs and project deadlines in the last seven years in flex-fuel technology.