What auto industry needs to learn from today’s cutting edge leaders
Recently, we have seen a great shift in the automotive industry as a new breed of automotive leaders has emerged. Cutting-edge automotive leaders like Tesla, Google with its self-driving car, and the BMWi series and consumer mobility initiatives are disrupting the “traditional” auto industry by using the technology to change the driving experience and even the overall meaning of “mobility.What each of these cutting-edge leaders has in common is that they are embracing digital technology as part of their core DNA.
As digital businesses are evolving, the nature and source of competition is changing with them – often in dramatic and unexpected ways. Technology enables new sources of competition from outside the industry.New players often are free from the burden of deep-rooted, old-fashioned organizational structures, production sites, processes and IT systems. Instead they can operate with alternative capital sources, like venture capital or crowd funding.
By focusing on a digitally-savvy customer set with desires for a high design, high tech, all electric vehicle, Tesla crafted a product offering and end-to-end value chain. The company has found that niche can trump mass when moving into an established product category with large dominant players. Open IP platforms and the network effect are stirring innovation Tesla’s connected car evolves to an “app on wheels” and customers are more and more becoming part of a movement rather than only a transaction.
Why would one of the biggest technology companies in the world – known for search, internet advertising, and android smart phone OS – get into the car business? Google with its self-driving car doesn’t aim to build own vehicles but it is exploring what it means to have an autonomous vehicle, how to make sense of vast amounts of real-time data, bringing them into context and utilizing on them. Latest they announced to bring their android operating system in collaboration with leading premium OEMs into cars. Google understands well, that the ability to capture and translate data will be the most important driver of mobility in the future. Autonomous driving is one building block for future mobility in terms of on-demand mobility for everyone. Mobility is about utility over design and in the world of technology form follows function. This is why when experimenting, learning is more important than luxury and Google’s car is not built to be sexy or fancy, but aims the synergy between technology and purpose.
BMW has placed its digital focus on two major initiatives: the i-Series of cars and mobility initiatives. BMW mobility experiences range from the owned car and beyond to ride sharing, parking services, bikes, and buses: DriveNow (location, reservation and access to a vehicle), ParkNow (location and paying for parking spaces) and ChargeNow (location and using of public charging stations in cities for the i3). In the BMW i-Series start-up prototyping meets established manufacturing and distribution models. In order to meet its goal of fuel efficiency without giving up horsepower, the BMWi8 uses a carbon fiber composite. This choice has led to other changes in the value chain including vertical integration by an investment in batteries and in carbon production (for carbon fiber pre-press to create parts that can be taken directly to the factory for assembly). Manufacturing techniques have also been modified as a result of the new material, which must be baked or glued versus bolted or welded. The production site for the i8 in Leipzig Germany is therefore part test laboratory, part robotic assembly. Both the i3 and i8 reflect the company’s current viewpoint on the role of software, driver and the connected car. Consumer accessible services focus on infotainment and simple functions such as remote unlocking or controlling the climate of the car. Software that accesses vehicle diagnostics is dealer-focused. There are currently no remote software or feature updates as in the case of Tesla.
As technological and cultural changes shift the way business is done on a global scale, companies can no longer thrive simply by being the best at one thing. Digitization of the world means that no one approach to innovation is competitive for long, and stable industries are being disrupted by companies like Google and Apple who have begun to master the art of integrating their digital skill-sets with those of established partners to create nearly impossible-to-beat offerings. Rapid experimentation and prototyping within a niche of unaddressed customer need may change the curve of an industry more quickly than ever before.