Automotive Ecosystem Series — Chapter 3: Automotive Industry Transformation 101: Key Features to Succeed
Future mobility is predicated on the successful digital transition of OEMs. In our previous articles, we’ve already covered the first steps of digital transformation for automotive manufacturers and explored strategic choices for OEMs.
In this chapter, I’ll focus on the key features of a successful transition of OEMs and Tier 1 automotive companies into the world of connected cars and self-driving vehicles and help you assess how well you’re currently positioned to prevail.
The initial step: Self-assessment
I recommend starting by finding the best literature on transitioning your business. It may take a while to find and read the top books, but it’s worth it. In my opinion, these are the best works on the topic:
● Driving Digital: The Leader’s Guide to Business Transformation Through Technology by Isaac Sacolick (AMACOM, 2017)
● Leading Digital: Turning Technology into Business Transformation by George Westerman, Didier Bonnet, and Andrew McAfee (Harvard Business Review Press, 2014)
● No Ordinary Disruption: The Four Global Forces Breaking All the Trends by Richard Dobbs, James Manyika, and Jonathan Woetzel (Public Affairs Books, 2016)
Still, they don’t provide an easy to follow guide to understand the challenges the automotive industry is facing. Having read multiple books and articles on OEM transitioning and based on many years of hands-on experience in the industry, I’ve concluded that a simple initial self-assessment is the quickest and most thorough way to succeed in evaluating any business’s transitioning potential. Take a look at the following condensed diagram designed for the automotive industry and vehicle-specific product development:
This is something I call the Transition Radar for automotive companies, and it provides a framework for your company to assess its potential to successfully go through digitalization. Ongoing digital disruption requires companies to thoroughly consider the elements in the Transition Radar to succeed in the ongoing battle for customers and innovation.
The above model was presented at the Autonomous Driving and Future Mobility 2019 conference in Berlin, Germany, and I hope that my elaboration on it will allow your business to initiate the first stages of a fruitful and prompt transition.
In-depth view of the Transition Radar
Let’s have an in-depth look at each of the elements in the Transition Radar and what they mean to your OEM or Tier 1 company:
Product. Vehicles are unique products with high value. They’re well known to customers in the market, and the value proposition is clear and appreciated by most.
Loyal users. A high-volume loyal user base is key to a successful transition. As an OEM, you can analyze your userbase and get a clear understanding of customer loyalty. For different types of brands, the percentage of high-loyalty customers can be greater and lesser. In order to transition and attract more customers, you need to focus on boosting the loyalty of your existing customers prior to initiating the transition. That way during the switchover to shared mobility, your products will be well-received and appreciated — and not seen as unnecessarily disruptive.
Proprietary and unique data. User mobility data is a gold mine for the automotive industry. Drivers prefer connecting their personal devices (smartphones and tablets) with built-in car location and navigation services are naturally better tolerated by users as they already use their mobile devices for GPS and other services.
Exclusivity. A successful automotive industry transformation requires exclusive access to consumers. Customer access isolation, especially with the proliferation of autonomous vehicles, will be a unique window of opportunity for automotive companies. For example, people may get bored while driving long distance. The task is to catch this exclusive moment and grab their attention while they’re in their bubble. The goal is to make users interested through media content, education, work/hobby activities, etc.
Data features. Every OEM has to craft an essential and unique feature set has to be carefully crafted by every OEM with respecting users’ privacy. The absence or presence of data features may be the difference between success and failure. For example, if your company provides sensor fusion to better perceive a driver’s mood, this can be key to the success of your product offering and business as a whole. Acquiring such an advantage will likely mean investing in a startup dealing with advanced sensor technology for automotive environments and user perception/tracking. Alas, not every automaker is concerned with this right now. Nearly all rely on what Tier 1 companies offer on the market and don’t try to create their own solutions.
Security. A proper security framework must be in place for any platform-based business. When offering life-critical apps, carmakers can’t bear the sole responsibility and expose themselves to high levels of risk. Insurance will, of course, come into the picture, but it’s worth defining your security practices before the transition starts. Stay tuned, as I’ll cover this topic in-depth in future articles; this seems to be the least developed issue in the whole automotive industry.
Ecosystems. Currently, we’re faced with weak cooperation due to the historically high competition among industry organizations. Automotive companies have become very hush-hush and homogeneous in the past 100 years. Now it’s time for a shift in mentality: share your ideas and ally with companies of any size — and even competitors — to produce positive results in the long term.
To sum up, each OEM and Tier1 company is welcome to use this Transition Radar to perform a self-assessment. And you’re always welcome to talk to us about this matter and get help assessing your own standpoint on digital transformation in the automotive industry and defining your own transformation strategy. Share your opinion on this transformation strategy for the automotive sector. Sharing your opinion on the current strategic transformation and restructuring in the automotive industry will be of great benefit for this discussion.
Up next
In the next chapter, we’ll cover in-depth tactics to implement your strategy. You’ll learn how to choose and embrace innovation, rethink your car concepts, search for new models, and more.
