There are Rumors of Radical Changes within the Automotive

Tuesday, October 30, 2018

#Automotive SPICE    #Automotive Agile

Recently I participated in several Automotive industry conference events. These events shared some common themes, especially with respect to the automotive digital transformation, autonomous driving, and e-mobility.

At all the different events, I observed two things:

  1. The traditional automotive community was represented well, however, new, disruptive players within the automotive market were not or only marginally represented.

Each time I again ask myself, why were there no representatives from the new players (e.g. Google, Uber, Apple, Tesla, and so on) present? Were they not invited or do they have no interest in participating in the events of the traditional automotive community?

  1. The presentations and discussions almost equally depict that the business trends and the necessity for change has been recognized and understood. Furthermore, all necessary activities for the transformation of the products and organizations have been launched.

Nevertheless, in my mind, the feeling is that the industry continues operating in its same manner as before (business-as-usual). They really have not yet understood that radical changes for organizations and their products are necessary to master the challenges.

One explanation for my first observation would be disruptive players avoid the automotive events because the content is too focused on problems instead of solutions. Here the new players are already one step ahead. They do not have the same traditional problems yet they are already providing solutions for the new digital world. So, why should they have interest in the problems of the previous automotive industry? To make these events more interesting, the focus should shift to solutions to the digital challenges required to realize new business models like autonomous driving, mobility on demand, and added functionality after Start-of-Production (SoP). In light of a few critical recent incidents, topics like functional safety and security will likely attract the interest of the new players.

These events also focus on traditional customer experiences with vehicles. However, the future customer is less interested in the vehicle itself but instead focused upon the solutions and services based on the vehicle. Hence, for new business models, the end customer experience is changing. This type of customer and experience is already well understood by the new players and is in the center of the new disruptive solutions. This gives them an additional advantage against the previous automotive community. Of course, this further draws into question why the new players should be interested in the events of the old automotive community when the future consumer is not yet discussed.

There is one more topic, however, that should be of great interest for the new player: To master the chasm between development and operations (also called DevOps). Historical barriers between the departments of development (R&D), production, sales, after-sales, and customer service have to be broken down with the digital transformation. For the new player, these historical barriers are non-existent. But in combination with relevant requirements from the areas of functional safety and security, an exchange of experiences between the old and new players would be a great enrichment for both.

Concerning my second observation, I want to mention that some old automotive organizations have not yet noticed that they are being passed, or even have been passed, by the new players.  In some cases, instead of tackling the root cause and addressing new business models, cost-cutting programs are being implemented to maintain profits.  Worse, critical efforts like functional safety, cyber security, or Dev-ops adoption are being underestimated and understaffed. Eventually this façade will collapse against new competition prepared to provide products meeting the new consumers’ expectations. The traditional organizations may become more efficient in the short term, but in order to be ready for a successful future, new products and services need to be developed.  To really face this challenge, and to meet the digital transformation, innovations need to be realized. Therefore, the business models, the processes, and the organizations of all involved departments fundamentally need to be changed or even reinvented.

To master the challenges of the digital transformation and to compete with new disruptive players, new ways of collaboration with distributed internal and external organizations must be cultivated.

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