The r&d grunt work shifts to suppliers
It wasn't too long ago that every car company and every division within a company had its own innovation center.
They weren't fancy starched-labcoat research laboratories so much as rooms full of clever people with tools and supplies who were told to build solutions to problems.
Individually, they handled innovation for customers or made technological improvements for a brand. Within General Motors, each unit had its own reputation for certain areas of innovation, and usually each earned exclusive rights to its own innovations for a time before it had to share them with other GM divisions.
While Chrysler and Ford had weaker brand separation, there was never a doubt that it was the automakers that spent the money to generate product improvements year-to-year.
Today all that has changed. Suppliers from around the world are creating the innovations and inventions that automakers integrate into tomorrow's models. Suppliers also seem to be offering exclusivity for a while to brands that adopt their innovations first.
The r&d has shifted dramatically from auto manufacturers to suppliers. The expenses for those innovations have shifted from auto manufacturers to suppliers.
Automakers worldwide are still spending billions of dollars on r&d, but much of it has shifted to manufacturing processes rather than product innovation.
Automakers must encourage suppliers to share innovations. Automakers also must prove that they are willing to deal with suppliers on the suppliers' terms. That changes the entire relationship between automakers and suppliers.
For suppliers, being able to present their latest and most exciting ideas in an atmosphere of cooperation and security is an essential part of that new relationship.
Auto manufacturers that have the best relationships with suppliers and earn the most trust from suppliers will be first to see the latest ideas.
It is interesting to watch as car companies jockey for top ranks in terms of cooperation and trust with suppliers. The winners will reap the benefits of being able to analyze and adopt the newest innovations before the others.
Suppliers are, for the time being, in the driver's seat.
Some auto manufacturers are going to benefit greatly with lower costs and more exposure to great product innovations. But they will have to prove continually to suppliers that they deserve that trust.
It's a different world today from that of just a few decades ago.