Over the last number of years, the auto industry has done a very good job at trying to improve the way we serve our customers. But the standard for a new-economy company is even higher. Today more than ever, if we don't anticipate what the consumer might want, someone else will beat us to the punch.
Traditional market research won't help here. Remember, many of the most successful new products or services - FedEx, CNN, cell phones, Post-it Notes - all had lukewarm receptions from consumers. Customers didn't realize at first how much they needed them.
We are in the same position when it comes to thinking about cars and trucks. We need to put ourselves in the driver's seat - literally - and imagine what we could do to make a better vehicle.
For example, at Delphi, we're producing an AM/FM/digital radio satellite receiver to take advantage of satellite radio, an emerging technology that will broadcast 100 channels of a variety of music without commercials, as well as other programming, directly to vehicles from satellites. This technology points to a door that we feel obliged to open for our customer.
Ultimately, though, anticipating the needs of the customer means giving the customer as much choice as possible. We still have a bit of Henry Ford's legacy in all of us - you know, any color you want so long as it's black. It's pretty clear the auto industry can't - and won't - continue that way.
Nor should it restrict our vision to simply selling cars and parts. The people who think the Internet is just about retail miss the point. The Internet has given us a new way to reach out to our markets: to collect information, to increase customer awareness, to create networks within our own industry, to customize products, to change the way suppliers work with one another.
The business-to-business auctions we have started are a critical first step. Delphi conducted one online auction per week over the last 18 months with our suppliers, and it is clearly the way we can create the most efficient supply chains. But the broader message is that the Internet has to be more than a virtual car lot for us. It is the most powerful web of intelligence gathering we have ever had.
I'm all in favor of the vision where a consumer might order a customized car over the Internet and have it delivered within days. But the far more ambitious goal is to interact with our customers so they have the maximum choice while we gain the maximum amount of information. We create an open architecture on our vehicles so that a consumer has the ability to choose more than one steering system, or one brake system, or more than one entertainment system and so on. These should not be expensive add-ons. This should be the way we anticipate consumer demand.
There is another driving idea of this new economic environment: 'Instead of swallowing your partners, learn from them.'
That's a big step for most of us. In the past, the auto industry would set its sights on a potential partner and then try to force them to do things the Detroit way. It made for some uneasy and unproductive alliances.
There's a better way. As Delphi started to branch out into areas of high technology, we knew the limits of our knowledge. We also knew that there were a lot of hungry competitors ready to get a foothold in the auto business. The software and hardware manufacturers were looking at the same opportunities that we were.
We wanted to learn from them about the full range of technology available. And we did. When we created the Network Vehicle (a 1998 concept car with Internet access), it grew out of a partnership with IBM, Sun Microsystems and Netscape. We were bringing together the power of wireless communications, global satellite positioning, voice recognition, Java technology and microprocessors inside a vehicle for the first time.
Precisely because of this sort of cooperation - the sharing of intellectual capital - this market is going to soar. Studies conducted by Strategy Analytics Group indicate that 50 percent of all new cars produced in North America, Western Europe and Japan will have embedded communications modules in five years.
That's why we are looking for the best ideas throughout the technology world, whether it is mobile Internet browsing, liquid-cooled generators or 42-volt electric systems to power it all. We are not going to create these innovations in isolation.
Nor can you just go out and buy them. Learning to create strategic technology alliances is a critical part of thinking in the new-economy style.
J.T. Battenberg III is chairman, CEO and president of Delphi Automotive Systems in Troy, Michigan. These remarks are excerpted from a speech he made Aug. 9 to the University of Michigan Management Briefing Seminars in Traverse City, Michigan.