DETROIT (Reuters) -- General Motors and Ford Motor Co., trying to shake off decades of insularity, are looking to California's Silicon Valley and beyond for innovative ideas and technology that could disrupt and even transform the car business.
Yet neither company appears to know what such a transformation would look like, nor are they close to commercializing a new product or process that longtime Valley venture capitalists would consider game-changing.
While the two automakers are looking at a similar range of advanced technologies, from Internet and mobile connectivity and infotainment to self-driving cars, GM is spending heavily; Ford is not.
Following the practice refined in Silicon Valley, northern California's traditional hotbed of innovation, GM established a corporate venture capital group in 2010.
Now it is providing critical early-stage funding to entrepreneurs and offering to be the first customer to startups in a wide variety of sectors, from advanced materials to alternate fuels.
Ford folded its corporate venture arm 10 years ago, having been an early investor in satellite radio pioneer Sirius and other tech startups.
These days it is more cautious, favoring partnerships over ownership and focusing primarily on technologies that enable or enhance what it calls "the next-generation consumer experience in the vehicle" -- shorthand for a consolidation of mobile apps and advanced electronics in cars.
The automaker still may benefit from venture capital, if somewhat indirectly.
Executive Chairman Bill Ford has his own private VC firm, Fontinalis Partners.
Based in downtown Detroit and managed by former Ford executive Mark Schulz, the fund's investments are focused on "transportation technologies of tomorrow," according to its website, including some that presumably could find their way into Ford vehicles.
The automaker said it maintains an "arm's-length" relationship with Fontinalis and has no immediate plans to reinstate a corporate venture fund, despite Bill Ford's public exhortation a year ago that "Michigan must become the Silicon Valley of the mobility revolution."
Schultz and Bill Ford declined interview requests.
Several broad trends are compelling the outreach from southeast Michigan to northern California, a somewhat surprising move for an industry that historically has eschewed ideas from outside.
One is the ongoing integration of smartphones and apps into automobiles, known colloquially as the "connected car."
Another is the realization that both consumer tastes and cutting-edge technologies are evolving at a rapid pace -- typically over months, compared with the auto industry's traditional five-year design and engineering cycle.
GM's bankruptcy four years ago and Ford's near-brush with disaster -- and the more recent success of Silicon Valley's Tesla Motors Inc. -- have given the Detroit companies additional impetus to expand their worldview and seek solutions beyond the Midwest and their usual supply-chain partners.
The creation of GM Ventures was "a way to go outside the four walls of Detroit (to) get good ideas from other parts of the country and the world -- an example of outsourced R&D," said GM Vice Chairman Steve Girsky of the company's new outward focus.
Girsky, a former Wall Street investment banker who joined GM just three years ago, said the attitude inside is starting to shift: "We have 100 years of history in this company. Some of it is good and essential and some of it is baggage."
To help facilitate change, GM and Ford have set up "listening posts" -- modest laboratories staffed mainly by engineers -- in Silicon Valley and are tapping into academic expertise at the Center for Automotive Research at Stanford University, which has close ties with VCs and tech entrepreneurs in the Valley.
GM Ventures has funded nearly 20 startups from a $200 million war chest, including investments in solar energy systems maker Sunlogics, advanced battery developers Sakti3 and Envia Systems, biofuel developers Coskata and Mascoma, and electric bus maker Proterra.
Co-investors have included such high-profile Silicon Valley VCs as Khosla Ventures, Kleiner Perkins and Sequoia Capital.
Every startup funded by GM has a technical support person or team inside the automaker, said Chief Technology Officer Jon Lauckner, president of GM Ventures and head of the automaker's R&D organization. "We typically invest in technology that we intend to implement (in GM vehicles) — that's the real acid test," he said.
Because the fund is only three years old, Lauckner said it's too soon to discuss when some of the outside technology that GM has funded will find its way into production.
An exception is Powermat, which has said it will supply a wireless charger for smartphones in some 2014 GM vehicles.
At least one of GM's outside investments -- in electric-vehicle startup Bright Automotive -- has gone bust, closing its doors in 2012 after failing to secure federal loans through the U.S. Department of Energy.
Two other GM portfolio companies, Coskata and Mascoma, which also have raised millions of dollars in private venture funding, this year postponed plans for initial public offerings as the market for biofuels cooled.
Ford in recent years has taken a more subdued approach to technical partnerships, following well-publicized technical glitches in its voice-activated SYNC communication and entertainment system, jointly developed with Microsoft and released in 2007. The carmaker set up a small research operation in Palo Alto in early 2012.
Focused primarily on mobile devices, connectivity and other unspecified transportation-related applications, the lab has concentrated on partnering with local entrepreneurs.
As an example of Ford's listening-post approach -- without the VC component -- chief technology officer Paul Mascarenas cited the development of Open XC, open-source software to facilitate the design and integration of custom applications and modules in future Ford vehicles by the company and its technology partners.
The Silicon Valley lab also has created an experimental "haptic" (touch-sensitive) shifter, which uses a motor from a Microsoft Xbox 360 game controller to cause the shift knob to vibrate, alerting the driver to change gears.
In contrast, Bill Ford's Fontinalis Partners has invested in such near-term ventures as mobile apps and peer-to-peer car sharing. Among its portfolio companies: Everyday Solutions, which makes GPS systems for school buses; Parkmobile, which makes mobile parking-payment systems; and Streetline, which uses sensors to track urban parking spaces.
Mascarenas said Ford is not co-investing with Fontinalis, nor is it recommending investments.
"We do 'pre-reviews' with them to ensure there's no conflict of interest, either at a personal level or in terms of companies we're already partnering with," Mascarenas said.
They're also watching with considerable interest the progress of such startups as Tesla and their potential to disrupt the Motor City's century-old business model.
"What Tesla has done, in a positive way, is to challenge some of the conventional thinking around our industry," said Mascarenas of the feisty California electric-car company that has become a Wall Street darling for its innovative technology and processes.
Asked about the impact of Tesla and other outside tech firms on Detroit, GM's Girsky responded: "My ego's not that big. I'll take a good idea from anybody that helps me sell more cars and make more money."