Why suppliers need to think differently or face extinction

One of the more advanced technologies used in cars today is the application of radar, lasers or cameras to sense what is happening ahead, allowing the driver, or even the vehicle itself, to react in a proactive way to avoid a potential crash.

It’s this sense of predicting the road ahead that automotive industry leaders are going to have to build into their own thinking. Yes, looking ahead is something executives always need to do, but right now the stakes are particularly high.

Suppliers, in particular, need to have a plan that accounts for likely scenarios 10 years from now that may include Silicon Valley giants engineering cars that drive themselves.

This is no small change.

If you really want to get a sense of the threat, consider that Apple is sitting on $178 billion in cash reserves and looking for new technology investments.

Apple and Google are drawn to this market because cars will become increasingly loaded with technology. Higher margins will also come from this shift. This is where much of the future profit potential for an auto supplier is at risk.

So, could Apple and Google join Tesla in taking on the automotive sector at their own game?

The only thing missing from the lineup of potential disrupters is Jeff Bezos with an Amazon.com Kindle-Car. Or would that be a drone? Perhaps, if you subscribe to Prime, it would drive off during the night to pick up your packages while you sleep.

And would anyone really be surprised?

The competitive landscape is changing that quickly. Serious strategic planning has become more vital than ever.

Sure, executives in all industries find it hard to think long term as they swerve from one crisis to the next, while constantly distracted by the minutia of management -- email, phone calls, meetings. But automotive suppliers, at this critical point in time, might need to look hard at whether their team has the strategic vision needed to avoid being disrupted. We’ve seen this movie before -- travel agents, video stores, and newspapers. They all thought they could compete with the same old business model.

Suppliers might scratch their heads over the exact plans of secretive Silicon Valley companies. But if you do not begin to imagine the future, it will slip through your fingers. Ask yourself: Do these technology giants intend to invade Detroit, or draw talent to Northern California? Will Apple make entire automobiles or perhaps just the electric drive trains? And will it be a customer or a competitor? Will Google create a new supply chain?

Also, look closely at your own company’s talent to see if you can compete. Is your strategy person someone who has a strong sense of what innovations are coming in the next five years, and is continuously thinking deeply about how to be proactive in the market? Or is he or she mostly building mundane financial projections and slides? How do you become the place where the smartest talent wants to work?

None of these questions have easy answers, which is why your toughest questions, perhaps, need to be about your own attitudes and complacency. Are your teams thinking defensively? Or are you behaving like a hungry startup?

Daron Gifford is the partner leading automotive industry strategy consulting at accounting firm and consultancy Plante Moran.