Innovation drives the automotive industry. But what drives innovation? I get that question all the time in the Automotive News PACE Awards Program, now in its 22nd year, where independent judges study companies that commercialize innovative products and processes.
How companies innovate is only the starting point. More important is understanding why they risk capital and resources.
The best companies base future product choices on potential total profitability and solid relationships with customers. Innovators are faster to link the needs of customers and their own technical capabilities.
Why? Innovative companies make a commitment to overcoming technical or process barriers that even well-executing laggards can't or won't. These leaders have a vision of how innovation will add to their future profits. Competitively, they build on earlier innovations that helped customers and focus on solving customer frustrations with any current products or processes.
And the best make tough-but-brave choices, sometimes even innovating their current product lines out of existence and replacing them with new technologies.
"Thinking outside the box" is often used to describe the creative process. But successful innovation is more than generating creative ideas. Commercializing requires tough choices, technical resources, focus on a customer's performance needs and excellent execution. It also requires cross-company collaboration and timely delivery at increasing levels of technical sophistication. Since many vehicles now have more than 100 million lines of code, successful new technologies require deep integration with existing systems provided by multiple companies.
PACE looks for commercialized innovations that are game changers, many of which arise because suppliers sense that a potential customer will see the value of a new approach, better technology or improved materials.
It's hard spotting the secret of any supplier innovation process, but PACE judges have reduced it to a simple three-part formula. The first part is a customer with a technological gap preventing it from exceeding buyers' expectations. The last is the idea or innovation that would solve the customer's need. The magic middle link is the person who sees how the innovation can solve the customer's need, even if it's unconventional.
That middle person is the "acolyte," or torch bearer, who understands the commercial potential of an idea. That's the one who fights for resources, makes a business case and gets an adult conversation going with a customer about the qualities of the innovation. The acolyte may have technical or sales abilities or both, but the key is the willingness to lead. That leadership defines successful innovators.
In any successful innovation, these individuals lead early in the development process by making the vital link between good ideas and markets that can produce future margin.
Torch bearers are vital because they can envision the technical or performance barriers boxing in the customer, the ones limiting performance or frustrating value creation.
By thinking outside the customer's box, these acolytes create a market-driven view of innovation, not a laboratory view. That difference spreads through the organization and speeds the innovation to market.
Creating an innovation culture starts with identifying and developing torch bearers -- people willing to bet their careers on linking a potential customer to an internal idea or technical twist on current practices.
Suppliers need both technical prowess and flexible customers with nerve, but the real innovators have internal torch bearers with the vision to make linkages.
