Editor’s note: This update reflects revisions made to the original version of this column, which appears in the Dec. 12, 2016, print edition of Automotive News.
Major incumbent companies that develop groundbreaking technologies have at least two traits in common.
First, they have laser-like focus on their customers’ daily existence, identifying opportunities to help them live the lives they want to live. Second, they can create new cultures or adapt their old, legacy structures to meet new market realities by combining novel or previously disparate disciplines to build these groundbreaking products.
Detroit’s auto industry must do both to avoid being left behind.
For most of us, our cars must be Swiss Army knives, all-in-one tools to serve multiple goals — from commuting to carpooling our kids to taking vacation road trips. Only the wealthy few can afford multiple cars tailored for a particular use, and, even then, they may be used only occasionally.
So the vast majority of individuals and families spend a lot of money investing in one or two purchases, compromising on everything to maximize a single function — typically some form of commuting. That, however, is beginning to change as emerging companies innovate in ways that lessen our need to compromise in affordable ways.
The advent of apps, driverless cars and services to provide mobility on demand signals an end to the car industry as we know it. It is a clarion call to Detroit to innovate to stay in the game.
The emerging companies have looked at how we live, why we buy (or don’t buy) cars, and why we drive and have begun to provide alternatives that increasingly serve us better than buying cars as we know them today. Detroit must start designing and building cars that fit our lives better than those alternatives, or it will not survive over the long haul. To its credit, Detroit has begun to explore this path in auto design labs around the world through development of specialized vehicles. However, these innovative concepts most often die as they make their way to market — because they were too “niche.” This has to change as niche will become “mass” when they are shared.
Of course, we have read headline after headline about the big U.S. automakers investing in ride-sharing, electric vehicles and driverless cars. We have read countless stories about Detroit automakers partnering with Silicon Valley to advance their r&d. While General Motors investing $500 million in Lyft and Fiat Chrysler’s parent partnering with Google on self-driving minivans are an important start, they must do more.
What Detroit must do is reimagine what cars do for people, how they work, and then re-engineer them to fit those designs. How do people live from day to day, week to week, season to season? What do they need in each part of their lives and how can Detroit’s products better meet those needs? Detroit might dismiss this as Silicon Valley-speak, but that would be a mistake. How many entrenched companies have thought the same and now barely struggle if they exist at all?
Detroit’s conception of innovation itself must change. It can no longer be limited to worrying exclusively about next year’s models and brands and optimizing them. That is too narrow a perspective and a classic example of how an incumbent can become captured by its own stale processes to its peril.
Automakers must think far more broadly. Their innovation must now be about the purpose of mobility and how design meets that purpose. It must cut across models and brands. In fact, they have to dispense with today’s market model at least until the future becomes clearer. Many customers will no longer want to purchase any car. They will instead demand the perfect vehicle for the perfect moment. The business model must become about convenient usage and purpose because that is what customers will care about. It’s already happening today with UberX, UberPool, UberVan, UberBlack, etc.
How can Detroit go about this?
It can start by creating cultures that appreciate and foster collaboration across divisions, that build teams that recognize how software, both on the vehicle and in your hand, and hardware can work together to change the driving experience. Arms-length partnerships and innovation labs in the Bay Area are only part of the answer. Detroit needs to build capable and motivated in-house teams and integrate them, knocking down the walls that divide them.
Detroit also should rethink its priorities. For decades, it has focused on the parts that make vehicles run while outsourcing much of the advanced electronics and software capabilities to Tier 1 suppliers. When I look at Detroit, I feel there is much that each auto manufacturer duplicates in-house and without differentiation.
For example, Detroit’s approach to engines is as if every computing device company had to recreate the Intel chip to be able to build their products — a lot of very heavy lifting for very little differentiation. In Silicon Valley, we think this is a ludicrous way of doing business. Detroit can move forward by focusing on making the software and sensor systems that will contribute to making the cars of the future while shedding many of their duplicative, non-differentiated “technologies” they no longer need and should have dropped years ago.
And when it comes to manufacturing cars, Detroit made great strides in modular designs, but it would be wise to start moving toward even more modular architectures. Cars need to be able to be configured after the design has occurred so that, for example, a car can be transformed into a delivery vehicle or vice versa, not just at acquisition time but anytime during its life cycle. This is similar to how trucks and buses are configured today, and it would allow for faster configuration and modification to adapt to the whims of ever-changing consumer fashion.
For a cautionary tale, automakers can look at former consumer electronic giants. Sony, Philips, and Nokia all toppled over because of struggles among internal fiefdoms. Sony’s audio and video, which were market leaders in almost every consumer category, had created separate products in those categories for years. But there was a critical lack of recognition that the two would need to work hand-in-hand to invent a must-have product that could handle any media when the analog-to-digital revolution occurred in consumer electronics in the 1990s.
By contrast, Apple knew from the outset that audio and video formats eventually would need to live together in the iPod and the devices it spawned in the iPad and iPhone. The Sony culture was wired against such innovation and ultimately impeded it.
Detroit has the resources to reimagine our mobility and deliver imaginative products that better suit our needs. Whether it does so remains to be seen.
As surely as Apple reimagined the ways we communicate with one another, someone is in an office building or a garage doing the same for mobility, all around the world. Automakers had better hope those people are working for them.