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Why the automotive industry is all of us Laurence Van Elegem - September 29, 2017

Mobility Photo By Patrick Tomasso On Unsplash

In a few weeks, we are taking a group of innovation-hungry C-levels to the future of mobility in Silicon Valley. At first glance, it’s not an industry I would feel instinctively drawn to. But performing blog research around the tour, it struck me how this 100-year old sector is adapting fast and furious to the disruption that is haunting it. The automotive industry is actually a great example of disruptive resilience for companies from other markets. Here’s what I learned.

When disruption strikes, find your essence

When I talked to the wonderful founder of Turo, Shelby Clark, who’s helping out with the organisation of the tour, he reminded me of Clayton Christensen’s “jobs-to-be-done” theory. Christensen is convinced that companies should not sell products and services to customers, but rather try to help them address their “jobs-to-be-done”. In the case of the automotive industry, that “job” is not selling cars, it’s getting people from A to B. 

"When the customer “job-to-be-done” is not owning a car, but mobility"

The combination of 2 top disruptive trends - autonomous driving and collaborative economy platforms like Lyft, Uber and Zipcar - is making car ownership increasingly obsolete. The result is that people will no longer be buying average cars - that fit their average life styles the most - but hire different types of cars that will fit their needs of the moment. That’s why the challenge of the automotive industry is moving away from selling cars and providing mobility, the “job” that their customers want to be done.

Many car companies have perfectly understood this dynamic, and are even partnering up with their “competition”. I love how Shelby Clark put it: “a lot of companies make the mistake of fighting disruption, but you have to accept it, integrate it and accelerate it”. Cadillac, for instance, is introducing a subscription car service with a variety of vehicles on-demand. Ford acquired Chariot, an on-demand commute ridesharing service and is heavily investing in artificial intelligence start up Argo AI. GM has purchased Cruise Automation, and is partnering with peer-to-peer car sharing company Turo. They have all understood that customers getting from A to B is no longer about (just) car ownership. They are all retranslating their essence into something that fits its changed environment.

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Become a tech company

The automotive industry is one of the quintessential atoms industries that has understood the customer’s need for bytes. Today, every industry is a tech industry. There’s no way around it. Cars and (most) other modes of transportation are computers - or rather smartphones - on wheels. Tesla is not a car company. It’s a tech company that is building tech platforms. That’s not just because of consumer needs. It’s also because it’s continuously analyzing its own data and optimizing how it works.

"Tech companies like Apple, Google, and Baidu moving into the automotive industry have a big advantage"

When most of us are thinking about “computer” cars, we are thinking about autonomous driving and connected cars that interact with their environment (with other cars, as well as the smart city devices around them). And that is a big trend, obviously, but people like technologist Ari Teman are looking into ways cars could interact with users sitting inside. The former see biometrics, “the ability for a vehicle, an environment, or a service to recognize who you are and how you are,” as one of the biggest transformations in transportation. Easy to understand, when you think about the data and insights potential that this has.

The biggest challenge for car companies when they make the transition to tech company, is that they don’t become “dumb pipes”, like telco companies did when smartphones were introduced: all the data and intelligence that was powered by them, was owned and leveraged by the likes of Spotify, Apple, or Uber. The latter knew a lot more about their customers than they did. Just like that, car companies are in danger of “loosing” their data to biometrics, healthcare, smart insurance, geolocalisation, driver safety and other software companies. That’s in fact a big challenge for any kind of carrier industry.

Another challenge for the car industry is really deeply understanding the essence of tech and translate that to “customer jobs”, because making the transition from classical OEM to a tech company is anything but easy. Tech companies moving into the automotive industry – Apple, Google, and Baidu  working on developing their own autonomous vehicle– have a big advantage that way.

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Laurence
Laurence Van Elegem

Laurence has more than 10 years of experience in marketing, communications and disruptive innovation. Passionately curious, she is fascinated by the impact of technology and...

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