Digital innovators from the Silicon Valley are noisily shaking up the automotive world. This has led some to wonder: Could outside players seize control of the automotive industry?
Not likely. Traditional automotive companies have plenty of what it takes – digital abilities as well as deep engineering expertise. But make no mistake, we’re dealing with a two-speed marketplace. On the one hand we have the automotive tradition of incremental progress and obsessive dedication to detail, quality and reliability, leading ultimately to… perfect shut-lines! While that may be something of a cliché, it’s a fair description. On the other hand we have Silicon Valley companies that may invest a mere 140,000 dollars in an app and away they go, without worrying whether it’s perfect. At that price automotive companies can’t even produce a component, let alone an innovative new product.
As digital meets metal, automotive is challenged to combine the best of these worlds by blending its tradition of engineering integrity with a fresh commitment to risk taking and rapid innovation. An Automotive OEM might be tempted to simply hire a bright mind from Silicon Valley to serve as its new Chief Digital Officer, then say: “OK, now we’re digital.” Of course, that is not nearly enough. Automotive OEMs and their suppliers must shape new cultures within their companies to accommodate work at both speeds.
Harmonizing automotive with digital will take some doing. The shift begins with objectively assessing and then actively developing current automotive leaders’ potential to drive deep strategic change and build more open cultures that effectively integrate diverse expertise. By fostering internal environments that value idea and information sharing, while also forging more mutually beneficial partnerships with a wider range of external suppliers, the automotive industry can become more hospitable to fresh ideas and rapid innovation. That is how Automotive OEMs stay in the driver’s seat in a digital world.
Christian Rosen, an automotive industry veteran, leads the global Automotive Practice at Egon Zehnder, the world’s leading privately owned executive search firm and talent management consultancy. This post draws from comments Rosen offered during a reception hosted by Automotive News (German edition) at the 2015 IAA Cars International Motor Show in Frankfurt, Germany.