Given all of changes and
opportunities, where do we invest?
Even OEMs sitting on the largest piles of
cash in the industry cannot afford to invest in
every major opportunity. The need for sharp
advice on strategic investments is intense
right now as manufacturers weigh whether
they should spread out their bets by investing
in numerous pilots or make bigger, higher-risk investments in one or two areas. Nearly
all investments related to connected cars,
mobility, major manufacturing innovations,
global production expansion and the like
requires some element of partnership. Before
those partnerships are forged, however,
manufactures need help from their consulting
partners in charting a clear course for how
they are going to participate in the space.
“Automotive companies need to decide
which portion of the new value-add they want
to make themselves, and what they want to
source,” notes Klaus Stricker, a partner in Bain
& Company’s Frankfurt office and leader of the
firm’s automotive practice.
How can we step on the gas
pedal in all areas?
Stricker also points to a need for more
automotive companies to adopt the same,
streamlined “trial and error” approaches
embraced throughout the tech industry.
Woodward notes that automakers are reducing
design cycles and dramatically increasing
the cadence of new product launches. From
1997 to 2016, OEMs introduced an average
39 new models a year globally; from 2017
through 2020, this figure is projected to leap to
58 new models annually, Woodward notes to
illustrate a growing emphasis on speed. That
need extends to “commercializing innovations
and managing the innovation queue” for new
models, components and options, Collie points
out. “There are a ton of great ideas out there, but
the process commercializing those ideas into
products consumers will buy must be conducted
extremely quickly,” he adds. IBM Global
Automotive, Aerospace and Defense Leader
Alexander Scheidt agrees, emphasizing that
automotive consulting practices have to become
more agile, too. “Today, automotive companies
need to make a decision, do a proof of concept,
make the design, implement, build and learn,”
Scheidt says. “You have to be very fast.”
How do we make money from
connected cars?
Talent challenges aside (see “Talent is also
Transforming” side bar), OEMs need help
figuring out business models related to the
evolution of connected vehicles that Deloitte
U.S. Automotive Practice Leader Craig
Giffi says resemble “rolling computers.”
Do the OEMs build their own technology
capability? Do they rely on suppliers? Do
they form partnerships with tech companies?
Regardless of which of those options or
mix of options manufactures select, a more
important question awaits: How do we really
make money doing this? The answer has so far
eluded OEMs. Rolling computers generate a
bounty of new data about consumer behaviors
and preferences. Manufacturers need help
figuring out how to generate revenue from this
data and also the extent of their involvement
in collecting, storing, protecting and analyzing
in-vehicle data. That capability marks a core
competency of some well-known technology
companies. “We’ve seen this play out over
and over in the tech world,” Giffi adds. “A
company develops connectivity and then
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