When people find out I work in the auto industry they all want to ask me about driverless and electric cars. Don't get me wrong, I'm as excited about these as the next person, but when it comes to innovation in my industry, it's only the tip of the tech disruption iceberg.
I've been working with cars for most of my life. I've seen a lot of innovation come and go. A lot of it has already been heralded as transformative, but the advances digital technologies are bringing mean we will see more change in the next ten to 20 years than in the last century. But here's the thing: driverless cars and lithium-ion batteries are not going to be the only disruptor. Sure, they'll change the way vehicles are driven, and their impact on the environment, but it won't be the technology that fundamentally changes the way the automotive industry does business; there's far more to it than that.
Let's think about this in terms of IoT; it's the way cars fit into the network of connected devices that surround us (be it smartphones, vehicles or even humans) that will really change the way we (as customers), interact with individual mobility and as an industry, do business. The rise of connected technology is quite literally going to shake the core idea of car ownership to its foundations.
There are two key factors in this dynamic that are going to drive this change; economics and demographics. Economic developments in the last few decades mean that most of us will not have the desire to invest in car ownership. In terms of demographics, by 2025, 70% of the global population will be living in megacities, removing the desire to own a car simply because it will take longer to find a parking spot than it will to make a journey.
There are already some very clever tech start-ups that have identified this opportunity. We all know about Uber, but what about those who still want to drive their own car? That's not going to change. With the rise of the sharing economy and IoT connectivity, the concept of driving your own car without having to own it is already becoming a reality. I'm not talking about leasing (and the commitment involved), or rental (expensive in the short-term), soon customers will be pooling ownership via subscription-based services.
So how is my industry responding to the opportunity, and threat, this change in customer needs is creating? How are we responding to the transformation technology is provoking? The key to this will be innovation. Serious innovation.
However, to do that, we need to disrupt the old-school corporate behaviours and practices that kill off great ideas before they get going. Innovation and adaptation is possible, but we need the right platform to make it happen. We need to harness the entrepreneurial spirit and technological expertise of others outside our corporation and open our doors to them, such as those car-sharing start-ups behind subscription-based services.
Many of our big company peers have turned to the corporate-funded incubator as their route to innovation. I think these have merit. They can inject innovation into a business by creating a way to work with agile start-ups. But if they don't work on the core challenges faced by the sponsor, the ideas they come up with will always feel tangential, as they don't make it to the customer. They also carry the risk of absolving the corporate from its responsibility to change its culture and become truly innovative. You can't just outsource innovation.
In my view, for any incubator lab to work, it is essential that it focuses on what really matters, and that innovation is guided with clear priorities and goals from the start. Get this right and incubators can really help. We're already onboarding 4 tech start-ups from 5 of last year's winners at our Innovation Lab. We were so happy with the success of this programme we've extended it this year to include our employees, giving 74 teams time away from their day job to bring their ideas to life, with significant investment earmarked for those that make it past pitch day.
Although it's early days when it comes to meeting the transformation technology brings, it's going to be a real first-mover advantage for those who adapt to this new concept of ownership. The automotive industry is going to change forever and the car will no longer be the only star of the show (even if it is driverless and electric). Customers will be demanding much more from car companies if they are to meet their changing habits and needs. It's time to get our thinking caps on and commit to innovation at the heart of our business. Will it work? I'll be keeping you posted.