How the Automotive Industry is Evolving
The automotive industry is gradually progressing towards enterprise-wide digital transformation, with established OEMs driving evolution across their existing product and service stacks to deliver new innovations. New players experience less friction to innovation thanks to minimal operational bloat, whereas existing players must deflate their operations to compete. This results in the revival of old ideas, leading to continuous innovation in products and business models that force a Darwinian environment of “adapt or die.”
For new and existing players, this environment is creating a hotbed for innovation through digital transformation. Rapid change is a requirement, and falling behind digitally is becoming synonymous with failure via loss of momentum. Automotive vehicles and technology are converging to introduce new paradigms like electrification, vehicular autonomy, diverse mobility models, and integrated connectivity.
This presents an avenue for the High Tech and Aviation industries to cut across the automotive realm, namely due to their superior technological prowess. The automotive industry must insulate itself with increased awareness and sensitivity to the competition and, through the adoption of technology and data-driven business models, to do so at a pace that meets or exceeds that of competitors.
Only 7% of Companies Are Delivering on Their Transformational Initiatives
Our research has shown that 30% of companies will fail to survive this decade due to an inability to evolve digitally. To address this negative trend, we have developed the Digital Enterprise Evolution Model™ (DEEM).
Digital Enterprise Evolution Model™
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DEEM allows our clients to recognize digital evolution patterns, implement benchmarking and prioritization strategies, and initiate application management protocols to satisfy stakeholder and market requirements.
Reinventing the Automotive Value Chain
To reinvent the value chain in the automotive industry, manufacturers must reimagine the customer value proposition and respond by integrating new digital capabilities. Competitors in the industry have already begun to realize the importance and urgency of “digital first,” a steppingstone towards digitally enhanced customer experiences (CX).
To lead in this space, keeping pace with industry averages is not an option. Instead, companies need to use digitalization to deliver connected and personalized experiences throughout the value chain, and to all stakeholders.
Digital disruptors like Uber and Lyft are facing increased competition following a “goldilocks” period where existing competitors lagged behind. Previously, automotive organizations worked with these companies to get a foot into the industry.
Now, automotive organizations are taking this experience and adding fuel to the “mobility-as-a-service” fire by creating their own ride-sharing and self-driving service platforms that directly compete with these digital disruptors. With this in mind, it is no surprise that over two-thirds of large enterprises plan to become fully digital, and focus on reinventing existing experiences to survive in an increasingly competitive business environment.
No Room for Error
There is no room for error in how automotive companies develop and implement strategies for the digital era. A majority of companies are still outside the vision-driven quadrant with digital transformation. This indicates that perceived urgency for digitalization in the automotive industry is leading to continuous action with the goal of transformation — however, the action itself is sub-optimal.
New and emerging competitors in the automotive market are pushing established players to transform their existing products and services. This is leading to a significant proportion of automotive companies reporting investments in analytics and process digitalization. Additionally, these companies are introducing electrification and Internet-of-Things (IoT) capabilities to drive connected and autonomous vehicular experiences. The goal being to regain market share and reposition themselves for the digital era.
Investing in Human Capital
The automotive industry sets a new standard when it comes to human capital practices in the digital era. First, planned investment in human capital digitalization is among the highest of all industries, driven by changes to processes and the adoption of analytics. Talent acquisition is another key area for human capital management, with advanced analytics and AI-automation introducing new skill requirements. This highlights the need for vision-driven digitalization among automotive companies, while also exposing vulnerabilities for companies that fall outside of the vision-driven quadrant.
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Trianz enables digital transformations through effective strategies and excellence in execution. Collaborating with business and technology leaders, we help formulate and execute operational strategies to achieve intended business outcomes by bringing the best of consulting, technology experiences and execution models.
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