The future of the automotive industry: Why adaptivity is key to thriving
Posted on 5th June, 2018 by Sophie Miller
The future of the automotive industry customer purchase experience is radically changing. How do you adapt to this evolving environment? LEO Learning’s Account Director, Sophie Miller, examines the subject.
As the automotive sector continues to transform, one of the key questions for businesses is the extent to which they will transition from manufacturers to technologists. In the case of many automotive organisations, the answer is still uncertain.
Shifting your overarching focus from factories, aluminium and stainless steel to a digital mindset isn’t easy. Where business models in the automotive sector have traditionally been based on production volume, they are now shifting into subscription models and services.
This is a fundamental shift in strategy that affects every role across an organisation.
Today, the digital experience is just as important as the physical drive. As a customer, you want your car to be connected, smart and personalised. Ideally, your vehicle becomes a digital extension of yourself, enabling you to go where you want, when you want and how you want. This seamless customer journey interchanges between the physical and digital, touching multiple technologies and experiences.
Technologist vs. manufacturer
In 2008, Tesla revealed its first fully electric sports car: TESLA Roadster. This stepped Tesla into the established automotive market with their niche focus on electric technology.
Tesla’s business model is structured on an agile development model, to continually improve and update software. In 2017, Tesla shipped around 100,000 vehicles , and their newest vehicle, the Model 3, pre-sold 455,000 vehicles  by late 2017.
However, with these volumes come significant production pressure to build the vehicle and deliver quality products.
From an alternative perspective, automotive manufacturers understand the challenges in producing a high volume of products at speed. The three largest automakers (GM, VW and Toyota) each produce a little over 10 million cars a year. Tesla’s output of 100,000 vehicles in 2017, by comparison, is equivalent to around 1%  of this production.
There is no denying these big, established manufacturers know how to make quality cars at scale, but how adaptive are they to change?
Most manufacturers have highly established brands which have been historically created and rigidily implemented on various linear production lines. The organisations are global, and many of them are underpinned by legacy systems and processes.
The perfect hybrid for the future of the automotive industry
To succeed in this competitive environment, manufacturers must continue to develop high-quality vehicle volumes but embrace innovative ways to meet customers’ rising digital expectations.
In March 2018, Jaguar Land Rover revealed the I-Pace, its first all-electric performance SUV. This vehicle is a perfect combination of brand heritage and technology and, according to the Jaguar website, “Jaguar feels like no other car on the road. Moving to all-electric power doesn’t change this. Built from the ground up, the new Jaguar I‑PACE is a pure Battery Electric Vehicle (BEV). Thrilling to look at and drive, Jaguar I‑PACE is the ultimate all-electric performance SUV.”
Significant investment has been put into products to embrace disruptive technologies such as electrification and connected cars, but to what degree is the shift in the way organisations and their workforces think and work being prioritised?
New skill sets and kinds of training will be needed when preparing for the future of the automotive industry.
Arguably the most important attribute required from employees is the ability to adapt to the new landscape and the pace of change on the horizon.
Who are the leaders you need to drive this agile landscape?
Even if you’re not in the automotive sector, it’s very likely that technology is going to take over many of your sales and technical processes.
To thrive, you need to establish the qualities your leaders will need to manage this change successfully and, ultimately, make your business more adaptive and agile.
You will also want to help your workforce:
- Move on from an established mindset, especially among long-serving employees
- Combine their manufacturing knowledge and experience with the ability to absorb and use new information
- Think differently and break down the barriers to embracing digital
Automotive showrooms are changing from huge sales halls to small and subtle product spotlights. Hyundai and Jaguar Land Rover, for example, greet customers with “store angels”, who provide customers with information and guide them through websites before they complete the purchase online.
And while nearly half of all car buyers begin their purchasing journey online, dealers still remain pivotal to the experience. Customers make on average two or three visits to a physical car dealer during the course of a purchase.
There’s a reason why the popularity of dealerships and the importance of sales people endures. For the customer, having someone who understands the product in detail and their individual requirements can be a key factor. This is especially important given the high cost of buying a vehicle.
How can you make your workforce think differently?
The behaviour change you want to produce needs to be embedded into your everyday workflow. That might mean providing a physical space that allows employees to step out of their familiar working environment and be challenged to think differently.
In the book, ‘Triggers: Sparking Positive Change and Making it Last’, authors Marshall Goldsmith and Mark Reiter explain that people typically turn away from exploring new ways of working when their workload is heavy.
If they’re routinely sitting in a sterile office or the same meeting rooms, creating that spark of change can be as simple as taking them out of the office and going for a coffee.
Studies of the brain show that we’re almost constantly on auto-pilot in these kinds of high-pressure situations, which allows us to carry out tasks as quickly as possible while maintaining accuracy.
But when thinking about the future of the automotive industry, staying in auto-pilot risks creating the same products in the same way without adapting to deliver what customers now want.
Facing the future of the automotive industry: the innovation question
While it takes more energy to think in a fresh and creative way, it’s worth every effort to build an improved awareness and understanding of what is really happening in the automotive landscape. And it’s a case of continuously embedding this knowledge.
As technology rapidly revolutionises the way we communicate, network and share, one certainty is that nothing will stand still. Keeping up means changing the way you sell, design and develop. It’s also about the way you evolve solutions and your production and processes.
At LEO Learning, we like to challenge our clients by asking these questions at meetings:
- Did we discuss the true goal in a way that means we clearly know the job to be done?
- Could we have got to this position in a better, quicker, more effective way?
- Could our solution be different, and what might we consider at a different time or with fewer restraints?
These questions might invite more challenges for you, but they should also create a culture where everyone feels involved and your organisation never stagnates.
Even if you don’t action anything from these questions, recording thoughts and keeping hold of process and design suggestions will lead to improvement.
Want to know more about preparing for the future of the automotive industry? Get in touch today. You can also read our ebook, ‘Thriving in times of uncertainty: driving automotive industry learning forward’.