From car phones to video rental shops via camera film and now even the wristwatch, today’s sure thing can be all too quickly replaced by The Next Big Thing.
Managed correctly, your company need not fear disintermediation and disruptive technology. Identify inevitable change early, and your organisation can ride it out, and even become stronger. But assume that your current market position is sufficient to survive, and it won’t take long to find out how far that dropped ball can fall. Respond too slowly, and you’ll be forced to watch as the newcomers grow rapidly, cutting every corner possible in pursuit of previously unimaginable profit margins.
Identify inevitable change early, and your organisation can ride it out, and even become stronger. But assume your current market position is sufficient to survive, and it won’t take long to find out how far that dropped ball can fall
Hitherto clearly-defined boundaries are becoming blurred as non-traditional companies enter into areas of businesses with which they traditionally have little, if any, association; accompanying them are all-new companies that are growing out of specific ideas – ideas that may later become the reason for acquisition by a much larger company.
This is happening in every industry. The world’s biggest taxi company, Uber, owns no taxis. Apple, one of the world’s best-known and most valuable product brands, builds no product. All the hard work goes into manufacturing; the shiny money is there to be found in the selling, the facilitating and the enabling.
In the automotive industry, the concepts of disintermediation and disruptive technology, and the associated threats and opportunities are (finally) gaining traction. It was a key theme at last week’s Automotive Megatrends USA conference.
In the automotive industry alone, newcomers are rushing in. Google is developing a car; we think Apple may be too. And now Richard Branson has been quoted as saying that he’s looking at EVs. The Virgin boss recently told Bloomberg that he has “teams of people working on electric cars” and that “you may find Virgin competing with Tesla in the car business – we’ll see what happens”.
In such an established industry, newcomers bring excitement, create headlines, and attract considerable investment.
But the established automotive industry has 130 years of experience. The leading players know what they are doing, and what is required to make a successful business out of developing and selling cars.
In many of the examples of dropped balls in business, the finger is instantly pointed at technology. Look more closely, however, and technology was merely the enabler
Or do they? Look at it another way: the automotive industry needs a fresh start. Traditional OEMs are cumbersome, weary, struggling; profit margins are low, overcapacity is costly – and rife; and consumers are losing interest in more-of-the-same products, especially when they see the speed of product evolution in sectors like consumer electronics.
In many of the examples of dropped balls in business, the finger is instantly pointed at technology. Look more closely, however, and technology was merely the enabler. The technological advances themselves need not be significant. Arrogance and ignorance also play a key role in failing to adapt. IBM’s recent study, “Automotive 2025: Industry without Borders” revealed that just 19% of its executive interviewees felt their company was ready to face disruptive new technologies.
Change is coming: make sure you’re ready…
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Martin Kahl is Editor, Automotive World
The AutomotiveWorld.com Comment column is open to automotive industry decision makers and influencers. If you would like to contribute a Comment article, please contact editorial@automotiveworld.com
