How Ecosystems Drive Innovation in Autonomous Vehicles – Part 1
A blog post by
Heinz Oyrer, Director of Strategic Partnership, LeddarTech
PART 1 – In this 2-part series, Heinz Oyrer discusses the effectiveness of working within a synergistic Ecosystem
Results from primary research by Bearing Point1 in establishing and executing automotive and transport companies’ ecosystem strategies reveal that, although companies in these sectors understand that they need to innovate quickly to meet their customers’ demand – and ambitions are high – the competitive nature of both markets is holding them back. Automotive and transport companies need to be open to cultivating partnerships for co-innovation, whilst avoiding being relegated to nothing more than a back-seat driver.
According to Bearing Point, “An effective ecosystem is an open, multi-sided collaboration between different parties. These parties can include the internal units of an organization, current, and future business partners and customers. All parties will receive value in an effective ecosystem and the roles can evolve over time. An effective ecosystem will enable an exchange of ideas/products/services or information iteratively. It will include operational processes and tools that benefit all parties and contribute to the overall customer experience. Effective ecosystems can generate new ideas, drive innovation, and expand product and service offerings leading to revenue growth and increased reach to new and existing customers.”
Partnerships stemming from ecosystems create essential synergies that accelerate innovation cycles. In “The eight essentials of innovation” [1], consulting firm McKinsey describes one essential which is to “Extend”. It relates to developing the ecosystems that help deliver benefits like sharing costs and finding faster routes to market. High-performing innovators work hard to develop the ecosystems that help deliver these benefits. Indeed, they strive to become partners of choice, increasing the likelihood that the best ideas and people will come their way.
This requires a systematic approach. The first step is to find out which partners they are already working with (surprisingly, few companies have this fundamental mapping!). The next step is to decide which networks—say, four or five of them—are most needed to support their innovation strategies. This is key to narrow and focus the collaboration efforts and to efficiently manage the flow of partnership opportunities. Strong innovators also regularly review their networks, extending and pruning them as appropriate and using sophisticated incentives and contractual structures to motivate high-performing business partners. Becoming a true partner of choice is, among other things, about clarifying what a partnership can offer to the potential ecosystem member, such as building brand equity, improving market reach or penetration, or providing access to strategic customers. It is also about behavior: partners of choice are fair and transparent in their dealings and work towards achieving the common goals.
Moreover, companies that make the most of external networks have a good idea of what’s most useful at which stages of the innovation process. In general, they cast a relatively wide net in the beginning. But as they come closer to commercializing a new product or service, they narrow their focus and become more specific in their sourcing, since by then the new offering’s design is relatively set.
Recent developments are bringing about the reality of the widespread adoption of autonomous vehicles – sooner than many had realized. Of course, several other pieces must fall into place to get us there, including regulation, mobility, human factor, and connectivity. Connectivity is key to the autonomous ecosystem becoming mainstream. The connection between different vehicles and the infrastructure is made possible by a complex process. Several cameras and sensors are responsible for the general detection of the surroundings. The data generated by the sensors is processed by onboard computers and cloud-based solutions that are also responsible for the actions of the machines in the ecosystem.
Undoubtedly, autonomous driving reshapes competition in the automotive and mobility ecosystem. The traditional top-down value chain tends to be flattened. The dominant role for automotive OEMs will be challenged, and the negotiating power for each player in the value chain will be rebalanced. Considering this transformed ecosystem, all stakeholders should clearly define their respective position in the value chain and formulate the winning strategy to cope with a changing market landscape. Cooperation is better than the competition. In the autonomous driving ecosystem, all the players need partners and collaboration to enhance their competitiveness, and no single player can achieve success without collaboration with others.
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[1] Source- BearingPoint https://www.bearingpoint.com/de-at/unser-erfolg/thought-leadership/the-ecosystem-iq/
Useful Links
- https://www2.deloitte.com/consumer-industrial-products/articles/autonomous-driving-reshapes-competition-in-ecosystem
- https://www2.deloitte.com/insights/us/en/focus/future-of-mobility/roadmap-for-future-of-urban-mobility.html
- https://scipol.org/Why we need to build the ecosystem for autonomous vehicles
- https://www.pwc.com/industries/automotive/Autonomous Ecosystem
- https://medium.com/Decoding the Autonomous Driving Landscape
- https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/the-eight-essentials-of-innovation
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