Digital Transformation, Disruption and New Business Models – HO HUM! And don’t forget the customer!
The automotive industry from manufacturers, suppliers and sales and service organizations have been talking about digital transformation, new business models for several years, all driven by the pervasive and still growing power of sensors, the Internet of Things, big data and analytics. During that time new players such as Lyft, Uber, Local Motors, Tesla and others have sprung up to challenge and disrupt a business that has remained more or less the same for over 100 years. Technology giants such as Apple and Google have weighed in adding considerable change and pressure, while learning about 100 years of complexity!
Last week the Best Practices for Automotive conference was held in Detroit with hundreds of participants from the event sponsor SAP, customers, analysts and technology partners. And wonder of wonders the main theme of the conference was “Accelerating Business in the Digital Age”, another way of expressing those same thoughts.
Yes, new business models, bigger business models, new opportunities and new players are very interesting, promising and indeed viable. However in listening to the many voices of the conference I must admit that a sudden and significant fear swept over me. It was not one of those fears of impending doom, not at all. It was a fear of limited or confined opportunity prevailing. You see, what I saw and heard was centered on all those new opportunities viewed through the “silos” of yesterday’s processes and business models.
The fact was that automotive participants were thinking about the future, those new or bigger business models through the “lens” of their current business silo. Product engineering or Product Lifecycle Management practitioners look for the future through their lens, they see the future as it “could” exist from their perspective, an engineering view. They are limited by what they know, practice and think.
Similarly supply chain and procurement practitioners tend to look at future opportunities from their lens. Manufacturing professionals visualize the future from their unique lens. Marketing Sales and Service professionals, while not quite so limited, exhibit the same tendencies of focus.
The combined effect of this “lensing” is to limit what could be, limiting the real power of business innovation that the technology of today and tomorrow can enable. These lens limit innovation to what amounts to “evolutionary” improvement and does not facilitate true “revolution”!
Today companies need to consider the wider concept of the overall experience; how each and every data point or signal can be used to innovate new business processes and new business models across and beyond the enterprise. Everything can affect and effect business processes, participants and outcomes far beyond today’s silos. Think how product design can impact the customer experience and loyalty, how manufacturing and the supply chain can innovate across silos and how marketing, sales and service and social media can impact and improve product design and on and on. Improving something means little beyond itself, improving everything means, well, everything! This cannot be done with a narrowly focused lens of thought!
And while we are talking about it innovation…for a number of years we have thought about customer centricity, the notion of everything in automotive revolves around the customer. I won’t argue that point…it is absolute. But please allow me to spin it a little around the automotive supply chain.
The automotive industry is relatively mature; products and services flourish today and have the opportunity to be even more innovative, profitable and valuable to customers and business because of the IoT. Think of the supply chain as a circle. Vehicle and services are designed, components and material are sourced, vehicles are manufactured and then sold and serviced. Mature industry!
Because of that maturity, we can take the customer out of the center and consider that the customer is, in fact, a point in the circular supply chain or perhaps more accurately the “energizing” point. Think this way…The customer injects money into the supply chain based on purchasing a vehicle or service. That money is used to drive the rest of the circle chain…design, sourcing, manufacturing, sales and service. Without that impetus…nothing moves.
Customer centric models that revolve around the customer are nice to consider…but without the customer energizing the supply chain…nothing revolves. Enough said!