In the not too distant future, automakers won’t be evaluated just on the physical, safety and performance characteristics of their vehicles. Instead incumbent and next-generation automakers will be evaluated based on the completeness of their solution along five dimensions: Electric, Autonomous, Connected, Mobility Services (EAC+MS), and Information. We read about the progress automakers and their suppliers are making along the first four dimensions. There is much less conversation about the fifth dimension. In this two-part series, we will discuss the big data challenge facing the automotive industry. The pieces are the result of my work in the industry helping corporations with their innovation and big data strategies. The first post provides the why and makes two points:
- Automakers must be in the information business. To be effective in the information business, automakers must change their perspective and start thinking about an overall process for big data in and around the car.
- Information in EAC+MS implies big data and incumbents in the automotive ecosystem must become serious about big data. Newcomers to the automotive industry such as Google, Tesla, Faraday Future, and likely Apple, but also Uber, and Lyft, realize this imperative.
The second piece will provide the how to try to address this challenge.
This is the fourth in a series about corporate innovation co-authored with Steve Blank. Steve and I are working on what we hope will become a book about the new model for corporate entrepreneurship. Read part one on The Evolution of Corporate R&D, part two on Innovation Outposts in Silicon Valley, and part three The 6 Decisions to Make Before Setting up an Innovation Outpost.
In our last post, we addressed the six key questions that senior management should address to determine if an Innovation Outpost makes sense for a company. If the answer is yes, here’s a step-by-step guide to help set one up.
This is the third in a series on the changing models of corporate innovation co-authored with Steve Blank. Steve and I are working on what we hope will become a book about the new model for corporate entrepreneurship. Read part one on the Evolution of Corporate R&D and part two on Innovation Outposts in Silicon Valley.
Corporate Leadership’s Innovation Outpost Decision Process
Today, large companies are creating Innovation Outposts in Innovation Clusters like Silicon Valley in order to tap into the clusters’ innovation ecosystems. These corporate Innovation Outposts monitor Silicon Valley for new innovative technologies and/or companies (as emerging threats or potential tools for disruption) and then take advantage of these innovations by creating new products or investing in startups.
This is the second in a series on the changing models of corporate innovation co-authored with Steve Blank. Steve and I are working on what we hope will become a book about the new model for corporate entrepreneurship. Read part one on the Evolution of Corporate R&D.
Innovation and R&D Outposts
For decades, large companies (see Figure 1 below) have set up R&D labs outside their corporate headquarters, often in foreign countries, in spite of having a large home market with lots local R&D talent. IBM’s research center in Zurich, GM’s research center in Israel, Toyota in the U.S are examples.
These remote R&D labs offered companies four benefits.
- They enabled companies to comply with local government laws – for example, to allow foreign subsidiaries to transfer manufacturing technology from the U.S. parent company while providing technical services for foreign customers
- They improved their penetration of local and regional markets by adapting their products to the country or region
- They helped to globalize their innovation cycle and tap foreign expertise and resources
- They let companies develop products to launch in world markets simultaneously
I first met Steve Blank when he started his enterprise software company Epiphany. Steve has spent 21 years as a Silicon Valley entrepreneur in eight startups and the last 13 years as an educator – currently teaching entrepreneurship at Stanford, Berkeley, Columbia and NYU. Steve and I are working on what we hope will become a book about the new model for corporate entrepreneurship. His insights about how corporations are adopting Lean Startup will be at the core of this series of four co-authored blog posts.
The last 40 years have seen an explosive adoption of new technologies (social media, telecom, life sciences, etc.) and the emergence of new industries, markets and customers. Not only are the number of new technologies and entrants growing, but also increasing is the rate at which technology is disrupting existing companies. As a result, while companies are facing continuous disruption, current corporate organizational strategies and structures have failed to keep pace with the rapid pace of innovation.
My previous post in the corporate venture capital (CVC) series provided a broad historical perspective on the sector. In this post I review important lessons learned by CVCs that have been operating for many years and several economic cycles and best practices being used by newer CVCs. The lessons in this post would be of value to CVCs looking for best practices and corporate leaders whose companies have already established venture organizations or are considering doing so as part of enabling innovation.
In a previous post I wrote about the disruptive innovations that have been introduced by Tesla Motors (Tesla) and Uber and presented the steps the automotive industry should be taking in order to address the startup-driven disruption. In this post I want to make three points:
- It is hard for startups to break into and succeed in the automotive industry. The industry requires high investment and ability to scale while maintaining low risk. The Car Use value chain has lower barriers to entry but they result in many competitors that have difficulty differentiating their solutions.
- Startups must realize that they cannot disrupt the entire automotive industry. Instead they must focus in the right areas, and collaborate with innovation-minded incumbents in order to become part of the appropriate supply and value chains as quickly as possible.
- The incumbents must structure their organizations, operations and culture in a way that enable startup-driven innovation to meaningfully impact their business.