Dirk Wollschläger, IBM Corporation, Racing toward a digital future | Top Company Guide

IBM Corporation

Racing toward a digital future

Dirk Wollschläger
General Manager Global Automotive, Aerospace & Defense Industry, IBM Corporation

There are many predictions about the automotive industry in 2030:

  • Every person will own 15 connected   devices.
  • Up to 15 percent of new cars sold  could be fully autonomous by 2030.
  • Software will account for 90 percent  of innovations in the vehicle and lines  of code will be a hundredfold what  they are today.
  • Car-sharing could make up 26 percent  of global miles traveled.

Clearly, technology advancements and consumer expectations are the constant drivers of change over the next 10 years. Sustainability is driving the focus on electric cars and the need for new skills is causing shortages in the workforce. Personal mobility serves as an even greater influence as the sharing economy grows. At the same time, the influx of outside competition delivers new value and displaces traditional automotive companies.

Regardless of how quickly the future materializes, two things are certain. First, digital technologies create entirely new ways to foster seamless touchpoints with consumers. They provide insights that deliver personalized services and integrate the vehicle with various aspects of a person’s life. And second, consumers expect the digital experiences they get from the vehicle to be as good or better than those they get from their other smart devices.

The automotive industry was born and has operated for the past 100 years on a single business model – producing, selling, and servicing vehicles. But radical change is coming fast for the global automotive industry.

  •  What actions can the industry take to accommodate this change?
  • How can an automotive organization evolve to operate and innovate like a high-tech company that centers its business around digital and data?
  • And how can automotive companies distinguish their brands by developing and conveying an ability to execute faster, more flexibly, and at greater scale than competitors? 

To glimpse into the future, the IBM Institute for Business Value (IBV) conducted the Automotive 2030 Consumer Survey with 11,566 consumer respondents, as well as the Automotive 2030 Executive Survey with 1,500 automotive executive respondents.

Fifty percent of surveyed automotive executives strongly agree that to succeed or even survive, they need to reinvent their organizations with digital technologies. And 42 percent have a high sense of urgency to do this sooner than later. With regards to Consumers, 48 percent said that the brand won’t matter in an autonomous, mobility-as-a-service scenario. The in-vehicle digital experience is replacing driving features as the brand differentiator.

Other key findings from the study:

  • Consumers in urban settings have higher expectations Consumers in urban settings have higher expectations  for digital mobility than consumers in rural.
  • 81 percent of automotive executives see investing in  new business models including digital platforms as the  best opportunity for growth.
  • Automotive executives also see a decline in the brand  as a competitive advantage. 69 percent of executives  believe the brand is a competitive differentiator today  vs. 49 percent in 2030.
  • 82 percent of automotive executives see incor- porating new ways to work such as design thinking,  co-creation, agile and data-driven decision making  as part an important aspect of their organization’s  culture.
  • 62 percent of automotive executives believe some  OEMs will have significantly outsourced their vehicle  production operations in order to focus on becoming  digital companies.
  • 33 billion USD will be spent over the next 10 years to  reskill the automotive workforce on digital technologies.

The industry is once again at an inflection point, but this differs from prior crossroads. Previously, the driving factor for change came from the business itself. Expansion to new markets, optimization of global footprints, and sustainable operations caused automotive companies to develop new strategies, products and services, and skills to succeed. The fundamental single ownership business model stayed the same.

Now, digital technologies and consumer expectations are having a profound impact on all aspects of the business. Even the core business model, one that has sustained the industry for over a century, is under attack. To add to the confusion, an industry that was once closed to others is now open to any entrepreneurial venture that can provide a mobility experience of value to consumers.

Automotive companies have a decision to make. They can seize the opportunity to reinvent their organizations through digital technology – unleashing new experiences, new focus, new ways to work, and new workforce skills. Or they can continue down their current path, running down the clock and risking obsolescence.

We recommend executives take the following actions:

  • Create loyal customers with personalized experiencesCreate loyal customers with personalized experiences that “stick”.
  • Innovate don’t isolate – build platforms to promote  purposeful collaboration.• Get agile and change fast.• Exploit and share data.
  • Boost brain power and skillsets with AI-driven  educational ecosystems.

 Digital is dominant, consumers are king, and automotive companies realize the need to reinvent themselves as high tech companies within a vibrant ecosystem to stay relevant. Autonomous, connected, electrified, and shared is the mantra for the future. The automotive industry ecosystem is expected to be a mixture of technical, agile, high performance companies from multiple industries, each bringing their own specialization and value to the mix. 

Dr. Wolfgang Eckelt | Eckelts Consultants