Are we too fixed in our thinking?
Last week saw the announcement that the new CEO of Volvo Car Corporation will be Jim Rowan, replacing an industry veteran Håkan Samuelson who seems to have done a pretty good job of improving Volvo’s fortunes over the last ten years, and presumably disappointing a number of internal candidate who might have aspired to the top job after decades of service. Rowan came from Dyson who you may remember came very close to launching their own car, but cancelled the programme in 2019. However, Rowan’s credentials for the Volvo board appear to have been that he has “global CEO experience from outside the automotive industry” rather than any particular insights into the Dyson car project.
He is not the only executive to have made the jump across from Dyson. Last summer, Jaguar Land Rover replaced a seasoned ex-Porsche and GM auto industry executive in the Chief Commercial Office role, responsible for all global sales and marketing activity, with Lennard Hoornik. The formal announcement emphasised innovation as one of his key attributes. On the other side of the coin, Ford of Europe announced that they had poached Martin Sander from a 25 year career at Audi to take on the position of General Manager, Passenger Vehicles. The official announcement stated that he “will speed the transformation … to provide customers with new connected experiences.”
As an ex-Ford employee who has also worked closely with Volvo and Jaguar Land Rover over the last thirty years, I wish all three well, and hope that they will be able to lead their respective businesses to future success. However, all three raise the question as to whether long-serving staff can become too blinked, mired in ‘old think’, and unable to lead businesses in new directions. All three of these businesses have been in the leading group for electrification, with commitments to be all-electric or electric plus plug-in by 2030. Volvo have been at the forefront of looking at new approaches to the market, with subscription offers and what looks likely to be an agency approach to their network. Ford have estimated the overall market for connected functions to be $20 billion by 2030, and Jaguar Land Rover have a ventures arm with interests in mobility and a range of other digital services.
I do not see the motor industry as a whole facing a ‘Blockbuster’ moment where they are wiped out by a new approach to market that they under-estimated or ignored. All players that I speak to from across the industry are fully aware of the challenges, and most are actively working on new products, channels and services. The emphasis and pace varies, but innovation is almost universal in some form. For the odd players who think they can ‘wait and see’ the future is probably bleak, but they are probably the players who would fall by the wayside anyway – even if the rules of the game remained the same.
Where we do have an issue – universally as far as I can see – is around the bold ambitions to grow digital services. There is a widespread belief amongst OEMs that this can become a high margin multi billion euro or dollar revenue stream during this decade. In part this has been fuelled by baseless big number estimates from large consulting firms, picked up by investors, and therefore included in the pitches from the senior management to the investment community. The industry has invested a fortune in connectivity and human-machine interfaces in their products, and it seems a shame if this is only used for e-call alerts and over-the-air updates of embedded software, with all the additional value being picked up by the driver’s mobile phone operator and other third parties. This is what the late, great Sergio Marchionne described as the auto industry spending a fortune to host other people’s parties, and that remains as true today as when he said it a decade ago.
I am not suggesting that there is no opportunity for digital services to flow to OEMs, dealers, repairers and other players from the existing auto industry, but I do not believe that the slow progress – even by brands like Tesla (other than charging) with their fanbase – is because we have been blinkered as an industry. It is always good to have some fresh thinking in any environment – I still derive value from time working in the technology sector and with Coca-Cola – but nobody has a magic wand. Change remains a hard grind, the work of many people and ultimately the whole organisation. What we will need is more about perspiration than inspiration.
Image: Car Magazine