Working together on innovation

BMW announced last week that they intend to make their trend research available to all.  Their focus mainly relates to new technologies that will ultimately find their way into products in some form, but includes areas like connectivity and sustainability that will certainly also have an influence on those of who are more focused on the distribution sector.  They segment the technologies into three self-explanatory categories of ‘watch’, ‘prepare’ and ‘act’ reflecting how close each specific technology is to application in the real world.  The stated intention is that by publishing an overview of the technologies that are catching the attention of BMW, potential collaborators including scientific institutions, start-ups and other businesses can identify opportunities for potential collaboration and have an access point at BMW to start a discussion with the right people.  Frank Weber, the BMW Board Member responsible said that the intention is to “start a dialogue with potential partners” and expressed the opinion that “research and development do not work without an outside-in perspective.”  Weber is also of the opinion that “innovation is created through interaction” with partners, not on a standalone basis.

What ICDP knows about some of the things on the BMW radar like “neuromorphic computing” or “acoustic analytics” could be written on the back of a very small postage stamp, but to me the reasoning is as relevant to innovation in the distribution sector as it is to products and manufacturing.  Many people in the industry – meaning manufacturers, retailers, repairers and the IT and service providers – have developed their careers within a single discipline, and often with just one or two companies.  They have a huge depth of experience, but may have limited or no experience in immediately adjacent businesses in the value chain.  Individuals in manufacturers may think they understand retail, but have never worked there and had direct responsibility.  Dealers may think they understand the challenges of juggling the various balls that a manufacturer has to do, but they have never actually been in that position.

Where this becomes particularly evident is in any area where an innovation affects two or more parties, as a view from only one perspective will almost certainly not fully reflect the needs of the other parties.  In the best case, there will just be missed opportunities, in the worst case the innovation will fail as it is impossible for the other parties to operate their own business with the innovation as proposed.  This applies to both process change and technology change, and through these to people and culture.  There are some parallels with the EU reaction to ‘dieselgate’ where the regulators felt that they could no longer rely on manufacturers and suppliers to engage in a constructive discussion about the best approach to radically reduce emissions.  As a result, a solution was more or less dictated – that we should move over less than two decades from almost 100% combustion engines to almost 100% electric drive.  The industry has responded, but considered from a distance there are huge issues with emissions from raw material sourcing and processing and from power generation, so it is quite possible that huge industry disruption and major allocation of government funding to incentives will not yield lower total emissions in 2035.  The biggest innovation the industry has seen might turn out to be a step backwards…

We also see this playing out in some of the agency implementation projects that are currently under way.  Even though this is the biggest innovation in the manufacturer/retailer relationship, the plans have mainly been drawn up by the manufacturers in isolation and then presented to the retailers as close to a ‘fait accompli’.  Key questions for the retailers around the functionality of the supporting IT and how key processes like dynamic pricing or handling of used cars will be managed are often deflected or delayed.  Whilst it is obvious to point the finger at the manufacturers, you can also say that dealers and their associations could position themselves better for a collaborative, even proactive, discussion on how to make agency work on a win-win basis.  That would require the manufacturers to be in listening mode, but unless the dealers have some of their own content and ideas to offer, this can never be the case.

After thirty years in the game, ICDP understands the value of collaborative research and of an outside perspective.  We look at the facts, with inputs from all parties, and then develop commentary on the trends, options and recommendations which are shared with all stakeholders on an equal basis.  This should be the ‘outside-in’ perspective that BMW have suggested is needed for real innovation.  With all the challenges that the industry faces today, we need more interaction rather than isolation, more discussions, less disputes.  More interaction should lead to more innovation, and most importantly, more effective and robust innovation.