Helping Legacy Auto Companies Innovate In The New Age

Helping Legacy Auto Companies Innovate In The New Age
by Heather Kluter

Few product categories are as exciting as the automotive category. For decades automobiles have captured the hearts and minds of millions of consumers. But despite the high level of consumer involvement across shopping and ownership experiences, the auto industry is demonstrably absent when it comes to creating a culture of innovation. Cultures of rapid innovation are very common in the tech space, but are less likely to be well-developed in industrial age companies like those in the automotive industry.

One reason may be the development cycles in the car industry. New models take four or more years to develop, and then stay on the market with just minor facelifts for a number of years after that.
Innovation through technology for automobiles has also been slow to evolve because manufacturers develop very few components on their own. The majority are sourced from suppliers. This can slow down the development and production of competitively unique innovations. Industry leaders see this and are seeking to strike strategic partnerships where they can. But is that innovative enough?
The auto industry currently lacks a direct link to consumers when it comes time for purchasing or servicing a vehicle. The dealership model that has been in place for decades has not changed, with very few exceptions, such as Tesla’s no dealer/no price haggle buying experience. And the automotive retail experience for consumers becomes even more scrutinized as it’s compared to customer experiences offered by other industries, which just keep getting better and better.
The departmental silos within the auto companies are also major inhibitors of innovation. Many product, design and engineering teams report to different management teams. These teams are often isolated from each other for a variety of organizational and political reasons. Cross-functional product development and customer-experience management is rare, and the lack of industry innovation because of that is apparent.

Despite all of this, there are a few auto companies that recognize these pitfalls and are committed to change. Coming up with and developing great product ideas can be a daunting task. Additionally, how can a marketer know that an idea is really “great” and will be talked about by auto shoppers and enthusiasts? These are the issues that face new vehicle product developers everywhere.

Companies that do the best job at innovating usually have innovation in their DNA. Employees should feel empowered to recognize innovative opportunities and be able to communicate those ideas to upper management. Brilliant ideas can come from the factory, and from assistant managers, engineering, marketing, finance—from every corner of the organization.

Ideally, a Core Team plus an Extended Innovation Team would be empowered to harness consumer understanding and combine that knowledge with that of other key influencers (employees, dealers, experts, etc.) in order to identify the best opportunities for growth. Such knowledge can also be applied to new markets, new customers, new advertising, and new uses of existing products. The Innovation Team needs to have the freedom to evaluate concepts that could be 5, 10, 20 years out, as well as concepts for next year, and to redefine current products and services.

Consumer-Driven Innovation

We talk to many companies that use traditional methods, such as focus groups, to innovate. We find that this approach often doesn’t work well to generate ideas for new products, services, and messaging because:

People: focus groups rely on regular consumers who have difficulty generating breakthrough ideas.
Place: focus groups are conducted in a non-creative setting.
Time: focus groups are held for an insufficient length of time.
Process: focus groups are conducted using a process designed to reach closure.

Innovation not only comes from employees, but also from consumers who have experience with your product or the product category. For example, at Decision Analyst, our clients tap into our Imaginators® panel, a community of innovative consumers who have the ability to generate large numbers of highly original ideas for new products and services. They are an online creativity community that is comprised of everyday people who have been tested for high levels of “idea-centric creativity”—the ability to generate large numbers of highly original ideas for new products and services. To date, more than 250,000 people have been tested using our proprietary screening system. Each panelist ranks in the top 4% of the general population in terms of idea-centric creative abilities. As a result, the ideas conceived by the Imaginators® are truly unique and breakthrough in nature.

Innovation Success

Through the Imaginators®, we have developed hundreds of starter ideas in ideation sessions geared towards meeting the needs of potential target customers. One example was automotive seating design for self-driving cars. As part of an extensive innovation program, the Imaginators® were used to advance the thinking about the future of vehicles, discussing and describing the kind of person that would be first to have a self-driving car. They painted a detailed picture about what these early adopters would look like, be like, do inside the car, what their life-style would be, etc. Through ideation with the Imaginators®, we created rich product development targets who included busy executives, weary travelers, senior citizens and handicapped people, such as people with vision or mobility issues. Throughout the innovation engagement, these profiles were used to springboard concept development. One specific area of innovation was the seating that would be part of a self-driving vehicle. Ideation, enhanced by a rapid-sketch artist, produced numerous viable seating concepts. We then use action planning with our clients to identify the concepts most likely to succeed, and we help them continue these concepts along the product development path. Over the years, many have been successfully introduced to the market.

Innovation Rally Cry

The industry sees that the very notion of what a car is for is being radically rethought. These changes appear to be revolutionary and should spur a new age of innovation.

In urban markets, people are less interested in buying cars.
Millennials have affordability issues.
Gen Z isn’t used to owning anything for more than a short period of time.
Tech and mobility companies have sped the development of self-driving cars, electric vehicles and ride services. People are able to drive more easily and cheaply without owning a car—or maybe even knowing how to drive.
- Nontraditional tech companies are applying pressure to the automakers because they operate differently. They show a greater willingness to test new ideas and speed up product development. Their data-centric business models are different too, so they have the potential to significantly change not just the car itself, but how the entire industry operates.
- Psychologically, tech companies offer something that is critical to today’s consumer – on-demand access to more and more, beyond just a ride from here to there.

The history of innovation has shown time and again that new entrants can emerge and take meaningful share away from leader companies that do not adapt and evolve. We believe the auto industry is on the cusp of great change.

About the Author

Heather Kluter (hkluter@decisionanalyst.com) is an Senior Vice President of Decision Analyst. She may be reached at 1-800-262-5974 or 1-817-640-6166.

Related Services

Library Sections

List of All Blogs