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Automotive Leaders are Mastering Digital Transformation

Think back, and we are talking about 30 to 40 years ago; when a company would release a new car. These different automobiles would be completely new in regards to the make and design. It was exciting to see the fresh new features and styles that the companies would introduce. That is what people wanted.

However, now it seems that customers aren’t as focused on the outside design of the car, but rather the inside and the features that come with the car. Connectability, Wi-Fi access, autonomous, or with smart technology; these are just a few of the highlighted technologies customers are looking for.

Automotive leaders are also rethinking their approach with the customer. Digital transformation is reshaping the industry as a whole, influencing how companies interact with customers, promote themselves, and maintain a level of transparency.

“The industry is going through a digital transformation. Automotive companies are becoming digital businesses and creating new smart mobility services. Think of the car of the future as your living room on wheels, or your office on wheels.” – Sanjay Ravi, Worldwide Managing Director of Manufacturing, Microsoft

The digital transformation expands beyond the cars too. The industry is transforming how the business is being conducted as well. According to the World Economic Forum, digital is proving to have a significant transformational impact on procurement, assembly, marketing, parts and services. In the parts segment, 10 to 15% of all global revenue will be generated online by 2025.

Digital disruption is catching up with the automotive industry. New technologies are drastically changing the entire automotive industry; from mobile enhanced audiences, electric vehicles with connective capabilities, to autonomous cars. It’s easy to say that the automotive industry is trying to walk in stride with these advances, as they come.

In order for the automotive industry to continue to flourish, the industry must adapt, change, and incorporate new concepts, business models, and goals.

Recently, McKinsey published an article emphasizing the six key points of a successful digital transformation for automotive suppliers.

  1. Digital Strategy and Targets – Takes into account the myriad new ways value can be created with digital technology. Leading companies must focus on internal and external strategies. The strategy needs to be practical and a clear process with everybody involved.. To track progress and maintain speed, leadership should put in place quantifiable key performance indicators (KPIs).
  2. Organizational Structure – Optimizing business structures comes naturally when the industry changes or is forced to adapt. Automotive companies will successfully push the envelope when optimizing the BU.
  3. Test-and-Learn Approach – In a perfect world, a digital transformation will happen flawlessly and be perfect after the transition finishes. However, that is not the case most of the time. Therefore, a test-and-learn approach must be granted to ensure funding is proper, the team is effective, and KPI’s are realistic and achievable.
  4. Talent and Capabilities – A successful digital transformation will harness multiple things, but the most important is the technical platform being implemented. So, that means a company will need capable talent to help run the digital side of the business. Automotive companies are implementing fun and welcoming work environments. Once again proving, a successful business hinges on employees being happy and driven within their job.
  5. Ecosystem Leverage – Once a digital transformation is underway, automotive companies will have the opportunity to collaborate with other technical companies to promote the transformation. The collaborative approach will allow automotive companies to share ideas and exchange entrepreneurial energy together.
  6. Culture Change – Automotive companies are typically “traditional” in perspective of the work day and company culture. Cut and dry business mindset, in the office all the time, and focused on the work. However, as times change, the industry must change too. Companies must explain the importance of digital, reinforce the idea of community within the workplace, and empower the digital role models in and outside of work.

The automotive industry is changing. New technology and new generations of workers are forcing the industry to adapt and explore new ways to succeed. A new era of digital is prompting companies to roll out new business models that work with the digital transformation of the workplace.

Automotive suppliers that can manage successful digital transformations will position themselves to win in the new world that is emerging.


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