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Drivers of Disruptive Change in the Automotive Ecosystem

Mahbubul Alam 2018, Automotive, Autonomous car, Blockchain, car sharing, Cloud, collaborative economy, Connected Car, disruptive model Leave a Comment

Today’s technology landscape is more dynamic, fast-paced and entrepreneurial than ever before. For big and small companies everywhere, innovation is a survival imperative. The power of the Software Defined Car is on everyone’s mind. What is not obvious is how this technology will disrupt the automotive ecosystem and change the industry players involved. The Software Defined Car has the power to transform our lives, but it will also change how cars are conceived and built from automakers to tier-suppliers all the way to the bottom of the supply chain.

What is Disruptive Change?

Disruptive change refers to an innovation that creates a new market and value network and eventually disrupts an existing market and value network, displacing established market-leading firms, products and alliances. It is something that we are often too busy with our jobs to see clearly. Sometimes we need to step back to take a look at our industry with some perspective to anticipate where the future will take us. Let us start by looking at some examples of technology changes that have completely disrupted the world. The printing press made inexpensive and widespread dissemination of ideas possible for the first time. Some other world-changing examples are the telephone, the automobile, the radio, the personal computer, the internet and the smartphone. Each one opened up completely new avenues of business, technology and possibility. Of course, each of these new technologies also destroyed many existing businesses –  monks with ink quills, the horse and buggy, secretarial pools and so on – all became irrelevant against the new technology upstarts. It is important to realize that disruptive technology does not just affect the Business-to-Consumer (B2C) market, but the Business-to-Business (B2B) market as well.

Key Disruptors of the Automotive Industry

The connected car is beginning to disrupt many aspects of the traditional dealer model. With the ability to obtain diagnostics and data from the car, as well as the ability to reprogram it, non-mechanical dealer functions will gradually phase out. We are starting to see some of that disruptive potential being maximized as we learn how to analyze and get insights into this vehicle data. The three key disruptors of the automotive industry – Cloud, Connectivity and Context – will set the pace of development of the Software Defined Car in the upcoming years. Let us look at each of these in more detail.

  1. Cloud: The democratization of IT infrastructure, creating access to powerful data centers with numerous applications at low cost. Instead of a centralized model, we need to have a distributed data storage model enabling every house to be its own mini data center. When a software-defined car is at home, it should be able to offload its data securely to the local (home) hub. Data will be humongous and not all of it can be transferred to the cloud, thereby differential data will become important. The amount of differential data must be brought down to one-millionth of its current level. Multi-level filtering to judge the critical nature of data, the ability to differentiate that data and compress it as required will become an essential process for the Software Defined Car.
  2. Connectivity: The proliferation of phone, email, social media and internet connectivity at any place, at any time. This connectivity is also responsible for the emergence of Internet of Things (IoT), which is the next wave pressuring internet growth at a pace matching Moore’s Law and doubling the compute power, storage and networking every 18 months. The continued miniaturization of electronics, sensors and actuators is driving cost down and allowing the collection and analysis of all types of data. With the incorporation of General Data Protection Regulation (GDPR) and other data privacy laws, the collection and usage of data will be determined by the end-user that generated the data. The automotive industry also needs to adopt the next generation of automotive cybersecurity architectures based on blockchain technology and the software-defined perimeter to defend the Software Defined Car against cyber-threats.
  3. Context: What used to require fixed hardware and software can now be reprogrammed dynamically using hardware that is adaptable to road conditions, user context and the latest innovations – leading to a Software Defined World, from the success of the Software Defined Radio and Software Defined Networks in the networking industry to Software Defined Perimeters that are used in cloud-based security. Context awareness along with machine-learning and deep-learning algorithms will enable cars to differentiate between a work day – when getting to meetings on time and finding the closest parking lot or a valet is paramount – versus personal time when we might be willing to make different choices. For instance, find a cheaper parking spot that minimizes walking time or locate your closest favorite restaurant. This will allow Software Defined Cars to be more personalized than ever.

Surviving the Disruptive Earthquake

The crucial factors for a business that wants to survive disruption is that they must be innovative and adaptive. Innovation and adaptability do not just apply to technology, but to business models as well. If we are not willing to walk away from an existing business that has become threatened, we may not be able to adapt quickly enough when change comes. We need to leverage the existing disruptive forces of Cloud, Connectivity and Context wherever possible to help us stay ahead of the disruption. The success of disruptive change depends on 3 things:

  1. Collaboration across industries leading to converged industries
  2. Embracing new disruptive business models and
  3. Positioning the company in the future value chain.

Change is an inevitable part of the modern business environment. Organizations and the people within them must constantly re-invent themselves to remain competitive. Sustaining success depends on an organization’s ability to embrace and adapt to a changing environment.

Today, we are beginning to see the acceleration of disruptive technologies, both in their impact and in their frequency. It is no longer enough to sustain a product if businesses are to survive disruptive technology, it is necessary to embrace change and innovate with the future in mind.

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