The ‛job’ of car companies is not selling cars, it’s getting customers from A to B

The automotive industry is one of the best showcases when it comes to disruption. Several major trends are coming together to ‛drive’ the change in the traditional automotive companies, that...

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October 3, 2017

What’s the one piece of advice you would give to incumbents that face disruption?

I would definitely tell them not to let their existing business get in the way of change. Incumbents tend to leverage the old tools, the old team and the old methodologies to transform themselves. But that is not the way to find and create something new and extraordinary. If you want to innovate, you have no choice but to start from something completely new.

Just being aware of that dynamic, that addiction to ‘how it’s always done’, would already be a great step forward for many out there. And the next one would be to expect and accept that there will be risks, and that their innovation will always cost more at the beginning than it will bring in revenue. Entrepreneurship is all about experimentation, not about risk avoidance within long-established and well-oiled processes. 

“Don’t fight the disruption. Embrace it. Accelerate it.”

How can they overcome this addiction to ‘how it’s always done’?

Do not fight the disruption, like the records labels and TV networks did. Acknowledge the change. Embrace it. Accelerate it. Invest in a start-up. If you’re a car company, accept that your future no longer consists in selling cars and invest, instead, in alternative mobility. ‛Ford Smart Mobility’ is a good example of this. Last year, Ford acquired Chariot, the on-demand commute ridesharing service, as a part of that programme. And then there’s General Motors and Daimler. Both have started a partnership with my peer-to-peer car sharing company Turo. Exciting things are happening out there.

A lot of incumbents lack this one essential characteristic when it comes to VC investments in start-ups, though: it’s not just about who you invest in, or how, but how fast you are. Speed is of the essence. My own company was contacted by a big European player and they were interested in investing. But we needed to wait a month, because Management was on vacation in August. And the board of directors of the company was in France, and they needed to decide as well. By the time they’d agreed to invest, it was too late. VC companies know that. They work fast. But large companies looking to invest in disruption, often fail to understand this.

“Find idle assets and put them to work”

What can large corporates learn from the sharing economy?

The most disruptive characteristic of sharing economy platforms is that they find idle assets and put them to work. They create value out of nothing and that’s a beautiful thing. For the ‘sellers’, the users, the platforms and for the environment. Incumbents have a great deal to learn from that: use what’s there, what’s ‛idle’ and put it to work.

Another top quality of collaborative marketplaces is how strong, fast and resilient they are. Their immense scale, combined with speed of reaction, makes them highly efficient. Large companies, on the other hand, tend to be inefficient and slow in their processes. The excuse is often their scale: they are slow because they are so huge. But if a massive collaborative platform with billions of buyers and sellers has found a way to be fast and efficient (and at very low cost), so should a large company be able to. It will take some guts, though: because they will need to empower their community and step out of the way themselves. And companies tend to be very uncomfortable with this kind of ‛loss’ of control.

What’s the future of the automotive industry, according to you? There will be a big part for the sharing economy, I presume?

Automotive companies have to realize that their future no longer consists in selling cars to individuals. I believe that shared, autonomous and electric will be the biggest trends looking forward which, incidentally, are the main themes of the nexxworks ‛Automotive Tour’. And they will be at their strongest when they converge. It’s not about just the one trend, but how they improve and accelerate each other when they come together.

These trends go way beyond some incremental improvements in design. They are completely changing the competition in that sector. It’s not ‛car builders’ like them, but it comes from unsuspected places like bike sharing, car sharing, Tesla, drones, Google, Apple. It’s no longer about vehicles, but about mobility: understanding that people don’t want a car but to get from A to B. That’s exactly why they need to focus on the core needs of the customer.

I love how Clay Christensen puts it: customers hire a company to accomplish a job and it’s up to companies today to understand what that job is. Many old-school companies start from their own processes, people, ways of thinking and lose touch with what that job really is along the way. The way to reinvent themselves is to ask this one crucial question: “what job does my customer (or maybe another customer) need to get done”?

Experience the future (of mobility) at nexxworks’ ‛Driving the Future - Automotive Tour‘ where Shelby Clark will be one of our thought-leading entrepreneur speakers!

Laurence Van Elegem
Laurence Van Elegem
Laurence has more than 10 years of experience in marketing, communications and disruptive innovation. Passionately curious, she is fascinated by the impact of technology and science on the way we work, consume and live our lives.
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October 3, 2017