Uncertainty abounds
As the pace of connectivity innovation grows faster and more diverse, the
winners become more unpredictable. Just who will the major forces in
connectivity be? Who will increase in influence or disrupt? The traditional
tech giants are playing in this space, but their innovations may not come to
dominate. Powerful players in the connectivity space could arise anywhere,
from those advancing facial recognition software to those involved in cognitive
computing:
–
Big players have big plans for the space, which will certainly impact
consumer expectations for connectivity. Apple’s Carplay will allow a number
of apps to be used in the car, from Siri to iTunes, while Google’s Android
Auto will provide a similar assortment of apps, messaging, music, and voice-
activated commands.
–
Explosive growth in digitized information, dramatic development in facial
and voice recognition capability, exciting progress in quantum computing—-
these are signs of tremendous technological advances that may mean Apple
and Google will not be the ones who dominate.
A final prediction: The end of an era
As a result of this changing competitive landscape, we fully believe that in
10 years, many of the major automakers will no longer be around, at least not
as independent companies. Those who survive must be able to meet the faster
clockspeeds of the Sexy Dynamic Experience while staying true to the pace
necessary for producing a Robust Industrial Machine.
The clockspeed dilemma 25
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How to solve the
clockspeed dilemma
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So what should an automaker do? How does it
innovate facing the clockspeed dilemma?
This will be hard. Yet innovating successfully will be the difference between winners and losers in the
evolving industry.
We believe the solution requires two essential and related steps:
Step 1: Facing the obstacles to
change
Step 2: Aligning the organization
for fast‑paced innovation
The power of a solution lies in its details…
SPEED
LIMIT
100
The clockspeed dilemma 27
© 2015 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with
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Most traditional automotive players nod in recognition of
multiple challenges but have not fully come to terms with
their effect on the ability to innovate. They understand
completely that fast-paced innovation can be disruptive,
and they understandably struggle to balance it with core
businesses they must not change. And yet there are
other cultural and institutional obstacles—many of them
core strengths in the past—that impede innovation in the
current ecosystem:
Securing new talent
The industry is losing the war for
young talent at the same time its
knowledge base is shrinking as older
talent retires. For many reasons,
traditional automotive companies
aren’t places where the most talented
millennials dream of working.
Rewarding failure
Innovation is high risk and requires
failure—something that true innovators
expect and celebrate—but the industry
tends to reward well executed, low-
risk change.
Investing in risk
Innovation means making financial
commitments according to compelling
investment theses. The traditional
industry makes business decisions
based on carefully calculated ROI. As
a business decision, it would have
turned aside Uber.
Thinking disruptively
The traditional industry often finds
it difficult to embrace truly powerful
innovation, refusing to examine it
where the industry has been most
successful. That’s different from the
courage Apple showed to intentionally
disrupt the iPod with the iPhone,
producing a phenomenal result.
Partnering to innovate
With a heritage of engineering
success, the industry instinctively
prefers to build from within, cutting
themselves off from the ideas
of outsiders and the dynamism
partnerships bring.
Building global awareness of
innovation
The industry needs to capitalize on
innovation anywhere, which means
it needs better awareness of new
centers of innovation everywhere from
Tel Aviv to Berlin and from New York to
Silicon Valley.
Facing the obstacles
28
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A framework for innovation
There is a means of addressing these challenges and achieving faster-paced innovation. First,
however, a simple truth: There’s no single answer to innovating successfully, no one-size-fits-all
solution. No expert—no business professor, successful entrepreneur, author, or consultant—offers a
prescription that works for every company and every situation. The most successful innovators today
take different approaches. And successful innovators from the past don’t offer an enduring lesson for
all circumstances and all companies.
Of course, we have seen and believe in patterns and common elements to some solutions, but
successful innovation fits the individual company and its culture. It must be customized. It must
be bespoke.
The clockspeed dilemma 29
© 2015 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with
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Building a bespoke innovation engine
Solutions for consumers’ unmet needs can be explored based
on establishing unmet need theses for experimentation
Products
Channels
Customers
Strategies
Technologies
Proprietary insights
Experiments
Unmet Need
Theses
External ecosystem trends
Auto Venture
Capital
Traditional
Tier 1s
Global
Regulators
Universities
and Research
Labs
Technology
Start-ups
Potential
Nontraditional
OEMs
High Tech
Entrants
Venture
Capital
Traditional
OEMs
Sensing ideas
around customer
unmet needs...
…and to
market-changing
innovation
…leads to
development
of fact-based
theses…
New
customer
experiences
Stage 1
Stage 2
Stage 3
New
business
models
New vehicle
systems &
technologies
30
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A bespoke solution works like an innovation engine with a three-stage assembly line: sensing
unmet needs of the consumer from a profound awareness of the auto ecosystem and a leveraging
of the proprietary insights of the company, intensively investigating potential innovations from
these insights; and creating market-changing innovations that are appropriate to the culture of the
company. It’s a complex process that we can only sketch here, but the result of it is that a company
can institutionalize faster innovation paces.
Sensing consumer unmet needs:
Awareness of the ecosystem and
proprietary insights
Successful, faster-paced innovation is
built out of the capacity to anticipate
the unmet needs of consumers. Most
businesses can sense the current
needs; it’s the unmet needs that
are more difficult to see. The ability
to discover unmet needs develops
only when a company is finely tuned
to what is happening in the auto
ecosystem—in as broad and careful a
way possible—and when it leverages
its own proprietary insights.
Developing innovations: From
unmet need theses to experiments
In the second stage, the innovation
engine carefully evaluates the unmet
needs it senses and creates a select
number of unmet needs theses. An
unmet need thesis is the result of
intensive investigation: The engine
makes certain that a promising unmet
need is absolutely the result of clear,
fact-based proprietary insights and
a clear sense of the ecosystem. It
then rigorously evaluates what it
senses and chooses what has the
best potential.
Just as important, the engine does
not settle on a single unmet need
thesis but multiple ones—unmet
needs theses. It never places all its
bets in one area of consumer unmet
needs alone.
The engine pursues the potential of
each unmet need thesis fiercely. There
is no fear of failure. It explores the
thesis in multiple internal and external
experiments, and it evaluates the
results of each experiment quickly,
thoroughly, and dynamically:
–
Every experiment provides data that
might lead to a new thesis about an
unmet need and a new experiment
in how the company might innovate
around it. There are no simple
successes or failures.
–
An experiment that doesn’t work
is quickly ended—ruthlessly, some
might say. But its results have
valuable information leading to
new ideas, and it may also have
successful elements that are
culled and combined with other
experiments.
–
Successful or failed experiments
may lead to still greater success
when synthesized with other ideas.
Leading to market‑changing
innovations specific to the company
In turn this leads to market-changing
innovations. The innovation engine
can produce changes in many forms,
including innovations in consumer
experience, technologies or vehicle
systems, and business models. All
fit the company, which the lens of
proprietary insights and the testing of
investment theses ensure.
Stage 1
Stage 2
Stage 3
Solving the clockspeed dilemma: Integration
With this new capacity for fast innovation in place, one last and important step remains. The multiple
clockspeeds of faster innovation must then connect with the larger organization of the company.
They must be integrated with existing processes that connect the company with its customers. It is
a simple, elegant, and individual solution to solving the clockspeed dilemma, but it is still hard to do.
The clockspeed dilemma 31
© 2015 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with
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Conclusion
© 2015 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in the U.S.A. The KPMG name, logo and “cutting through complexity” are registered
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We’re riding a wave of fantastic innovation that’s going
to be still more fantastic and happen faster and faster. It
may seem daunting, but the traditional auto companies
can institutionalize a faster-paced innovation capacity to go
with their current one, as the innovation engine suggests.
If they do and if they integrate their innovations with their
larger organizations, they will be able to meet the variety
of clockspeeds that this new normal asks of them. They’ll
embrace the relativity of time. It is an exciting, powerful
era. The right approach will lead a company toward a
powerful future, a winner.
Who will be among the next
generation of leading companies?
What new business models
will emerge?
How bold will your company be?
Setting the pace
The clockspeed dilemma 33
© 2015 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of i
ndependent member firms affiliated with
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A. The KPMG name, logo and “cutting through
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KPMG Automotive practice
In case you missed them, you can download our previous papers related to the future of the
automotive industry.
Self‑driving cars: The next revolution
August 2012
For the past hundred years, innovation within the automotive sector has brought major but
mostly evolutionary technological advances. Now, the industry is on the cusp of revolutionary
change with the advent of autonomous or “self-driving” vehicles. KPMG LLP and the Center
for Automotive Research (CAR) joins forces in examining the forces of change, the current
and emerging technologies, the path to bring these innovations to market, the likelihood
that they will achieve wide adoption from consumers, and their potential impact on the
automotive ecosystem.
Self‑driving cars: Are we ready?
October 2013
Gaze out at the automotive horizon and you can almost see a new era coming into focus: the age
of self-driving cars. Ultimately, the shape of the automotive future will depend on consumers—
their needs, preferences, fears—and their pocketbooks. Will they trust these new vehicles?
What will future car buyers care about? If we build self-driving cars, will they come? KPMG
seeks to answer these questions through the lens of real consumers who provide us with their
unique perspective on the self-driving market.
Me, my car, my life
November 2014
Not since the first automotive revolution has there been such stunning innovation in the industry.
The convergence of consumer and automotive technologies and the rise of mobility services
are transforming the automotive industry and the way we live our lives. How will the automotive
industry adapt to this new world? How is technology reshaping the automotive ecosystem – and
how will these industries work together? What will customers of the future expect from this
collaboration – and be willing to pay for?
34
© 2015 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International
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Authors
Gary Silberg
National Automotive Industry Leader
gsilberg@kpmg.com
Thomas Mayor
Principal, Industrial Manufacturing Strategy
Practice Leader
tmayor@kpmg.com
Todd Dubner
Principal, Strategy
tdubner@kpmg.com
Jono Anderson
Principal, Strategy
jonoanderson@kpmg.com
Leila Shin
Director, Strategy
lshin@kpmg.com
The clockspeed dilemma 35
© 2015 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with
KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in the U.S.A. The KPMG name, logo and “cutting through
complexity” are registered trademarks or trademarks of KPMG International. NDPPS 404853
Thank you
The authors would like to thank Amitai Bin-Nun,
Mike Corley, Laurent Des Places, Bill Lakenan,
Mitch Manassa, Joseph Schneider, Huu-Hoi Tran, and
other KPMG colleagues for their contributions.
They would also like to acknowledge James Mendelsohn
for his writing, Rod Hernandez, Sarah Milsow-Guenther,
and Deb Scartozzi for their contributions to the
design and production, and Charles Garbowski for his
moderation of the focus groups.
36
© 2015 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International
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trademarks or trademarks of KPMG International. NDPPS 404853
The clockspeed dilemma 37
© 2015 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with
KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in the U.S.A. The KPMG name, logo and “cutting through
complexity” are registered trademarks or trademarks of KPMG International. NDPPS 404853
© 2015 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in the U.S.A. The KPMG name, logo and “cutting through complexity” are registered
trademarks or trademarks of KPMG International. NDPPS 404853
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Document Outline - Structure Bookmarks
- A message from Gary Silberg
- Key changes: Big opportunities
- Consumers want one trillion miles of more mobility
- Competitors are innovating at Sexy Dynamic clockspeed
- Facing the obstacles
- A framework for innovation
- Building a bespoke innovation engine
- KPMG Automotive practice
- Authors
- Thank you
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