Is There an Innovation Gap in the Automotive Industry?
Someone recently shared an article with me that addressed why the automotive industry often appears to move slower than others when it comes to experimenting with new technologies and ideas that could have the potential to radically improve its environmental, health & safety, or economic performance.
The article, “Why car and energy companies have a hard time experimenting like Google does,” points out that the public often reads about certain businesses experimenting with game-changing ideas, like Google’s self-driving cars, and then they wonder why long-established OEMs aren’t “keeping up with the tech-Joneses.” The reality, as author Katie Fehrenbacher points out, is that automotive companies – and most manufacturing companies along with them – are much more restricted by profit margins and cannot simply dedicate large sums of money on high-risk or flash in the pan experimental technologies. Instead, the automotive industry seeks out proven ideas that have demonstrated their ROI and slowly integrates those successful experiments into their operations and products over time.
As someone who has worked with the automotive industry for many years now, both with international OEMs and part & coating manufacturers, I was pleased to see someone talking frankly and realistically about why the industry doesn’t always seem to move at the same pace as others. I want to share my own thoughts on how the automotive industry does in fact embrace innovation. I don’t believe there’s an innovation gap at all: how the automotive industry innovates simply looks different from others.
Collaboration is Key
One of the largest factors in how innovation works for the automotive industry is the fact that automotive manufacturing is a group effort and almost everything happens due to collaboration. Some of the best improvements are developed at automotive manufacturer association meetings and symposia.
Therefore it’s not easy for a single entity, OEM or otherwise, to make a sweeping and dramatic change to a product without years of advance planning, notice, and negotiation. While that’s a recipe for enduring and sustainable innovation, it’s not how sudden or disruptive experimental ideas take shape.
The reason that there’s a perceived innovation gap between the automotive industry and others is that automotive manufacturers rely on much more complex supply chains than faster moving industries: a great idea or experimental project that finds life somewhere down the supply chain will need to prove itself again and again as it slowly makes its way upwards to where it will get a full-scale launch and gain some attention. Similarly, an idea originating in an OEM think-tank may still have to get parts supplied by a supply chain that isn’t yet convinced or capable of meeting the project’s demands.
It’s only once everyone is on board that an innovation can be rolled out. And by that point it’s usually not considered experimental anymore.
Internal Innovation – Outside the Public’s Notice
Often, the most important innovations are those that the public doesn’t see and that don’t get attention from industry pundits. They’re not the kind of advancements you’d describe as glamorous, but they are fundamentally improving how vehicles get manufactured.
For example, a part manufacturer or OEM would consider new technology that significantly reduces the amount of topcoat that needs to be applied to a part (and thus reducing manufacturing costs and air emissions at the same time) to be a successful innovation, but industry outsiders wouldn’t even know this kind of change was taking place unless they carefully scoured industry reports or association clearing houses.
In my experience being part of automotive industry working groups, some of the most impactful innovation comes from inventing new ways of managing and planning for environmental and energy performance. Groups like the APMA and the Suppliers Partnership for the Environment are creating new standards for assessing materials and planning for end-of-life scenarios, all innovations which are having a gradual but dramatic positive effect on the industry’s footprint.
However impressive these innovations are, they often go unnoticed by outsiders.
System Innovations Get Overshadowed
Business and environmental critics are quick to pick up a story whenever an automotive OEM wins a green award or makes sustainability commitments in their annual reports, but oftentimes the actual small-scale innovations that make up these accomplishments get overshadowed by easier-to-digest umbrella ideas like sustainability.
Typically, large successes in the automotive industry are made up of several smaller innovations. For example, the Volkswagen Chattanooga facility, which is LEED Platinum certified, had to undertake many smaller steps to reach its goal, including innovations for water, building materials, and energy use. It’s easy to forget and see the small innovations that compose the big picture.
Almost every innovation in the automotive industry is thanks to some type of underlying system: it’s those systems that often contain the largest scale innovations but those systems rarely get the spotlight. Here’s another example: next time you read that a manufacturing facility reduced its carbon footprint or air emission releases stop and consider that the facility’s EH&S team didn’t just worker harder, they probably implemented some new type of control device, Continuous Monitoring System, or air emissions accounting system – none of which will be the focus of the news story.
Partnering with the Tech Industry
When it comes to experimental new ideas and eye-catching disruptions, look no further than the Tech and Software industries. Being much more independent and fast-paced, hardware and software manufacturers have become today’s poster child for shiny and new – and hopefully better.
While the experimental products and ideas that the software and tech industries roll out aren’t always a success story, these innovations can be put to good use by more risk-averse industries like automotive manufacturing.
I’d suggest that the partnership between the automotive industry and the tech industry is where innovation and experimentation works best for the automotive industry: both industries have attitudes towards innovation that balance each other nicely. Automotive manufacturers are looking to invest in proven innovations (newer and better control devices, reporting tools, and management systems) and technology manufacturers benefit from meeting this demand while being tempered by automotive’s insistence on quality.
With the prevalence of sustainability in the future for automotive businesses, it’s never been more important to have proven –yet above standard – systems in place that streamline and help manage your performance. Whether that’s Continuous Monitoring Systems to keep real-time records of emissions or equipment parameters, an automated SDS management and authoring tool, auditing software, or environmental KPI reporting done on the fly, the technology industry is the ideal place from which to adopt these innovations.
I’ve found that automotive businesses are at their best when they let the tech industry tackle the experimental stage of any innovation while offering their support, and then utilizing the best of the best that makes proves itself to be a winning idea. It’s usually whenever automotive businesses try to do everything by themselves (like investing large sums of money into developing an internal software solution when they don’t have an experienced team of software engineers on staff) that experiments fail and risks outweigh rewards.
Constant Innovation Closes the Gap
Fehrenbacher is correct to point out that there are economic factors at play in why we don’t typically see the automotive industry taking wildly experimental approaches to improving its operations. I’d qualify that statement by adding that the automotive industry is constantly innovating in small, collaborative steps that emphasize systemic improvements rather than full-blown disruptions. Considering the size of environmental impact of the automotive industry, this results-driven approach is not only good business sense but good for the environment.
Is there an innovation gap between the automotive industry and high-speed experimental industries? No – whereas some industries innovate through major disruptive leaps forward (with their fair share of flops), the automotive industry innovates through a steadier stream of constant & continuous improvement. Both approaches lead to the same benefits, one just happens to be more attention grabbing.
Gary Vegh is co-founder of ERA Environmental Management Solutions with more than 15 years of experience in providing software solutions to manufacturing companies looking to comply with complex environmental regulations. Vegh graduated from Concordia University – Montreal, where he studied Chemistry/Ecotoxicology. He later moved to Raleigh, NC to work in the Research Triangle, where ERA was founded to meet the compliance needs of the local wood furnishing
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