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Is There an Innovation Gap in the Automotive Industry?

vegh, garySomeone 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.

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