Perpetual Disruption: An object lesson from the automotive industry

A couple of weeks ago, during lunch with Michael Stucki, he asked me why I had such an interest in the automotive industry. Since then, after having posted a blog about the Faraday Future press conference, I’ve been confronted by the question more and more often, and I’ve noticed that most people don’t realize that exemplary change processes are currently underway in the industry, changes that are driven by culture and new technology.

Sometimes I regret having written the article about my disappointment with BMW, for now I am often asked about it. From people that have been upset by BMW in one way or another (“Scandalous. They didn’t vacuum my trunk during servicing”), people that want to convince me that there are no better cars and people that simply have a Goliath complex and want to see everything dead that’s big.

I have nothing in common with any of them. BMW is neither stupid nor lost. My disappointed was much rather targeted at BMW for long neglecting technological innovations and consequent decisions in many areas. They have left this path. What you get from BMW today is, at the most, qualitative mediocrity at a premium price (brand Agio).

The reasons are varied, yet typical for those industries that no longer dare to create true innovation, but rather focus on incremental improvements to a product model. The reasons, by no means all-inclusive, are as follows:

As odd as this might sound, but one of the biggest problems regarding innovation and newly invented products is a business that’s humming along. There are two dimensions to this; a) The fear of losing existing business and deviating from the path of success and b) The fundamental predisposition of humans to make less of an effort, when things are going well.

The very rare exception are business people and companies that develop new things from a position of strength. Though everyone rambles on and on about this, one will actually find few companies that, upon closer examination, are successful and strong, even though they are fundamentally healthy. Rather, it’s those companies that have to do something, either because they’re new or because their business is threatened.

The not-invented-here syndrome is widespread. Sometimes new paths are attempted compulsively, even when it isn’t needed at the moment. Certain concepts are simply good and accepted and can be copied and used in a meaningful way. For example, the operating concept behind a large touchscreen. Tesla didn’t invent it, it passed its trial by fire in the iPhone long ago. To copy it and use it in an automobile is neither groundbreaking nor a stroke of genius. It is simply the most logical step in solving the issue of handling. There are no objective reasons why BMW and others couldn’t have done the same.

A further point is bogged down product thinking. Sometimes, or so it seems, a car must have a combustion engine. If, however, we compare physical basics, everyone will quickly realize that an electric engine has fundamental advantages.

Why then weren’t new concepts developed along these guidelines and fundamentals, especially when we consider the compulsion to decrease emissions? From a factual perspective, BMW and other manufacturers had far better conditions to build a car of this sort than Chevrolet or Tesla.

Last week I wrote an article about how industries are trodden paths. And I think the same thing applies here as well. Apparently, a certain culture and mindset are missing in order to be able to think beyond one’s own product concept.

And now, startled by Tesla, everyone is talking about digitalizing, mobility of the future, E-mobility and software-driven concepts. At first, this is good, as the entire industry has been set in motion.

It also creates competition, and with it, ultimately, better concepts for the customer. For, not much that was fundamentally better was created in the recent past. And a lot more would have been possible.

But when Harald Krüger says he wants thousands of additional software engineers at BMW in the next five years and that strategic training takes a whopping 18 months, I get a really queasy feeling. Is the number of people in any given sector a serious KPI? I think not, at most it’s an indicator. And the five-year timeframe? Roughly corresponds to the time in which Tesla developed the Model S.