Leading Change: Why We Fail

This is the first of a two-part field study into how digital is transforming the auto industry. Here we draw from our experience to detail five of the most common blockers to successful digital strategy. Part two focuses on seven key building blocks that can help shape a successful digital strategy in the face of constant change.

_This post has been adapted from Humanising Autonomy: Where Are We Going?, the new book by ustwo Auto — download it in full here. _

Part One

We have the privilege of working with large and small companies, across multiple industries — often as they are going through significant change. After all, almost every area of business has been disrupted by the new opportunities that digital brings.

The automotive industry is no exception. Our entire perception of mobility is changing, the car is becoming more software dependent and a key component of a service platform, increasingly connected to other aspects of our lives. This is dramatically changing how automotive companies organise themselves — and their propositions for the future.

In order to understand how to embrace these challenges and devise a strategy for the future, we need to have a good understanding, or diagnosis, of the challenges we face.

In ustwo Auto’s first book on user-centred design in the automotive industry, focusing on in-car HMI, we provided an analysis of some of the design challenges the industry faces. Since then, we have worked on a range of automotive and mobility projects including with the likes of JLR, Ford, Alphabet and Skånetrafiken. These projects have provided us with a deeper and broader understanding of the industry dynamics — and where we can find some of the underlying challenges.

In this post, which is an extract from our latest book which focuses on humanising our approach to autonomous driving, we aim to provide a strategic overview on why some grand ambitions don’t quite reach their vision as intended. Here we’ll identify the challenges and part two is all about proposing a different approach to navigate a world of constant change.

A good diagnosis simplifies the often overwhelming complexity of reality by identifying certain aspects of the situation as critical.

Richard Rumelt, Good Strategy, Bad Strategy

Diagnosis: Where are we going wrong?

There are a few challenges that most companies seem to face as they aspire to become more digitally equipped.

One of the biggest challenges in large projects is a lack of clear visibility of success or failure. We analyse commercial performance against competitors, but we rarely reflect on how we successfully (or not so successfully) deliver digital products and services.

Nevertheless, implementation is a very big part of a successful digital strategy. It is not sufficient to have a “big picture” understanding of digital trends and technology to achieve successful digital services. It requires a fundamental rethink, getting your hands dirty and understanding the dynamics of creating software platforms and services.

This is especially important because it is diametrically opposed to the process of building cars.

For a broader view of the dynamics of digital transformation, we recommend reading our post on 10 Principles of Digital Transformation. This post provides more of a field study perspective — what we have observed in the automotive industry, as companies go through great change.

Each company will face its own set of challenges, but in the process of working with several partners, we have identified 5 of the more common challenges:

1. We can’t see the forest for all the trees — everything is a priority

Automotive OEMs that embark on building an architecture for digital services will tend to do so on a grand scale. Inevitably, this is complex as it involves many generations of vehicles, backend infrastructure, and a multitude of touchpoints that the user can interact with. When approaching complex projects, it is more important than ever to have a clear understanding of priority and focus. Despite this, we have found that companies are often reluctant to prioritise, as there are many stakeholders to consider and it is very difficult to change the strict vehicle development plans. Unfortunately, this results in slow progress or products that are sub-optimised due to unclear focus.

2. We need to catch up with competition

While you are busy copying your competitors’ features they are busy innovating or improving them. That is why the idea of “catching up” is a flawed strategy. It is highly unlikely that you will be able to work faster and smarter than your competition, especially if you haven’t done so historically. Thus, your company will always be one step behind. While it might seem that more features are always better, and more valuable to the customer, evidence shows the opposite (e.g. the iPod, Leica, Monzo, Southwest Airlines) The perceived quality matters more to the end user than quantity.

3. We don’t understand what matters to our customers, so we fail to deliver real value

Any real innovation will tend to stem from one of two sources — either core competencies or a better understanding of customer needs. Automotive OEMs are usually very good at understanding their unique competencies, but rarely have a deeper understanding of their customer. If you fail to provide genuine value to the end customer, it will make it very difficult to find a business model that justifies your investment in the product. More than ever, user-centred innovation in the automotive industry is a real opportunity to differentiate digital products and services.

4. We put emphasis on vision, but not enough effort into implementation

Most automotive OEMs have well-defined visions based on years of research and advice from expensive consultants. This is very important, and without a well-considered vision of the future, it is difficult to find true focus.

Nevertheless, it’s also important to recognise that building digital products and services is very different from building the next generation of vehicles. A car is complex to build and will last for many years. Digital services need constant improvement and maintain their quality by long-term, continuous iteration. Startups generally embrace the Thomas Edison quote “genius is 1% inspiration and 99% perspiration” (Thomas Edison, Harper’s Monthly Magazine, 1932). True commitment to a digital service platform requires a commitment to organisational and cultural change, on every level.

5. We want to be agile but haven’t designed our organisation to support it

Today, the conversation about agile and waterfall software methods feels a bit outdated, but yet more relevant than ever. While teams are pushed to be lean and agile, organisations are still structured around upfront “fixed” plans, that maintain unrealistic milestones despite changing market needs. Often, this creates an internal conflict in process and expectations. In such cases, management tends to resort back to strict waterfall methods, because “agile failed” and if they just plan better success will come.

The reality is that change is inevitable, especially in software. It is impossible to plan the unpredictable. What makes a company successful is the ability to take an agile mindset to what it builds and respond quickly to change, not to apply agile routines and methodologies correctly.

Continuous communication and feedback loops between leadership and delivery teams is what makes a difference, not scrum ceremonies (although this might give some direction on a team level).

Principle driven strategy

While words can summarise years of observations and experience, to realise this in practice requires substantial organisational and cultural willingness to change. Often it will prove easier to achieve this change within your development teams, but unless top management recognises the same need for change, any initiatives will tend to fall short.

Each organisation and each product requires a slightly different approach. There is no such thing as a one-size-fits-all recipe, and that is why a process-centric approach will not automatically work for your organisation.

Instead, we need to introduce the idea of a principle-centric approach, which is a more robust way to shape your digital strategy in a constantly changing environment.

Part two of this post expands on this principle-centric approach — discussing how companies can develop a strategy to face constant change and what some of the key building blocks for success are in that environment.

And if you’re looking to readdress your digital strategy — we’d love to talk to you about it. Contact us on work@ustwo.com.

Originally published at https://www.ustwo.com.