Shift Magazine - August 2021 - 14

5G and Auto: Organizing
for the Future Customer
The 5G Hype Is Real
Much of the hype around 5G technologies has been focused
on smart cities, autonomous vehicles, and the disruption these
models would cause in adjacent industries such as energy,
distribution, and insurance. These changes are on the horizon,
and proofs of concept have started to demonstrate what's
possible. In the mobility space, autonomous transport trucks
will begin to come online by 2023 or 2024, setting the stage
for automation of our personal transportation vehicles, which
is not that far behind. But with wide-ranging manufacturing,
regulatory, and consumer changes required before automation
can be adopted, these changes will likely not occur as a big
bang but more as an evolution. OEMs and suppliers will
have opportunities to create new experiences, platforms, and
revenue streams to meet changing customer expectations.
In the immediate future, we believe that new passenger
experiences will enable OEMs to differentiate themselves in
partnership with telecom and media providers. The car may
become a new entertainment device-children in the backseat
will be able to start watching a movie at home and then switch
to watching it in the car. EV drivers waiting for a recharge
will want to use their vehicle for work-related activities such
as video conferencing. Cameras within the vehicle, combined
with AI algorithms running in the mobile edge, will be able
to detect distracted drivers and enable safety measures.
Natural language processing capabilities will further reduce
the swiping and typing needed to interact with onboard
systems. Advances in flexible microchip printing and the use
of 5G signals to deliver power mean that onboard sensors
can provide exponentially more data in real time. Cameras
will be able to report traffic, road, and weather conditions
to the cloud, with more data points than Apple or Google
have today. Performance data from just about every critical
component could be measured, allowing for proactive service.
Over-the-air (OTA) system updates could be pushed on a daily
basis, if needed.
A New Business Model
This opens the opportunity for OEMs to organize themselves
to become data-driven tech-based mobility companies. Not
only is this inevitable, it's also crucial for taking advantage
of the 37-billion-dollar automotive software industry over the
next four years. Autonomy and faster network connections
will enable software as a service to be at the forefront of
the OEM business model. CMOs, CDOs, and CIOs are
focused on determining what software to develop to service
future customer needs as experience becomes the brand,
moving away from incentives and vehicle capability as market
differentiators.
How the customer experiences the product and how that
experience enables them to feel fulfilled will take mainstage.
We have already seen this in other industries that have been
in a transformation state for some time. If they are to stay
ahead of the disruption seen over the past eighteen months,
OEMs must put customer data at the core, find new ways of
working across channels in a tier-less fashion, and establish an
organizational structure that breaks down silos.
As many of our OEM partners look to create tech companies
within their walls, they are doing so in a couple of different
ways: joint venture start-ups and acquisitions. In a joint venture
scenario, the OEM and usually a mobility-focused tech partner
come together to focus on common value-based outcomes.
Both parties have a financial interest in the company and a
share in the profits. In some cases, after the business model
is established, the new org is evaluated and purchased
back from the OEM, allowing them to operate in this new
model. The benefit here is the OEM can break down silos by
essentially starting a new way of working, leaving silo-driven
objectives behind. They can quickly align teams to goals,
leveraging tested agile tech company models coupled with
OEM subject matter experts (SMEs). Both parties contribute
respective SMEs to ensure the newly formed way of working
has context as they move at speed and scale to achieve valuebased
outcomes. This option is attractive because it enables
the OEM to transform without the enormous effort it takes to
change the current org. Gradually, once the new business
model is established, the OEM can recast people into the
newly formed org, achieving the desired outcome. The tech
company provides modern ways of working, access to a large
pool of engineering experts, and consulting and customer
experience experts, organically transforming how the OEM
works toward a desired future state.
In the acquisition model, companies are clear on what their
vision is and have likely hired top talent from successful tech
leaders to establish a baseline to start from. They then acquire
a smaller tech firm that aligns to their goals. Both strategies
can achieve the same outcomes; it really depends on the level
of risk your organization wants to take on and the timeline
you choose to help you achieve results. Joint ventures (JVs)
are a model that our experience has told us gets you there
faster. At the end of the day, you want to refocus an org to
be lean, think creatively, break the status quo, experiment,
learn from failures, be hands on, collaborate, and spread the
knowledge.
Shift Magazine - August 2021

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