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The challenge of innovation: transitioning to a new automotive reality

Alexandre Audoin
28 April 2022

Innovation is a word uttered frequently throughout the automotive industry. Particularly today, as Original Equipment Manufacturers (OEMs) stand at a pivotal transition point in their progression after years of constant disruption.

A transition that is seeing traditional ways of acting and thinking merge into a world of more dynamic and fluid interactions, inspired by the constantly evolving demands of consumers, governments, and regulators.

As with any change of this magnitude, innovation has a vital role to play.

In fact, ingenuity has a lot of hard lifting to accomplish as it empowers the shift from mass production mindsets to services-centric models. Where legacy systems and constraints give way to new approaches, and the rapid ideation enabled by software-driven transformation. Change that brings with it 3 broad challenges:

  • Completing the move to a service-oriented and agile culture
  • Building up the competencies needed to sustain this transformation
  • Enabling change through the adaption of legacy production capabilities

Let’s quickly assess each of these in turn.

Challenge #1: moving to a service-oriented culture

The innovation remit in automotive is certainly broad. That’s because there is a lot to factor in, with new usage and ownership models demanding attention, alongside the all-consuming concept of sustainable mobility. Innovation therefore needs to be inclusive and extend from first design concepts to methods for end-of-life recycling, thereby helping the OEM:

  • Bring to life the concept of digital continuity extending across the full lifecycle of a vehicle
  • Act to enhance the appeal of their vehicles with unique services that help enrich the overall mobility experience
  • Deliver a regular rhythm of new features and functions across a car’s full lifecycle – made available on demand – to create additional revenue opportunities

Delivering against these ambitions takes OEMs into the realm of end-to-end service provision. An environment of always-on connectivity and universal data flows that moves them beyond ‘fabricate and forget’ products, to cars as ‘service platforms’ – constantly adjusting to meet the needs of drivers and passengers.

Challenge #2 building up the competencies to succeed

One of the biggest tasks faced by OEMs today is to maintain the skills needed to thrive in a software-defined marketplace. To move beyond the traditional focus on cost and quality, toward an operating environment where engineering blends effortlessly with IT to create unified and seamless outputs.

That can of course be easier said then done. Building up the required technological competence involves more than opening up a new department.  Instead, fundamental change is called for to support:

  • The different methodologies and expectations of software developers, who are used to highly creative and agile working practices
  • Open and transparent end-to-end design thinking, not restricted by any vertical siloes within the OEM
  • The championing of software as a means to extend hardware features, and placing this philosophy at the heart of every activity

In response, leading OEMs have been quick to act. Taking inspiration from other industries to adapt procedures, while also spinning off parts of their business to create centers of software excellence – or acquiring specialist consultancies.

Whether these are short-term measures designed to buy time for OEMs as they strengthen their own in-house training, or whether such trends continue we wait to see. But one things is certain: skills availability is proving a key differentiator – and a core enabler of future innovative prowess.

Challenge #3 enabling the transition

Legacy skill sets are not the only barrier to accelerated innovation. Legacy production processes also present sizeable obstacles, as they ensure software integration is relegated to a minor, final step prior to a vehicle’s completion.

Innovating at speed however means ensuring software acts as a key enabler throughout this end-to-end production phase, both inspiring and informing it. The end goal being a more flexible and modular approach that helps realize the full potential promised by Intelligent Industry, alongside the twin advantages of standardization and customization:

  • Standardization of hardware: a vital trend as software-driven transformation calls for greater utility of components – from specialist to generalized capabilities – while also helping reduce the overall cost of production
  • Customization of software: where this ‘foundational’, universal hardware can be used to quickly develop, refine, and re-purpose different on-demand services, made available from across an expanded automotive ecosystem

In summary

Sustaining and accelerating innovation in automotive is an endeavor that impacts every facet of an OEM’s end-to-end operation. The need to enable new service models while maintaining the necessary skill sets, are challenges that few organizations in the industry were ever fully prepared for. Yet overcoming them is a must for any OEM hoping to remain relevant.

Progress however can be surprisingly swift. Especially when based on a clear vision and backed up by the skills, methodologies, and production capabilities needed to succeed. To help inform this conversation, Capgemini has created its TechnoVision for Automotive 2022. A guide that details how end-to-end thinking leads to end-to-end innovation, while always ensuring that the customer sits at the heart of every transformation initiative.


Alexandre Audoin
Group Industry Leader for Automotive at Capgemini