Innovation can putter along or it can feel like launching fast right out of the gate. We’ve recently hit such an inflection point in the automotive industry where there’s a lot of change and disruption in a field that has been otherwise slow to change over the last several decades. Similar to how the iPhone brought a revolution in mobile innovation, we’re seeing a similar disruption in automotive innovation brought around by both new technology, electric cars, and an iconic company, in this case, Tesla.
The thing that makes Tesla unique isn’t the fact that it’s making a car, or even that they are making an electric car or even a self-driving electric car. The thing that makes them unique is that they are innovating much faster than traditional automotive companies. This may seem like a small thing but the rate of innovation, especially of technical detailed things, has a disproportionate impact on companies long-term growth. This week GM announced a major restructuring to turn itself into more of a technology company from being a hundred-year-old manufacturing company. GM sees the change coming and they are starting to get themselves ready however innovation for large companies is particularly difficult.
Innovating at scale is incredibly hard because as organizations grow, they accumulate process, supply chain, procurement, legal and other operational requirements that can slow the pace of innovation. While these operational elements can benefit a large organization they can also slow it down. Getting the details right gets harder and harder. When it comes to software or technology it gets increasingly difficult to innovate on technical products that involve thousands of engineers.
Tesla’s products aren’t perfect, but the active decisions that they’re making on hardware, UX, software updates, firmware, mobile apps while moving quickly at scale is giving them a much longer term advantage than many realize. While traditional car companies may catch up on electric cars, Tesla is putting distance between competitors on the rate of change they are able to achieve with an ever-growing engineering team across AI infrastructure, mapping technology, electronics, mobile apps, and user experience.
Innovation isn’t in one part of a company
With many companies, innovation is focused on the core product. With an innovation company, the innovation happens across all aspects of the business. As an example, Apple’s innovation wasn’t just the iPhone, it was also in the marketing, supply chain, and completely rethinking the retail experience.
The same is true for how Tesla is selling and building its cars. The experience starts at a showroom. The major automakers are innovating on their cars but they aren’t innovating as much on the infrastructure and dealer networks or the factories that surround them. Customer experience (CX) isn’t just about software. CX is the total end-to-end customer experience and innovation has to be an all-company effort.
I’ll leave the car reviews to more qualified car sites, but the innovation in software is also exceptional. Whereas most car companies started as mechanical products and added electronics, Tesla started with a computer and added car parts and mechanics. The change in approach is profound. The difference is that these components are tied into a control system allowing the end-user-experience to be integrated.
• When a collision sensor sees something it stops the music
• When you’re backing up the side view mirrors adjust to make it easier to see the parking spot
• When the car parks it adjusts the seat to make it easier to get out
• When the vision system sees rain it turns on the wipers
• When you approach the car it unlocks the doors
These aren’t gimmicks. These are the result of a thoughtful design made possible because of tight integration between software and hardware. These things will continue to get better over time and it’s not hard to imagine how software could enable active noise canceling via the sound system, keyless entry via face-recognition or even Starbucks/Dunkin’ coffee ordering via the touch-screen.
Beyond the retail and software, the experience is the innovations in infrastructure. Both the infrastructure in manufacturing with a robot based assembly process and the infrastructure of a national energy charging network
Innovation isn’t in one part of the business, it’s holistic.
Small changes leveraged for large impact
When the iPhone first came out it introduced a seemingly small change to the way that we purchased smartphones. It was one of the first phones to require a data plan. Since the iPhone was always connected to the internet it enabled a number of applications that were previously not used on mobile devices. Mobile maps, YouTube, and mobile browsing were the first of the app wave. This seemingly small change in default connectivity was leveraged into a large impact both within Apple and across the industry.
The same things are happening in the car space as Tesla is including a data-plan in the base cost of the car. The built-in 3G connectivity is a game changer for consumers assuming a connected car allows for end-user benefits that most car companies can’t offer.
• Control the car remotely from the mobile app. (pre-heat in the winter and cool in the summer)
• Automatically upgrade the firmware without taking it to the dealer
• Remotely diagnose and repair issues (sometimes before they even happen)
• Learn from the fleet to make future cars better and smarter
• Replace hardware components like CD players with streaming music solutions and podcasts
• Provide navigation directions that respond to traffic in real-time
• And much more…
Many of these connected features benefit the car company too, not just the consumer. Upgrades, Diagnostics, Fleet learning, etc. While many car companies are now starting this process, they are often charging consumers for the data plan and not getting the leverage of the seemingly small change applied to all vehicles.
Breakthrough technologies take a decade
Does the Tesla really self-drive? Sorry, no. The auto-pilot is amazing, especially on long stretches of the freeway but even with this, there are issues. Really hard problems may take a decade to solve and the key to large innovation is starting down the path of solving these problems. There is a larger vision that both employees and consumers are aligned with.
The existing auto-pilot does a great job on well-defined roads with good markings but it has trouble when the road curves sharply, when the road splits, when someone crosses the road, when there’s a stop sign, when someone merges too quickly, etc. To be fair, auto-pilot isn’t advertised or designed for these scenarios. These features will be enabled and will improve over time but it doesn’t matter because the initial benefits of the long-term vision are useful today.
Big changes rarely happen overnight, they may take a decade of incremental progress. The key thing is that the changes happen in an agile model improving weekly and monthly. The technology is easily twice as good as it was a year ago and it’ll be half as good as I expect it to be one year from now. The neural networks are exponentially gaining experience on a growing set of roads, crosswalks, stop signs, pedestrians, road construction vehicles, and police officers waving you to stop and go. These problems won’t be solved overnight but starting to solve them is the thing that matters.
Ready. Set. Go.
Companies that want to innovate can follow some of these key principals:
• Innovation is about constantly advancing your ability to make improvements in your product and your business. This doesn’t happen annually or quarterly, it has to happen all the time.
• Innovation is an all-company activity. Every department looking for 1% gains in efficiency or improvements leads to extraordinary impact at scale.
• Big changes take a decade. People may be willing to buy into the big-change today if you provide iterative and incremental progress.
• Look for seemingly small changes that can have outsized large impacts across your industry and your organization when you apply them as the default and not an option.