Navigating the new car industry
‘Massive and dramatic’ disruption of the auto industry presents issues for incumbent carmakers, says an article co-authored by experts from Cambridge Judge Business School and Jaguar Land Rover.
“Massive and dramatic” shifts in the auto industry present eight key issues for incumbents responding to disruption of a century-old sector, says a new article in Future Studies Research Journal co-authored by two academics from Cambridge Judge Business School and a senior executive of Jaguar Land Rover (JLR).
Those issues include cooperating with rivals and handling the impact of many sweeping innovations and challengers in a rapidly changing landscape.
“(There are) multiple paradigm shifts occurring at different levels with varying magnitude within the auto industry,” says the article. “For a high-end car maker such as Jaguar Land Rover, the first and foremost task is to pursue the enhancement and development of capabilities needed for a vastly different future.”
As an incumbent in an industry based for a century around the internal combustion engine (Jaguar cars date to 1935, Land Rover vehicles from 1948), JLR needs to formulate responses to four broadly disruptive tech-driven trends: connectivity, electrification, autonomous driving, and “diverse mobility” such as pay-per-use in contrast to car ownership, says the article.
“Behind each of these major disruptive technology trends, there exists a large number of diverse radical innovations in product, technology and business models led by firms primarily from different and even remote industries,” the article says – citing Google (and possibly Apple and Amazon) in autonomous driving, Tesla in electrification, and Uber in shared mobility.
These challenges give rise to the eight key issues facing incumbents in responding to such changes: how to face the “incumbent’s dilemma” (disrupting yourself); coping with multiple radical innovations and challengers; cooperating with competitors new and old; identifying key factors to navigate change; better predicting and preparing for the most likely future scenario; organisational capability; developing a platform strategy (car as a platform); and obtaining a different set of organisational competences or radically transforming existing ones.
The article – entitled “Radical Innovation, Paradigm Shift and Incumbent’s Dilemma: The Case of the Auto Industry” – is co-authored by Eden Yin, University Senior Lecturer in Marketing at Cambridge Judge; Shaz Ansari, Professor of Strategy & Innovation at Cambridge Judge; and Naseem Akhtar, Group Leader Strategy & Innovation at Jaguar Land Rover, based in Coventry, England.
Eden Yin and Shaz Ansari have spent many hours with strategists and other executives at JLR, including visits to the auto maker’s Product Development Centre in Gaydon, England, and their head office in Whitley, Coventry, in order to better understand the company’s technological, management and supply-change capabilities and challenges.
Our key goal is “sustainable growth,” by building superior capabilities in electrification, autonomous driving and connectivity while maintaining profitability and remaining competitive,” said one senior executive at JLR.
A senior JLR technologist explained: “We need to collaborate with tech startups as we cannot do everything in house, and move from a product-centric to a platform-centric mindset.”
Added a marketing executive: “The very notion of brand loyalty is under threat (in the world of autonomous driving) as customers shift from owning to paying by mile or distance.”
The research by Cambridge Judge and JLR is part of the business school’s programme of “deep engagement” with leading companies and other organisations in order to utilise academic research to address real-world management and business issues.
The article underlines the need for incumbents to be flexible in addressing the sort of changes now roiling the auto industry, given the “inherent” uncertainty surrounding the outcomes of paradigm shifts.
So for JLR, which since 2008 has been part of India-based Tata Motors, this gives rise to a number of issues, such as: How should the company develop software and service capabilities for a mobile-service future? How should JLR digitalise and provide customers with a “digitised total brand experience?” As JLR is smaller than many rival high-end carmakers, making total innovation in-house infeasible, how should the company work with suppliers and start-ups in emerging technology areas?
The article underlines the many parallel and powerful disruptions affecting the auto industry at the same time.
Although there have been numerous studies on shifts affecting a single product or business model (such as the word processor, or traditional movie rental business), the article suggests that changes to the car industry are on a different scale and scope spanning multiple industries and ecosystems – including automakers, tech firms, energy companies, public transportation providers, regulators, construction companies, insurance companies, and town planners.
“How incumbents of an existing ecosystem should best cope with the massive and dramatic industry-level disruption induced by multiple radical innovations along a number of fronts has largely remained unexplained,” the article says.
Find out more
Visit Dr Eden Yin’s faculty webpage
Visit Professor Shaz Ansari’s faculty webpage
Visit ResearchGate to read the article “Radical innovation, paradigm shift and incumbent’s dilemma: the case of the auto industry” by Yin, Ansari and Akhtar, Future Studies Research Journal (DOI: 10.7444/future.v9i1.301)
Visit the Jaguar Land Rover website
To read more information, click here.
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