As I started doing research about your company and the automotive industry in general I noticed that car innovations in the last decades have been focused on achieving car efficiencies and complying with environmental regulations. While Renault have spent a significant amount of money in research and development, on par with industry average, the results have been rather disappointing for the end consumer. In order for Renault to gain a significant competitive advantage in the auto industry I believe that it needs to change its design process and start putting the end consumer in the driver’s seat.
In the next lines I will develop my argument and explain what I mean by putting the consumer in the driver’s seat. The ideas that you will read might sound unrealistic at first, but you will realize that while they might be too futuristic for the present times, Renault has to invest in the future and change the ways the auto industry has operated since Ford created the production lines, Sloan announced GM mass customization and Toyota perfected the industry with its lean production system.
Why Renault, Why now
Renault is, without a doubt, one of the most significant players in the auto industry today. Its global positioning and access to world talent gives the company the minimum set of tools necessary to survive. However, in order to step ahead and differentiate, those attributes are not enough anymore and they will become less and less important as we move on. Renault’s history of innovation and futuristic design is a great foundation for the challenges ahead. Renault couldn’t be in a better position to set a precedent in the history of the automobile.
Now is the perfect time to invest. While Renault is doing so today in many different arenas, it seems to be doing so in the car of tomorrow but not on the car of the future. Green technologies, safety and efficiencies are mandatory investments today to survive, but I don’t see how any of these technologies are really revolutionizing the way we use and drive cars today.
Other car makers have started to do more for their customers, like GM’s OnStar, but that has not changed fundamentally the way we think about cars. Instead, it has simply broadened the spectrum of possibilities about what a car is and what can it do for its owner. Looking at history, cars are essentially the same as in the 1930’s, a compact steel mass with 4 wheels, an engine and a steering wheel. The panel provides drivers with basically the same information about speed, gas level, and total mileage, with some modernization, of course! I will grant here that the technologies that make the whole work are very different but the essence of the whole hasn’t changed much.
A massive amount of resources is being spent today in the development of a single technology, electric vehicles. So much could be gained if automakers could agree in one standard from the get-go and allocate the extra resources to the development of really revolutionizing technology. Renault could take the lead and start a major change.
The Driver of Tomorrow
Stop for a second to think. Do you believe 100 years from now people will drive cars the same way they do it today? The level of drivers’ sophistication and expectations will be completely different and companies will have to adapt to those user demands. Companies that don’t adapt will die and new players with innovative products and different ways of thinking will rise.
As an example, look at the kind of investment Honda is making today in brain machine interface technology. Simply imagine the possibilities and the impact of such technology in the automotive industry. Another breakthrough idea is self-driving cars. There has not being enough research and investment in this area, and especially big auto makers don’t seems to understand that this vision is not too far away.
The way I see it, there will be 2 well differentiated needs from the driver of tomorrow. First, the “urban driver”, that simply needs a way to get to and from home to the workplace. This need is very basic but important. People don’t want to get stuck wasting time in traffic and focus on driving. Instead, they want to use that time more productively by reading the news, connecting with other people (for work or personal affairs), read a book, etc. Public transportation is very inconvenient and people want the flexibility of having their own mean of transportation. In the future, I believe that “public transportation” will have a very different meaning.
Second, the “weekend driver”, that wants to enjoy driving in the open roads and have control over the automobile. However, the needs of this driver are completely different than today. This driver, even if s/he is in control of the car, s/he still wants easy access to road information, facilities and communication links with multiple other devices and people seamlessly.
Does this mean that each person will have 2 different cars? Maybe, I don’t have the answer and this is what Renault needs to figure out. The solution could be a vehicle that is able to adapt to the different needs.
Smart Roads, Smart Homes
We all know that movements towards a more integrated road system are on its way. Any vehicle will be able to exchange information with other vehicles in the road and with the road itself and the uses of this kind of technology are numerous. However, big auto makers don’t seem to see this as a priority and are delaying innovation. In the case of Renault, I have not found any information indicating that the company understands the need to change the type of innovation in which it invests.
Talking about interconnectivity, vehicles will not only be able to exchange information about the driving conditions, but they will connect with multiple devices at home, work and other locations. For example, a vehicle can retrieve food stock information from the house’s fridge, send the list of products to the supermarket while the driver is going out of work and going home. Smart homes will become more prevalent and cars will become part of the smart home interconnectivity.
Now the question is: can Renault do this alone? The answer is obviously no. I propose two approaches to take on this problem. First, Renault should forge new partnerships with a whole new set of players. Second, open the R&D lab.
Partnerships
In order to achieve high level of success and be a player in every sector of the market, Renault will have to create new links with players that it would not have imagined before. Let me start with an easy and obvious one, Microsoft. Microsoft Auto is helping to change the user experience in the cars by integrating seamlessly car functions with external devices.
Global telecommunication companies like Vodafone will also be of significant importance in the future. Vehicles will need to be connected all the time and exchange information with other devices (in and outside the car) nearby and faraway.
Other high tech companies like Sony, HP or IBM can help Renault to change the rules of the game. Rethinking new ways of satisfying drivers and integrating technologies that these companies already master well in their own domain should be adapted and incorporated in the vehicles of tomorrow.
If you think of data storage and processing, partnering with Google or Amazon could be a smart move from Renault. Renault doesn’t have to become an expert on things that already exist today and it doesn’t have to spend large amount of capital building infrastructure that can be accessed at a very low cost. Finally, with the advent of social networks, Renault could use Facebook or even Twitter to boost a new community of innovators working for Renault. This lead me to the last point: open design
Open Design
As of today, car makers are very secretive about their new designs and innovations. A small group of people spend years in an R&D lab before any of those ideas see the light of the day in a commercial vehicle. Many of those ideas don’t even see the light of the day and die in the lab. The main reason? They were not needed in the first place or they are way too expensive to commercialize. As you see in the graph below, only 17% of the options in cars today are actually sold to consumers.
Figure 1 - Source: http://www.car-innovation.com/pdf/studie_car_innovation_2015.pdf (Page 16)
In my opinion, if Renault were to use the same resources it dedicates to R&D today to foster an external community to brainstorm ideas and collaborate, the return on investment of those resources could double, if not triple. This way Renault would have access to a large pool of talent at a lower rate. Even more, ideas could come directly from Renault customers (or any driver) without them being design experts. Sometimes the smarter idea doesn’t come from the expert in the field.
By adopting this approach, Renault would lose part of what makes its cars unique but it has a lot more to gain. Producing cars that exactly match the needs of its customers and include many more useful features than any competitor can be a clear competitive advantage. Renault wouldn’t even need to produce the car itself, it could outsource that part of the process and become just the hub of ideas and development of final products.
Summing up
The goal of this memo is to start the conversation about the kind of investments Renault should make in the future and what should be the focus of the company in the years to come. Renault today masters the technologies of tomorrow, such as hybrid and electric cars and will be able to monetize those in the short term; I have no doubt about that. However, other auto makers are already thinking ahead and Renault needs to take an overarching vision of the auto industry. In the future, only the auto makers that are able to integrate with other technologies and think as cars in a completely different way, to the point of putting in danger their own business models, are the ones that will be able to reap the benefits of the change.
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Thank you for very informative blog
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