Why a cultural shift is needed as the auto industry embraces software defined vehicles

Just as the emergence of software-defined vehicles (SDVs) requires automakers and Silicon Valley to blend their expertise, it also requires them to combine their processes and the way they approach innovation.

Historically, the auto industry moves slowly – rigorous safety regulations and protocols require automakers to prioritize caution over innovation. Conversely, tech companies in Silicon Valley are more nimble and less process-oriented. In order to compete in the increasingly SDV-focused automotive industry, both parties must find a happy medium between these approaches.

Behind the cultural differences

The challenge for legacy automakers is that the required urgency for developing SDVs means that the status quo of automotive development ways of working will not suffice. Yet, at the same time, safety remains paramount to protect the brand and avoid downstream recalls or litigation. To find this middle ground, automakers must shift their focus from short-term innovations to long-term solutions, while tech developers must adjust to the auto industry’s “safety-first” mentality while continuing to push for innovation.

This disconnect highlights a key difference between the mentalities and cultures of the automotive and tech industries. Throughout history, automakers have been accustomed to making gradual improvements on what will ultimately be a finished product – and once that product leaves the dealership lot, it is generally untouched for the remainder of the product cycle. SDVs are, by design, never finished – they can be updated and improved over time just like smartphones. This constant sense of innovation mirrors the Silicon Valley mindset well.

However, tech companies have something to learn from automakers as well. The freewheeling, innovation-first approach works much better when dealing with apps instead of heavy machinery. When working on vehicles, tech developers must adopt the auto industry’s reverence for safety, and to do so, adhere to regulations. There is no sense in rushing to develop an innovative vehicle if you don’t feel comfortable with your children riding in it.

Why a cultural shift is urgently needed

 The history of industrial companies such as automakers is grounded in more than a century of experience. It can be easy to forget that much of the software-driven technology that is so prevalent today has only been around for a few decades. So, why should automakers change their time-tested processes to make way for the latest technology trend?

OEMs are highly profitable companies. So long as they are generating such high profits, automakers will be risk averse when confronted with change. But the plain truth is that, regardless of whether companies are willing to adapt, the software race is well underway. Automakers must be willing to listen and change or risk letting another company win the race.

Understanding the macro-trends leading to the shift to SDVs is the first step in accepting it. For example, the emergence of SDVs is a reflection of a shift in customer preference. A growing number of drivers, especially younger drivers, care much less about vehicle specifications than they did in the past. Instead, they’re focused on connectivity, with smartphone compatibility a higher priority for many customers than the vehicle’s handling specs.

In the fast-paced tech world, companies know that profitability doesn’t last forever when hungry startups are chomping at the bit to be the next big thing. Automakers must realize that, in the software race, complacency means falling behind. It’s essential to understand that the processes that got traditional automakers to where they are today are not necessarily the processes that will bring them forward.

How to make the shift

 Shifting away from decades-old manufacturing processes is no small task for automakers. It requires adept leadership, the right talent and a strong directional focus.

On an intellectual level, many automotive executives understand why this cultural shift towards software must be made. But in practice, it’s more difficult to implement this shift in the workplace. There is deep momentum at auto companies in the way things are typically done, and these “tribal knowledge” habits are hard to break. Companies can benefit from an expert, outside voice such as Envorso that has deep, proven experience on both sides of the equation – software and automotive – and the “white coat” ability to shift the legacy behavior towards the needed change.

The transition to SDVs is a survival quest to find the best of the automotive and tech worlds. Startups will look to improve their safety processes, while automakers can learn how to be more nimble and innovation-forward. While this collaboration can take many forms, one thing is clear: automakers must adapt or be left behind.

Contact us today to learn how Envorso can help your organization bring together the best of both worlds.

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