Oliver Wyman recommends five areas of action to improve innovation management in the automotive industry.
Stronger focus on customers and marketing
Innovations can succeed only if they address megatrends, legislation, competition or the customer. The majority of today’s car innovations are based on the engineer’s creative act of invention. Too few of them are driven by the car user. Both OEMs and automotive suppliers must align their innovation management according to the customer requirements and future market trends. The product portfolio, the innovation marketing process, pricing policy, market research, close-to-market R&D centers, customersegment innovations (i.e. brands, clusters, etc.) are all ways of improving customer and marketing orientation for auto-industry innovations.
Active reshaping of the innovation portfolio
An imbalance in the innovation portfolio leads to future growth gaps. OEMs and suppliers have to analyze and reshape their portfolios to gain a good balance of innovations in terms of potential and importance of innovations, strength and degree of innovativeness, external/internal innovations, timing, added value and profitability, customer segments, functional versus cost innovations, etc. The innovation portfolio must deliver short-term value as well as cover solid returns in existing or new fields of business in the future.
Improvement of R&D economics and risk management
To remain cost competitive, suppliers and OEMs must continuously improve their innovation economics. Three fields of action must be emphasized: Improvement in the efficiency of your R&D organization, i.e. reduction of the overall process costs and increases in productivity. Enhancement of your R&D effectiveness, i.e. more and better innovations for your enterprise. And assessment of the future risks associated with new innovations for your company in order to protect your business from potential losses.
Support of open organization and culture
The auto sector must open up. It should embrace innovation trends from outside the industry, for example, from consumer electronics or telecommunications. OEMs and suppliers must also build innovation networks to enlarge their competencies and reduce costs. Management needs to create an open environment that strengthens a collaborative innovation culture, increases the competence level of its employees and supports entrepreneurial action in the R&D department.
Alignment of innovation strategy
Suppliers and OEMs should regularly check their overall innovation strategy. The Oliver Wyman ISF serves as a guideline to ensure that the key deliverables of an innovation strategy are met: improvement of competitive position and long-term profitability. The innovation proposition, the R&D organization and culture, and the competence focus and level of collaboration must all be aligned to build a strong business case for OEMs or suppliers.
