|Carl Kelley:||00:12||Welcome to Driving the Future. My name is Carl Kelley and we’re going to be talking in this first episode about the current mobility ecosystem and the invasion of the digital players. I’m delighted to be joined by two digital automotive mobility experts, Mark Caesar and Marcus Winkler. Thank you very much for joining us gentlemen. Welcome.|
|Mark:||00:36||Thank you, Carl.|
|Carl:||00:39||Okay. We’ll start with Marcus. Please Marcus, could you introduce yourself and tell us a little bit about your role?|
|Marcus:||00:44||Yes, of course. Marcus Winkler, I’m heading the global automotive sector at Capgemini. I’m a consultant at heart, a strong background in economics and technology. Automotive in Capgemini means that we are more than 10,000 people working collaboratively for our automotive clients, leveraging the full power of the Capgemini group of more than 200,000 people. Our client is mainly OEMs, manufacturers, suppliers, retailers, but also the new transport and new guys like [inaudible 00:01:22] as well.|
|Carl:||01:24||Great. Thank you very much. Great to have you on board. Mark, please could you introduce yourself and tell us about your role.|
|Mark:||01:31||Yes, my name is Mark Caesar. I’m working for Capgemini [inaudible 00:01:35] for the connective car business. Long time being in the automotive industry and enjoying the times at the moment and the things that are going on.|
|Carl:||01:46||Great. Great to have you on board. Okay. I suppose we should start by setting the scene a little bit. I’m talking about this monumental shift in the automotive industry and the current mobility ecosystem. Maybe actually we could start by describing what is meant by the mobility ecosystem for our listeners and also what has brought about this massive shift from product centricity to customer centricity, from product to service.|
|Marcus:||02:19||I think first of all we need to take a look at what the now. The now is actually, and OEM and manufacturer producing vehicles and at the end of the day, relying on the retail, which are most of the time, even let’s say third party retail, and those retailers actually selling the car. Then we have to get private transport and we have now more and more, the new transport challenges. The new actually, the mobility ecosystem of the future will be actually very more road based. We’ll be of course still the manufacturing of vehicles being one of the parties. It’s the asset owner of the vehicles, service provider, the mobility platforms and then of course also let’s say the operator, the brand, at the end of the day.
And the consumer, which means driver, but also let’s say the passenger. This is, let’s say, the new. You are absolutely right. The new means in mobility also a transformation of how we are buying vehicles, how we own vehicles, how we use them, how we lease them. And at the end of the day, how we can transfer from A to B as well. This is, I think means a whole new role play in this new segment of the market.
|Mark:||03:51||Yes, if I might add, I’d also say looking at the customer, the question for the customer is really how he moves from A to B no matter taking a car or riding the bus or using whatever transportation means. That’s really the customer demand. That’s how the mobility demand is really changing at these times.|
|Carl:||04:21||Great. And it really is like a huge shift in the, almost a revolution. I’ve heard it said that the automotive industry is undergoing its biggest revolution since the advent of the internal combustion engine. Do you think that’s an accurate representation of just how huge the revolution is?|
|Marcus:||04:44||Absolutely Carl. I think this is definitely true. Today’s OEMS, what they need to do is, at the end of the day, manage it’s legacy IT into efficiency and reroute the [inaudible 00:04:59] and actually the investment towards the new destiny, which is around connected, autonomous, shared, electric and also those, let’s say old organization formats, they need to adopt the new ways of working for this challenge. Technology must generate much more business value than in the past and it needs a new handshake actually with the business. I think Mark, as well, the business itself, the business department, they also need to accelerate new forms of collaboration. They have to focus on a much faster go to market as well. All of that, this acceleration, what you described Carl, is actually also very, very strongly pushed by the decapitalization goals of the EU by the new mobility developments, for example, in China.
Plus, they would lead the new market entrance which are coming to the automotive and mobility game. This is what actually accelerates and will be marking the massive shift.
|Mark:||06:16||Yeah, like Marcus says, especially the digital players like the Googles, the Apples, they’re now invading the mobility market. These new engines, they have a total different way of working. They’re much more faster in bringing new features, new products. This is what the consumer is used to and therefore expects now also from the mobility industry and from mobility. That puts a lot of pressure on the OEMs and on the whole automotive industry.|
|Carl:||06:59||What is it exactly that these invading digital players are bringing? A case like fresh eyes on things and fresh ideas and they’re setting the expectations as you say with consumers. But what is the scope of what they’re bringing into the automotive industry?|
|Marcus:||07:19||I think what we see is that those new market entrance, which are also coming as quite interesting out of this sector. These are definitely the digital players that you’re mentioning, but also players from other industries like insurance for example, energy utility providers and they are cutting out pieces of the traditional automotive value chain. Let’s take an example. The [inaudible 00:07:49] return of the vehicle was for a long time, the core dealer business. Now actually new entrants are coming and startups are coming, even insurances and they have built new brands around it and actually eased the hassle for the consumer to return the car and actually sell the car into the market.
This is, let’s say, what they are acting and what they are bringing on the table. It’s definitely something like they’re providing this kind of seamlessness for consumers in terms of the processes. Think about Mark, simplicity as a matter. One of those attributes.
|Mark:||08:31||Yeah, make it as simple as possible so that the customer doesn’t want to have lots of choices and options, but in terms of situative relevance, he wants the right service at the right time at the right place and this as simple as possible. When you look at the products provided by Apple, simplicity is really, that’s what counts and that’s what makes a great success.|
|Marcus:||09:05||And accelerated relevance is really what the digital players can do and are really excelling in that. Superior customer services as well. Again, they are satisfying the new customer expectations actually in this market. This much more even with high agility and new speed in the market.|
|Carl:||09:28||Mm-hmm (affirmative). Are OEMs reacting as quickly as they might to these challenges? Or to these huge opportunities? I guess in this incredibly exciting time that there is, I suppose a pressing need for the OEMs to adapt. Is there any kind of cultural resistance within the automotive industry would you say that’s stopping them from reacting as agilely as they could?|
|Marcus:||10:00||Yes, definitely. The current tempo, the reaction time is much too slow. I think that’s what we are observing. The interesting thing is, those digital processes and the customer centricity is by nature cross divisional. This is where the hurdles are, thought the OEMs organizational structures are grown since decades. Of course it’s much easier to open up, let’s say, a digital apps than actually implanting or seeding digital transformation within the organizations.|
|Mark:||10:44||Yeah. We are seeing our clients and the OEMs, we are seeing that they’re doing something. They are opening up digital labs and all these initiatives trying to work agile and to be fast. That, to some extent, works quite well, but only to a certain extent. If you start a new project and repeat minimal viable products for example, then at a certain point, you need to bring that project into your existing processes and into your organization. That’s most times where the hurdles start and when the speed is really decreasing a lot. So from a really fast startup style coming to the existing slow processes of the existing organization and those hurdles really have to be overcome.|
|Marcus:||11:52||Right. [inaudible 00:11:53] needs new formats of collaboration. It needs a strong enablement of the employees, maybe even new make or buy decision, what is strategic and maybe what are things that partners, suppliers actually can do. Again that needs investment right? This apparently, the OEMs, it needs to be earned from the operating profit while on the other hand side and the digital players, they can rely on the fresh external money sources and the fantasies of the stock markets as well.
I think one thing is true, the OEMs and also the other automotive market players, they need to accelerate the transformation now.
|Carl:||12:42||Mm-hmm (affirmative). I see. Just as a bystander or a lay person such as myself, it seems like an incredibly exciting time to be involved in the automotive industry. I wonder if, is it as exciting for you guys to be on the inside of this change?|
|Mark:||13:00||Definitely. There are so many possibilities that open up to support our science, to support the automotive industry. There are so many forms of collaborations that we are trying to establish. So many really innovative projects that we start and bring to life. It’s a really great time at the moment.|
|Marcus:||13:28||Absolutely. That’s the place to be. We are in the middle of the transformation where it opens up a lot of opportunities. We at Capgemini have built a lot of digital capabilities, transformation capabilities in the last year, so we are as well on the transformation and this is what we bring to the market.|
|Carl:||13:46||It really does seem like a fascinating time. One way to look at it would be that perhaps the OEMs, there’s a kind of pressing need for them to change. Could it also be a case, we could look on it as a time of tremendous opportunity for OEMs also?|
|Marcus:||14:12||Yeah, absolutely. They are already trying to play in both worlds, and at the end of the day, we call it ambidextrous play. So they still have the strong manufacturing and engineering background. They have the capabilities to scale globally their business. They are really in the vehicle business. At the same time, of course, they are acquiring the new capabilities, the new digital capabilities, where we help them actually to transform and open up for the new mobility market. Even let’s say with some new trends appearing in the market or with acquisitions actually of players in this market.|
|Carl:||15:12||Okay. Thank you so much for joining us Marcus and Mark. It’s been a fascinating introduction to the mobility ecosystem. Thank you so much. Okay, so join us next time for driving the future when we’ll be joined by Sebastian [inaudible 00:15:29] and again by Mark Caesar. We’ll be talking about the specific pain points of OEMs in the current mobility ecosystem. Join us next time. Thank you very much. Bye bye.|