How to set up your automotive ecosystem for success
January 7, 2021
IDC predicts that, by 2024, companies who adopt an ecosystem model will grow 50% faster than those that don’t. For the automotive industry, ecosystems are an imperative in the age of mobility—but they must be set up properly to ensure success. Here’s where to start.
Would you buy a smartphone that didn’t have an app store? Me neither.
That’s the importance of building a strong ecosystem. In our last two automotive posts, my colleagues Rich Meszaros and Brian Irwin explored how equipment manufacturers (OEMs) can collaborate over digital thread data to unlock a veritable gold mine of new capabilities, services and revenue streams. If you walk away with one point from this series, it’s that multiparty systems like blockchain are key, but technology on its own is not enough. You can’t go at it alone; you must work with your partners to create new features and experiences that bring value and agility to the entire ecosystem. To do that, you have to think big, start small and scale smart.
Think big: rally around a greater common challenge
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OEMs face a common challenge already: The growing influence of tech companies spurring the shift from manufacturing to mobility.
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STEP 1. DEFINE WHY YOU'RE WORKING TOGETHER.
You may have heard that blockchain is a team sport. Building on that idea, every team needs a reason to come together, be it a mutual goal or increasingly complex competitive landscape. One way to motivate participation is to lay the potential value out on the table, but you and I both know that OEMs face a common challenge already: The growing influence of tech companies spurring the shift from manufacturing to mobility. To respond, automotive leaders must come together—perhaps with competitors—to carve out a path forward.
STEP 2. DEFINE WHO YOU'RE WORKING WITH.
Start by assembling a minimum viable ecosystem around your business case. This is the smallest set of partners you need to start building something new. As you further define your value pools, you'll add more. For now, focus on recruiting founding partners with the following traits:
- Leadership buy-in to the project vision
- Market influence to drive transformation and adoption
- A demonstrated interest in innovation and industry transformation
- Willingness to invest time, resources and knowledge to drive innovation
STEP 3. DEFINE HOW YOU'LL WORK TOGETHER.
Naturally, you might have concerns about collaborating with competitors or other types of partners you wouldn’t ordinarily work with. A clear governance model for operating and maintaining the ecosystem will be fundamental to establishing trust and productivity. You’ll want to create an organizing structure that outlines authority and provides guidance over priorities, strategic decision-making and risk oversight. This is where the “team sport” metaphor comes in again: All players agree to play under certain rules.
Think about:
- Decision-making – Does one party have more influence due to market power? What will change management and onboarding look like?
- Data standards – The "what" and "how" of data sharing, standards are necessary for adoption, cost reduction and applying business logic to data. The Mobility Open Blockchain Initiative (MOBI) for instance, has already established a Vehicle Identity Standard (VID) that will be critical in leveraging digital twin and thread data.
- Stakeholders – It’s important for each participant to bring in the right stakeholders, including legal. Even competitors who don’t trust each other initially can at least trust the rules, procedures and enforcement you put in place.
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Example: MOBI
Accenture is a member of MOBI, which is a large consortium working to make transportation greener, more efficient and more affordable using blockchain and related technologies.
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Start small: Define value in terms of quick wins
In collaboration with your ecosystem, think about what you could do with digital thread data and multiparty system coinnovation. If you and your partners and customers could share a single line of sight into real-time vehicle data, what processes could you transform? What services could you create? Brian's latest post on automotive use cases is a great place to start. Identify problems you can solve quickly that map to the vision for the group, and prioritize those use cases.
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Picturing the Value of Blockchain
Use this framework to identify the value of blockchain for your industry and build a corresponding business case.
Learn moreNext, determine value pools, commitments and incentives for each partner, onboarding new parties as needed to execute. Perhaps your original ecosystem of OEMs and dealers now includes regulators and resellers. Helpful tools at this stage include:
- A value pool analysis
- A vision statement
- A consortium charter
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Example: Certified maintenance history
Use case: With a vehicle identity platform enabled by a multiparty system digital twin, we could create a certified maintenance ledger, allowing all parties to see trusted information about vehicle condition, history, parts, etc. in real-time.
Value: By instilling transparency and trust into the resale process, a trusted maintenance ledger could yield enormous value. Our estimates indiciate that using it in even a third of used car sales could increase resale prices by 5 to 7%, redistributing $20 billion throughout the US economy each year.
Value distribution: Let’s say prices increase 5%. Out of that new value, the OEM takes 1%, the dealer takes 1% and the reseller takes 3%, which they can then use to buy new cars.
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Scale smart: Reuse your solution to move horizontally into new services
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As network effects scale, more partners mean more possibilities.
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Once you’ve dipped your toe in the water, think about how you can expand on what you’ve created. In-vehicle transactions? Over-the-air updates? With proof of value, governance and standards behind you, it’s now even easier to bring new partners on board. Enter your third wave of stakeholders: Municipal systems, software companies, insurers and more. As network effects scale, more partners mean more possibilities.
From here, your well-managed consortium will grow its network, scaling services to bigger markets and creating news ones in accordance with your governance model. Consider MOBI, which recently welcomed a host of non-OEM members like Amazon Web Services (AWS), Hitachi and USAA into the fold.
To scale further, you’ll also have to evolve your business model. As possibilities increase, so do monetization opportunities for everyone in the ecosystem. How will you continue to fund and harvest value from the solution you created? What returns can you anticipate and how will you measure them? These and other decisions, such as defining your commercial model, will need ecosystem alignment.
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Example: From certified maintenance ledger to titling, insurance and more
The vehicle identity platform from our last example can also streamline digital titling, leading to dynamic insurance models and other monetization opportunities. Imagine if OEMs could receive annual tax breaks when their vehicles continue to meet emissions standards, year after year, owner after owner?
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Speeding to value
Going forward, automotive ecosystems will define the era of mobility, but you can’t go from 0 to 60 overnight. Take the time to develop your ecosystem the right way, by thinking big, starting small and scaling smart—then, accelerate into this new era of profitability.
Read more of this series:
Part 1: The keys to driving epic change in the auto industry
Part 2: OEMs: 5 reasons why you need to look again at digital twin
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