Are You Ready for the Connected Car?

Taking and then sharing photos used to be a process that could easily take a few weeks, if not months. The 36-exposure film had to be filled up exclusively with “shots that mattered,” and the resulting film roll would take another few days to develop. Once you had the printed shots, there would need to be some form of physical logistics involved in order to share them. Looking back, it seems quite a cumbersome process – but it was an everyday reality only ten years ago – and it was a reality that represented the bottom line of many different companies.

Irrational Disappointment, Changing Expectations

Since then, things have changed at an ever-increasing pace. I was recently surprised by how disappointed I was that I couldn’t “simply” share some shots I had taken with my digital camera via my smartphone. I was disappointed despite rationally being aware that when I bought my digital camera back in 2008, the miniaturization and affordability of WiFi modules hadn’t reached the point of being economically viable components of the device. I didn’t seem to care.

I am, however, not alone in experiencing these seemingly irrational disappointments. Customer expectations towards technological innovation sometimes seem to be moving at a faster pace than the development of the technologies themselves. Perhaps more worryingly, a sense of “entitlement” seems to arise. On a recent flight, an announcement was made that the on-board WiFi service would temporarily be suspended. The person behind me immediately started cursing and loudly exclaimed he’d never fly that airline ever again.

Have we all gone mad?

New Opportunities, Old Boundaries

Looking back at the 100+ year history of cars, the arguable lack of genuine innovation is staggering. We’re essentially still using the same types of engines, drive trains and body-type ideas. What’s more, many of the most successful car brands’ organizations seem to mainly be built on the premise of repeating, and perhaps optimizing this same trick. There are many compelling reasons why this is the case, and has always been the case. Nevertheless, consumers are getting conditioned to expect increasingly shorter product life cycles. Software developers are often forced to create at least one major software update per year. Compare this to a car – the average life cycle is around seven years.

As car innovations are increasingly based on improvements related to their software rather than their hardware, inherently new challenges arise: both organizationally and operationally.

Signs of Change: the Connected Car Today

Even though the car industry might seem to be evolving relatively slowly, multiple in-car functions such as navigation, warning systems and event data recorders are driving the digitalization inside cars. Because of this, cars themselves create more data than ever before.

In some cars, drivers get real-time spoken suggestions about what gear is recommended for the next corner. Data isn’t just going one-way into a car, either: real-time location data can be smartly combined to suggest smarter, less traffic-prone routes while driving, combining the ability to both predict and monitor actual traffic flow situations. The technology behind these features is complex, but the experience for the driver is seamless. This is an important point: however hot-off-the- press some of the actual innovations involved might be, drivers expect a flawless and intuitive experience. They’ve become conditioned to expect nothing less.

Apart from enhancing a driver’s experience, collected data can be useful in a dizzying array of other ways, too. Insurance companies are starting to consider offering lower premiums in return for getting real- time information about their customers’ driving behavior. This can even lead to having variable premiums per month, based on how a car was driven. With all these new ways of using data, new opportunities for revenue generation are created, while others are challenged.

China: Connected, Mobile and Innovating

As the Chinese car market matures, new car sales will start playing an increasingly smaller role in overall revenues. In-car connectivity is poised to become a new field to find new ways to generate income. More and more, China is becoming a hub for innovation rather than just the manufacturing hub it has sometimes been described as. The only statistic that seems to trump the bewildering growth in Internet usage over the last ten years seems to be that of mobile usage – and, perhaps more importantly, mobile Internet adoption.

Specifically in these fields, innovation is extremely fertile in China. As an example, the ability of WeChat to, in a very short period of time, go from being “just another messenger” to being the go-to app for mobile payments, group communications and the overall social network of choice for both consumers as well as brands reflects this potency rather clearly. Compare this to the ostensible lack of innovative new features in Europe’s favorite messenger: WhatsApp. The disparity is rather telling. It also hints at the particularities of the Internet and mobile landscape in China: the typical large players in the rest of the world might not be relevant nor government-sanctioned in China. A good example of this is mapping – there are only a couple of mapping data providers that can be legally employed in China. This means that however strong a brand’s global technology alignments and partnerships are, a local approach needs to exist.

Strong Appetite for Technology

Fortuitously, many research insights suggest that the Chinese appetite for new technology is larger than it is, for example, in Europe. Moreover, personalization is big in China, and is becoming increasingly important across industries, and across market segments. One of my colleagues recently summed it up quite nicely: “In Europe, it’s said that people buy cars with money they don’t have to impress people they don’t like. In China, it seems people buy cars with money that they do have to both truly express themselves and impress their peers.”

In-car connectivity offers a host of opportunities to play into this demand for personalization and expression, especially in the areas where people’s digital and physical lives converge. The additional market characteristic of cars being seen as a status symbol helps to amplify this opportunity greatly too. Even though the car industry seems to be darting towards fundamental change, there is still plenty of room in the short- and medium term for traditional players to offer innovations that can meet the needs of the market place. Overall, the following five key success factors can be identified.

1. Organizational Readiness

First off, a clear mandate is needed top-down to clearly define in-car connectivity as a priority topic, in spite of any current market success. This decree is necessary to be able to sustain a meaningful task force that can quickly connect and activate the many different departments that will need to start working together as an agile team. Moreover, some departments might need to be “supported” outside of their traditional comfort zone: an experience last year demonstrated that an engineering department had come up with twenty eight “innovative functions” for in-car connectivity, yet no one had thought of how an actual driver would want to use them – let alone how to communicate nor categorize the functions intuitively. Innovations for engineers aren’t necessarily innovations for consumers.

2. Brand Values: Amplification or Transformation?

As with all brand communication, efforts either tend to amplify or transform brands, or their values – in some cases, it can achieve both. Overall, cars are becoming more generic, and clear emotional differentiation is needed to court new customers. A great example of brand value specific amplification is MINI’s Driver Excitement Package, where in-car data is smartly packaged to add excitement to the driving experience by visually celebrating torque and output values – thereby helping to prove MINI to be the exciting brand it claims to be. Ford has taken in-car connectivity very seriously indeed, and its well-publicized partnership with a big player in Silicon Valley has helped to dust off its aging brand perception.

3. Innovation vs Innovative Communication

Innovative communication can in some cases be more effective in giving an “innovative” halo onto a brand than the actual innovations themselves. As the car industry is relatively traditional in its approach to communication, cross-industry scouting for best practices is essential for clear differentiation. BMW i recently proved this in their industry- defyingly poetic odes to their new flagship product, the BMW i8. Gus van Sant, primarily known as successful film director, was employed to create an out-of-the-box set of three television commercials that looked and felt more like micro-movies, with strong monologues and a surprising cast. The ads were arguably able to convey the sense of newness much more than any bland carbon-vs-steel comparison ever could have done. Moreover, setting the right topics in the right places is important – and the ability to set the relevant topics is essential in being able to remain “a brand that matters.” Tesla’s recent revelation that it would open up its tech patents supported its image as a real “game changer brand.”

4. Respectful Technology Seamlessly Integrated

Communication alone cannot suffice, of course. The implementation of technology should be guaranteed to be seamless, and, in some cases, classless. QOROS has been able to catch two birds with one stone in this regard. In a segment where brands are perceived to be even more generic than elsewhere, their QorosCloud implementation, which bundles all main modern connectivity functionalities into a touch- screen interface, is both differentiating and democratizing. As cars are entering the realm of their customers’ personal digital life, brands have to behave more considerately: a clearly welcoming yet respectful code of conduct is required.

5. Staying connected in China

In the constant struggle to maintain global brand values in local markets, China sets forth its own unique challenges. With global digital partnerships either unavailable or irrelevant for the market, tools need to be adapted or even exchanged to remain functional. Although these hurdles complicate the planning and execution of local strategies, they also offer an incomparable opportunity to substantiate the “China- focus” of a brand and its perceived appreciation for and of the market. Volkswagen clearly demonstrated this with their People’s Car Project: for the first time ever, the Chinese people were asked “what kind of car do you want?” – leading not only to a host of valuable and diverse insights, but also to digital dominance and increased brand likeability.

The car as a connected gadget is a uniquely powerful instrument to help transform brands and perhaps even to future-proof them along the way, especially here in China.