A Network Orchestration Framework for the Automotive Industry
Digital Business Strategy & Innovation
Wolf Ingomar Faecks
Maria Francesca Staehle
Reconfiguring the Stage Framework for Experience-Driven Automakers
A car no longer stands for what it used to. Rising to prominence as a label of personality and ownership, the automobile now finds itself to be an access point among many others — a means to an end. That end is a connected, obstacle-free journey from point A to point B. And as consumers alter their perceptions around ownership and the desire for personalized experiences, the traditional auto value chain is being disrupted by a combination of networked technologies, unbundling and disintermediation.
Original equipment manufacturers (OEMs) are, in turn, facing the need to reimagine their product-based propositions and have turned to service-driven frameworks to do so. What they must realize is that approaching service design through the lens of product management has already proven fraught for several automakers. Rather, it will be the OEMs that forgo asset building for network orchestration (i.e., building a customer-centric environment made up of various products and services) that continue to deliver value and sustainable growth.
So, how can OEMs make such a transition quickly and effectively?
For many years, service design has been looked at through the lens of a stage framework, one where the front stage comprises of direct consumer experiences and the back stage consists of the invisible processes and elements that shape a product or service. While this has traditionally worked across many sectors, a new layer must be added in order for OEMs to effectively bridge the two stages: a layer of data and platform. Only by doing so will automakers be able to design a service first and then position products along the consumer journey for seamless access and usage.
With mobility becoming the consumer focus, requirements are changing: customers will want to alternate between solutions fitted for specific purposes and customize their mobility experience accordingly.
Exploring the current front and back stages
The overall customer experience (the front stage) represents the visible and interactive part of a service. Here is where the rapid change in consumer expectations is occurring. OEMs need to bear in mind that the new consumer is choosing a personal mobility solution rather than a car. This means that — in order to service future desires — leaders must not only acknowledge the effects of imminent technological advancements, but they must also map more than one possible mobility use case for each customer.
To do so, experience and journey maps have proven quite useful. They are seemingly simple, but extremely effective in identifying the potential impact that well-designed services can have on reaching the right consumers, at the right time, with the right delivery. They also streamline the various components of a service, allowing it to remain agile and continuously improve. In fact, we strongly suggest using customer journey maps in the boardroom to introduce the customer perspective in the planning stages of any and all customer-related activities — a step too often forgotten.
It is this robust journey exploration phase that enables OEMs to design holistic solutions that truly differentiate their offerings, entice engagement and loyalty, satisfy consumers’ fickle wants and alleviate unnecessary frustrations. The automobile suddenly becomes the synapse — the connector — between the consumer at the front stage and the repertoire of services and products in the back stage.
Now, the back stage is where the magic happens. While consumers relish frictionless experiences and services they didn’t know they wanted (thank you, consumer insights and digital experience platforms), OEMs will now be busy coordinating all the back stage processes necessary for those touchpoints to be delivered on time and to the right people, partners and channels.
And they can use service blueprints to do so. The service blueprint is what ensures that the right back stage processes are in place for fulfilling consumer needs during each key moment along their journeys. The biggest implication here, however, is the necessary collaboration both within and outside of the OEM’s organization.
On the one hand, OEMs have to take a close look at the partners that make up their surrounding networks. In essence, experience-driven OEMs will take the lead in orchestrating a network of products and services across consumer behavior and delivery. By playing this role, they will not only take control of the value chain and direct customer access, but they will also profit from the network effects of their large customer base, grow rapidly and even define market rules.
On the other hand, OEMs are presented with a change management challenge that asks them to deeply analyze their organizational DNAs and structures, rather than simply extend their marketing or IT practices. The shift from asset provider to network orchestrator is one that requires novel value creation grounded in an internal agility spread out across talent, teams, responsibilities and governance. And OEMs must understand the tradeoffs required. The transition from product-centricity to service-centricity is one that nixes functional silos in favor of collaboration between marketing, product development, technology and IT, research and development and sales and service.
Introducing the data and platform layer
With so much discussion around implementing digital to better both customer experiences and the organizational structures supplying them, OEMs cannot forget the intermittent layer that makes these mobility services — and their subsequent evolution — possible. This is the data and platform layer, one that is nimble and scalable enough to support everything from partner data integration to experience personalization on the consumer front.
We definitely do not see this layer being activated very well today. The automotive industry is one that has traditionally been secretive, proprietary and individualized both in branding and technology. But what the automotive industry needs to realize is that these unique offerings are not going away. On the contrary, we can safely assume that each player can do their jobs better than the OEM could; however, it is the connection of these partial solutions into an overarching system that is missing. The industry is in dire need of a flexible, service-oriented architecture that proposes a standardized approach to interfaces, protocols and the orchestrating logic behind them.
Hence the big opportunity for OEMs to stop focusing solely on manufacturing and get into the data business. There is a desperate call both on the consumer and producer side for a streamlined experience, and OEMs can be the ones to build the infrastructure necessary to achieve it. All they have to do is reimagine how they approach their own culture, partners and competitors.
Easy, right? Not so much.
A shift such as this one implies a fresh look at the market landscape. All of a sudden, megadigital Googles and Apples become competitors — as well as potential partners. Not to mention the breadth of startups that pose the same duplicity. Whichever partners are introduced into the network must accept the same open-mindedness when it comes to their data and understand the long-term value of doing so. They must wrap their own strategies around the return and potential of changing the inherent way in which they work. Only then will we be able to create a truly seamless mobility solution — the kind that not only knows when you’re stranded, but proceeds to offer you an alternative based on your driving preferences, the weather, your desired destination and a slew of other factors.
Now, this is where it gets interesting. Let’s say that you connect the partner systems in a fully-optimized platform… How do you then identify each customer, product and service across a variety of systems?
Nothing can be done effectively if the data management across the systems isn’t streamlined by customer master data. Each customer requires a unique identification that allows you track them across the big data — and the big platform. There are many modes of tracking and utilizing real-time sensor data across the automotive industry already. It’s what allows us to have the contextual and personal interactions that we already experience today. But if you don’t have a unique customer ID across the partner network to map your big data to, then the value of that data drops significantly. You won’t know that the new customer walking through your dealer’s door is the same one that just built a customized finance plan on the dealer’s website. And you won’t be able to identify the car rental preferences of your customer when they get stranded on the road, no matter how well your own product can identify a malfunction. More so, people (we’re looking at you, Millennials) are even beginning to expect that if they rent a car, then the seat, temperature and music will automatically adjust to the settings that they’ve already identified on other platforms — or in other vehicles.
To this day, we’ve seen automakers focus heavily on the data models for their cars, but not so much on those that identify their consumers. When we multiply this gap by the amount of partners in a network, and add the duplications and discrepancies of each partner’s existing data, we end up with the current need for customer data to be collected and shared across an integrated platform. By initiating the first step and ensuring that master data (mostly static data such as credentials, preferences, opt-ins, products, services and interaction history) is consistent and accessible by all systems, OEMs will take customer relationship management to the next level.
And the mobility services of the future simply cannot exist without this foundation.
Understanding the internal and external implications
The nature of a platform is that it combines distinct points into an overall view. In the case of the automotive industry, these distinct points include everything from weather and product/service review providers to public transportation and music streaming services. We can also safely assume that future open APIs and consumer or start-up co-creation should be considered and supported, as well.
And gathering the data is one thing, but distributing it back into the partner network is another. It must be made accessible in a manner that is safe and secure. Given the tech tools and data management models that we have today, this is certainly doable. It’s the willingness of the players that will prove to be tricky; while the breadth of companies may be widespread, their mindsets are even more so.
This might, in fact, be the biggest challenge for an OEM looking to become a network orchestrator: getting various network players to alter their own internal cultures. Those organizations that choose to participate have a lot to gain, but it does require them trusting the other participants (sometimes even competitors) with the one thing that they’ve always kept hidden: customer data.
The rewards, however, outweigh the struggles. We can clearly see that consumer expectations and behaviors are driving us towards a united experience. This does not necessitate a monolithic solution (as some players wrongly assume), but it does ask that each and every partner forgo a bit of control for the sake of the collective. And it asks that time and funds be spent on the clean-up, organization and distribution of data across a network much wider than what automotive players are used to.
With this in mind, OEMs can stand as beacons of the future and push this transformation along. It is their best chance of sustaining control, market share, profits and brand loyalty. Not to mention the gains to be had when such an innovative leadership position is taken among peers both within and outside of the OEM’s own industry —the potential for growth is unmistakeable.