CTO'S FRAMEWORK FOR SCOUTING FOR DISRUPTIVE TECHNOLOGIES
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| SPECTRUM - CTO's Framework for Scouting for Disruptive Technologies |
While the CTO for ordinary times keeps track of the technology trends, the CTO for extraordinary times tracks many other drivers of changes and synthesizes a holistic vision of the future. The key drivers for transformation include social, political, economic, competition, regulation, universal, market over and above technologies. The SPECTRUM radar helps the CTO look at the drivers of transformation in a holistic way and take a proactive approach in responding to megatrends. In the case of the CTO of an Indian Automotive OEM the key drivers of transformation are:
Social – sustainability,
shared mobility, demographic divide etc – Hyper-connected
millennials (Gen Y) have very different needs as compared to their their Gen X
parents. Automotive OEMs need to design
their product in a way that appeals to younger people. Smaller, digitally
enabled, connected cars for urban commute allow younger people to stay
connected as they drive and meet their infotainment needs. Among the three main
benefits of connected cars — improved safety, enhanced driving experience and
infotainment — infotainment appeals most to the youth [6]. With this input, the
CTO starts tracking developments in connected vehicle technologies.
Political -
shift of focus from oil to critical metals – for example, lithium and cobalt
are key components of the battery of an EV – literally all the Cobalt comes
from Congo – the stability of the government in Congo and the political
relationship of a country with Congo becomes very important for ensuring a
steady supply of Cobalt for the growing EV industry [7]. With this input, the
CTO starts tracking the dynamics influencing the price of lithium and cobalt,
R&D in alternative battery materials etc.
Economic – the economical
drivers include the initial cost and total cost of EV as compared to ICE
vehicles, the volatility in the price of fossil fuel etc – for example,
according to a recent study published in the Journal of Applied Energy, for a
period of over four years, the TCO of an electric car is lower than that of
gas-powered vehicles in Texas, California and the UK [8]. With this input, the
CTO starts tracking the usage pattern across different customer segments, the
GDP growth, the various factors that influence TCO etc.
Competition – if
we consider the autonomous vehicles (AV) space, while new players Tesla, Google
and Uber score high on technology, the traditional automotive OEMs like GM and
Ford are leveraging their go-to-market strategy,
production prowess, staying power, and sales, marketing, and distribution to
stay in competition. Ford has made big investments into an artificial
intelligence outfit. It acquired
ride-sharing service Chariot and invested in
Velodyne, a company producing lidar, the laser scanning technology for self-driving cars. GM picked up self-driving
expertise via a startup called
Cruise, and partnered with Lyft [9]. With this
input, the CTO of an automotive OEM starts tracking players outside the
automotive domain, cab aggregators, LIDAR companies etc, He also starts closely
monitoring the mergers and alliances between auto OEMs and new technology
providers.
Technology – Electric,
Autonomous, Connected – the convergence of these three technologies is expected
to change the landscape of the automotive industry – this combination of
technologies has great potential for enabling sustainable mobility for the
future [10]. These three technologies are exponentially growing in their
performance and the cost is steadily decreasing – their evolution is further
accelerated by parallel developments in digital manufacturing – additive
manufacturing, robotic manufacturing, modular approach to design etc. When such
technologies converge, they have the power to disrupt the entire industry. When
Local Motors introduced Olli (the mini bus), to the automotive market, it was
an industry first in many sense – most of Olli was 3D-printed, it is an EV and
AV, the vehicle could drive itself through dense urban traffic, Olli carried a
few sensors and the sensors output were analyzed by IBM Watson (on the cloud)
and instruction were given to Olli to successfully navigate through the roads.
Here is a convergence of electric, autonomous, additive manufacturing, cloud
technology, AI and cognitive technologies [https://localmotors.com/meet-olli/].
Based on this input, the CTO stops looking at disruptive technologies in
isolation but starts visualizing future scenarios arising from the convergence
of multiple disruptive technologies.
Regulatory – When the Indian Government decided to implement
BS VI by 2020 [11 a], the entire automotive industry focuses their effort on
leapfrogging technologies and innovations that can accelerate the journey. When
the automotive OEMs are focused on meeting the emission norms, they also have
to drive innovations to improve fuel efficiency and keep their customers happy.
The NITI Aayog.report [11 b] says that “India can save 64% of energy spent on
transportation and 37% of carbon emissions in 2030 by pursuing a shared,
electric, and connected mobility future”. With this input, the CTO starts
aligning his company’s technology roadmap with his Government’s mobility
roadmap, explores opportunity to work with government labs, form industry –
government consortia to accelerate the development of the disruptive
technologies.
Universal – The universal resources like minerals,
water, fossil fuel etc have a strong influence – especially the availability of
Lithium, Cobalt, Rare Earths, Water have a big role to play in the evolution of
EV industry [12] – lithium and cobalt are key constituents of the battery of
the EV – both these metals are concentrated in certain geographies (Cobalt in
Congo and lithium in Argentina, Bolivia and Chile) – the rate of scale up of EV
manufacturing will be limited availability of these materials. The motors of the
EV need strong magnets made of rare earth element (Neodymium, Praesodymium) –
China dominates the global supply of rare earths and the price has increased
multifold with the rising demand for motors from EV and wind turbine industry. Based
on this input, the CTO starts tracking the availability of scarce material
resources that could become critical bottlenecks for the growth of his company,
starts assessing materials recycling technologies, initiates R&D on
alternative materials for batteries and motors etc.
Market – Global automotive executive survey by
KPMG in 2017 [13 a] indicates battery powered electric vehicles as #1 trend,
followed by connectivity and digitalization. In emerging economies like India
fuel efficiency (FE), total cost of operation (TCO) and ease of use continue to
top the market demand from new vehicles. EVs score very high, on the fuel
efficiency dimension, as compared to ICE vehicles. Lower TCO encourages cab
aggregators like Ola and Uber to induct EVs into their fleet. Ease of use of
EVs will depend on the range, density of charging stations network, time for
charging etc. Based on this input, the CTO starts looking at eMobility as a
system level solution rather than EV as a product in isolation – he realizes
that it is not enough if he delivers a world class EV product, he has also to
ensure that the ecosystem is ready so that his customers can realize the value.
He can assure ease of use of his product only by co-creating the charging
infrastructure for EVs. He will also start tracking technology developments in
fast charging, wireless charging etc. Rising EV penetration is expected to have
an impact on low-voltage distribution grids in residential or commercial areas.
Hence the CTO has to track technology developments in power generation, storage
and distribution. The EV will be truly green only when the electricity used for
charging is derived from renewable sources like solar. The CTO has look across the
industry as the EV brings three industries together – automotive, renewable
energy and power distribution [13 b].
The CTO has to
study all the eight drivers and synthesize his insights from all these eight
directions to create a holistic view of disruptive technologies. He will be
very responsive to disruptive changes when he continuously keeps scanning
across all these eight directions.
References
[6] Millennials
are rewriting the rules on car usage, Business Line, https://www.thehindubusinessline.com/specials/auto-focus/millennials-are-rewriting-the-rules-on-car-usage/article9752385.ece
[7] Cobalt: The Achilles Heel for Electric Car Makers, Forbes, https://www.forbes.com/sites/timtreadgold/2018/03/07/an-electric-car-boom-excite-australias-mining-tycoons-but-there-may-be-a-cobalt-problem/#8d884183b426
[8] Total
cost of ownership and market share for hybrid and electric vehicles in the UK,
US and Japan, Kate Palmer
et al, Applied Energy, Volume 209, 1 January 2018, Pages 108-119
[9]
Detroit
stomping silicon valley self-driving car race, Wired, https://www.wired.com/2017/04/detroit-stomping-silicon-valley-self-driving-car-race/
[10] The future of
mobility in India, McKinsey and Company, 2017 https://www.mckinsey.com/~/media/mckinsey/industries/automotive%20and%20assembly/our%20insights/the%20future%20of%20mobility%20in%20india/the-future-of-mobility-in-india.ashx
[11] (a) India
Bharat Stage VI Emission Norms
(b) India leaps
ahead – transformative mobility solutions for all, NITI Aayog, May 2017, http://niti.gov.in/writereaddata/files/document_publication/RMI_India_Report_web.pdf
[13] (a) Global
Automotive Executive Survey, KPMG 2017,
(b) Global EV
Outlook 2017
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