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PREPARING CEOS FOR THE FUTURE

PREPARING CEOS FOR THE FUTURE

In today’s world of constant disruption and innovation, management leaders of the automobile sector need to stay on top of innovation. They should strive to grow revenues and differentiate themselves with new product and service model launches given the growing challenges from start-ups, new entrants, legislation and shift in consumer taste from ‘buying to subscribing’ of vehicles just as they do with their mobile phones. This is the advice that distinguished management consultant, futurist and prolific writer Sarwant Singh has to offer to C-Suiters as they attempt to navigate the mobility scene in order to remain relevant. Singh, senior Partner of Frost& Sullivan–the 55-year old consulting firm that has been guiding global companies to face cycles of disruption, innovation and transformation– is widely known as the author of celebrated groundbreaking book New Mega Trends, which was sold in 30 countries since its launch six years ago and recently got translated into Chinese for local market release.

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As Executive board member and of global Practice Head of Automotive, Transportation, Aerospace, Defence and Security Business Practice of Frost & Sullivan, the consulting firm with global footprint, Sarwant Singh’s views are closely watched by the corporate world. As the author of the book New Mega Trends and the developer of the popular ‘Macro to Micro’ methodology for developing white space opportunities to leverage mega trends, he has been a guide and mentor to CXOs of global firms.

In an interview to Tyre Asia he said that despite globalisation and toughening competition, some companies still face the probability of experiencing a ‘Kodak Moment’ slumping into oblivion as they fall victims of disruption and losing out in their own game.

However, some companies are actively working on strategies to overcome the challenges of disruption by creating dynamic strategies to take on the challenges. It is here that over the past five decades Frost& Sullivan has been guiding its growing number of clients to move towards transformational growth strategies. Singh and his team have been helping CEOs to focus on innovation opportunities driven by disruptive technologies, mega trends, emerging markets and new business models.

When asked what he expects will be the major disruptive changes in the automotive and tyre industry in the coming decade that will transform on mobility, Singh came up with four major changes. They are: First, Digital transformation of the automotive Industry that will cut across five pillars of connected supply chain, Industry 4.0, connected and autonomous products, digital retailing/customer UX and product as a service business models.

It is forecast that new car sales would cross 100million. As developing economies like India, Indonesia, Mexico, Brazil and Russia grow, the global car sales are expected to top 100mn sales in 2019/2020.

“We will have all OEMs hiring Chief Digital Officers and building capabilities in data monetisation, focussing on customer UX and building Internet of Things (IoT) platforms inside the vehicle.”

The second major change will be autonomous vehicles. “This year Audi launched the first level 3 Autonomous features in cars. “We will see level 3 and 4 Autonomous vehicles enter the car in the next few years. The role of the car in future will be that of a pilot and co-pilot therefore at times driving you and at times supporting your driving experience.”

The third trend will be electrification. “We expect over 200 models of electric cars being launched in the next 5 to 7 years. Share of electric and hybrids cars will cross 15% of all new cars sold by 2025,” he says.

Singh, who is also Executive Board Member of Frost & Sullivan, forecasts that new car sales would cross 100million. “As developing economies like India, Indonesia, Mexico, Brazil and Russia grow, the global car sales are expected to top 100mn sales in 2019/2020.”

He suggests autonomous and electrification will require next generation tyres to have lower rolling resistance and be lighter in weight.

However, he does not think that the ‘Kodak moment’ will happen to present auto giants Ford, GM and other volume OEMs. They would not become legacy companies with the advent of ‘upstarts’ like Leon Musk and other adventurers of his class, Singh feels.

“Companies like Ford and GM are responding very well to the challenge from Leon Musk and the Silicon Valley. Ford has one of the best mobility strategies in place and is moving from selling cars to providing mobility solutions. Similarly, GM has what I would term as one of the best strategies in connected cars with its On Star subsidiary,” he says.

Impact of disruption

With regard to the impact of disruption on the automotive and tyre supply chains that would transform OEM business in the coming decade with outsourcing becoming a major driver of in the future like in the IT sector, Singh feels that there will be some level of outsourcing in fields where car companies don’t view them as core to their business and are not necessarily best placed to re-invent the wheel.

“For example, OEMs will leverage the capabilities of IT and Silicon Valley companies in fields like cyber security, developing digital voice assistants (e.g. Alexa), etc. However, in newer fields like electric vehicles, electric motors and batteries, OEMs will develop the technology in-house. They might source electric battery cells but most likely most of the OEMs will bring assembly of the pack and motor technology in-house.”

The manufacturing technologies would also undergo changes. However, Industry 4.0 in the automotive and tyre sectors has not happened right now. “It is still in nascent stages. There is no OEM factory that one could term as is completely Industry 4.0 ready. However, numbers of pilots and sub sections of an assembly plant are being tested for IoT.”

With regard to the impact of disruption on the automotive and tyre supply chains that would transform OEM business in the coming decade with outsourcing becoming a major driver of in the future like in the IT sector, it is felt that there will be some level of outsourcing in fields where car companies don’t view them as core to their business and are not necessarily best placed to re-invent the wheel

Referring to the issue of how the world would tackle the high demand for non-polluting energy sources to drive the future growth of mobility, Singh feels that it is indeed a huge challenge for the car industry.

”It is not just the pollution. Cars also cause congestion and accidents. The Industry is tackling all these three evils of mobility. We expect electric and hybrid vehicle technology along with 48v hybrid solutions to be the focus in near future for OEMs to tackle pollution.”

These are the disruption and innovation trends that CEOs should be prepared to face. Outright vehicle buying to monthly subscribing is the trend that management leaders should catch, says Singh who is also Frost & Sullivan’s head of the Visionary Innovation Group, a think-tank that works on Future and Mega Trends. He founded the team in 2009 which works across all of the 12 Industry sectors in identifying White space growth opportunities.

(Published on February-March 2018 issue of Tyre Asia)

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