11 April, 2023 Webmaster

Thriving in the Disruption in Automotive – Speed, Data and Ecosystems

Why is Digital Transformation causing a disruption in the Automotive Industry? At VECS 2023 we are very proud to present Dr. Jan Bosch and his Keynote Thriving in the Disruption in Automotive: Speed, Data and Ecosystems. Dr. Bosch is Professor at Chalmers University of Technology in Gothenburg and his research activities include Digitalization, evidence-based development, Business Ecosystems, Artificial Intelligence and Machine/Deep learning, software architecture, software product families and software variability management. He is a fellow member of the International Software Product Management Association (ISPMA) and a member of the Royal Swedish Academy of Engineering Science. We had a chat with Jan before the Event and he shared his thoughts on Digital Transformation, the Automotive Ecosystem and data-driven decision making. Besides that, he also gave us his view on how AI can help developing the Automotive Industry. 

 

What will you speak about at VECS 2023?

I am going to talk about the Digital Transformation disruption that is happening in the Automotive Industry, and I will then separate that into three different aspects. One is speed. We need to find speed at multiple levels, especially so we can continuously deliver new values even after the vehicle has left the factory. I believe that features like DevOps and continuous updates of software are very, very important. Companies that do not implement this will be viewed as old fashioned and boring because customers like the idea that the car is getting better every day.

The second aspect is data. A lot of opinion-based decision making is still taking place within a lot of the Companies I work with. They basically make decisions based on how things were in the past, what opinions of certain key leaders are and so on. I believe that we need to become much better at data-driven decision making. The good news is that once you have a feedback loop and get your data back on a continuous basis, you are redeploying software on a frequent basis, that is actually much more feasible to move towards a data-driven decision model. We can see that AB testing and similar features are about to enter the Automotive Industry. Some of the Automotive Companies I work with are already doing AB testing but only on a smaller scale and in Employee vehicles, for example.

The third part I will talk about is Ecosystems. The Automotive Business Ecosystem has been built on the concept that the OEMs are on top and the Tier 1 suppliers below. I believe that there is a significant need to reinvent, and rethink, on how that Ecosystem is structured, because what we now see is that a lot of OEMs are demanding very bespoke solutions from suppliers. What I recommend is that companies start to think much more about what is the commodity functionality in my product? What is differentiating? Then in the commodity part, companies could basically adopt standardised architectures and advise standardised solutions from the suppliers that are at a much lower cost – for the differentiation they could do it exactly as it is specified. Many in the Ivy list of the Automotive Ecosystem must reinvent themselves around what is differentiating and then do customization. When it is commodity, go for standards. Then you have the role of Artificial Intelligence in the Ecosystem. That plays a huge role in Autonomous Drive but also in the personalized experience of the vehicle.

Why is the Digital Transformation causing a disruption in Automotive?

There are two things that I think are interesting. The less revolutionary one is the increasing expectations from users that the car gets better on a continuous basis. The danger I can see is that the Automotive Companies that do not realize that customer preference is switching, are going to go the way of the dinosaurs.

Then there is the big revolution. Most of us are living in larger cities and owing a car is just a major headache. It is expensive, it is impossible to park and so on. Once we get to fully Autonomous Vehicles, although it is still a while out, why would anyone want to own a car? Even though I live in a house with my own parking lot I hate owning a car! I have to change tires in the winter, I have to wash it, put int into service and it costs me a lot of money. Once we get to a point in mobility that pressing a button on a phone is price competitive to owning a car, then I can see that we are moving towards a very different ecosystem. The OEMs will not be the top dogs of the industry but instead the people that own the cars that can offer mobility as a solution service. I believe that many people in the Automotive Industry are not ready for that transformation or are reflecting about what it will actually mean.

How can we increase business agility and speed?

By using, in many ways, the same principals as online companies apply. Adopt agile, adopt continuous integration and test. There is only one big difference between vehicles and Google or Facebook.
The difference is that a lot of the functionality we put into vehicles has safety implications. We need to develop new mechanisms to do continuous safety certification for any functionality that has safety implications. So, in every agile sprint we should not only build new functionalities but also update the risk, or the safety case, before the vehicle and collect all the evidence related to the new functionality. Then we have an evidenced safety case and new functionality at the end of the sprint.

For me, that is one of the key things that the Automotive Companies are currently struggling with, because that is quite a deviation from how we have worked with safety in the past. In the past you would do a big onetime thing, when the vehicle was more or less ready, and then you did not want to touch anything because then you had to redo all of that. Now we do more of a continuous way of safety certification as part of the process and it also fits in within ISO 26262 in my experience. It is just a different, basic mindset on how you work with safety certification.

Why is it so important that decision making needs to be data driven and based on experimentation?

Our research shows that in typical IT-systems between half and two thirds of the features are never used or used so seldomly that they should not have been built in first place. Why are they built then? Because there was a Product Manager who believed that this feature was the best thing since sliced bread. The problem was that the assumption of the Product Manager was wrong. The only way you can actually get away with that and change it is by finding out what is the smallest, cheapest, fastest experiment that you can run to validate that this feature indeed has value. You can do that by getting a thin slice of functionality out to some of the customers, and some vehicles, so you can measure the impact of it. Then use that to iteratively expand on the feature if it turns out that is actually adding value, or to kill the feature if it turns out that it is not adding value.

You are saying that “we need to be intentional about our positioning in the Business Ecosystem” can you elaborate on that?

Many of the companies that I work with assume that the Business Ecosystem is static and will never change in the future. That is one group of people. The second group of people think that ecosystems just happen accidentally, and that they must respond to whatever is happening in the world around them. I believe that I want to be the protagonist of my life. I like to be in charge of my destiny. If you want to oversee your destiny, try to figure out what is the best place for us to be in the business ecosystem and then manoeuvre towards that place by working with suppliers, working with certain partners, or incentivising customers, for example. You need to make those decisions intentionally. That intentional thinking about where we want to be in the Business Ecosystem is something that I believe the VECS participants would really benefit from.

How can we speed up Digitalization in the Automotive Industry?

First, we need to radically reduce the number of variants of the vehicle models that we put out in the market. Secondly, we have to become much better and go much further in Platformization of our business. The third area of improvement is that Automotive Companies need to be become much better at classifying different functions, or functionality in vehicles, as either being commodity or differentiating. Let’s take electrification as an example. There are two things that matter in EV: range and acceleration. The customer does not really care about the other things. A lot of time and money are being spent on things that people inside the Companies think are very important in differentiating and the customers simply does not care. So, remove variance, maximise Platformization and be clear on what is differentiating and commodity, those are the three things I believe we must do to speed up Digitalization.

How can AI help developing the Automotive Industry?

The obvious answer is that we are using AI to create Autonomous Drive and advanced driver support ADAS solutions. That is the first part. The second part is one thing I believe is underestimated; the amount of customization that AI would allow vehicles to do. Imagine that instead of having rigid and fixed functionality we could offer a range of functionality and a car would learn from my interactions with it, how I like it to behave and then adapt mass customization. Let’s take adaptive cruise control for example. There is learning taking place in adaptive cruise control but I am the one that has to learn how the adaptive cruise control is behaving. I would like to have a system that learns how I would like it to behave.

The third part, which I think is a really interesting area, is Generative AI. Generative AI allows creation of totally amazing new designs that we could not have imagined as humans earlier. I believe that in the design and development of vehicles we could make very good use of generative AI in order to come up with solutions that we could not even have found ourselves.

Is there anything else you would like to share?

Transformation of industries and disruptive industries always comes with risks, and I see that a lot of people are fearful of how the Automotive Ecosystem will evolve. I want to take the exactly opposite approach, disruptions and transformations are the places where you are creating opportunities. The focus should be on how to maximise our ability to capture as much of the value in the new Automotive Ecosystem. I have a very positive output, I think that is the best thing that has happened to the Automotive Industry and the players that jump on this first and go out and experiment and learn about the customer, new preferences and try out different things, they are ones who will be winning this game.