Forget Products – Think Ecosystems.
That’s the title of the post I read on Tim Kastelle’s Innovation Leadership blog (where they really pick apart the nuts and bolts of innovation, by the way). There was quite the buzz about some Nokia memo a while back, and John Steen apparently beat Tim to the punch with some thoughts on the story over there that day.
John closed his post with a simple question, “What industries, do you think, could compete on ecosytems?” That’s a BIG question. I’ve been struggling lately with what I consider “next steps;” going beyond merely recognizing and addressing symptoms, considering new ways to address causes. Upon reading this question, the automotive industry immediately comes to mind.
Production, consumption, needs, and wants
Manufacturers make new vehicles. “Consumers” buy them. Lather, rinse, repeat.
Proliferation of the automobile and easy credit have made the automobile a commodity. The fundamental needs of transportation, freedom, and cargo capacity have been met since the 1950s. Modern consumers buy new vehicles because they want something new. We want the shiny new sheetmetal, the 100% functional accessories, the spotlessly clean interior smelling of soft-touch plastics and adhesives. We don’t need these things, we want them. And we know it.
And that’s why, when the economy gets tight, manufacturers see such marked declines in sales. Faced with financial uncertainty, our defenses come up, and we see polished sheetmetal, touchscreen navigation, and new car smell as superficial. We still want a new car, but we know it would be smarter to take care of the one we already have.
New vehicles experience a marked depreciation in those first few years. It’s also no stretch to suggest the dealership likely charges among the highest prices for parts and labor in town. The auto industry depends on the sale of new vehicles and the servicing of existing models. Yet they are constantly coming up with profit-eating incentives just to get people through the door because their offerings are unessential and expensive.
Complete the ecosystem.
What if, instead of relying on gimmicks to trick people into long term debt on rapidly depreciating commodities or driving them away with exorbitant parts/labor rates, the auto industry figured out how to monetize lifelong relationship-building activities? What if they put their size and power to work in other ways?
- Imagine sales reps empowered to sell you a new car, a used car, or help you find and purchase a car at auction or privately. (Pre-negotiating rates on service which may or may not be necessary on such a purchase.)
- Imagine service reps empowered to quote service on your car, or schedule you an appointment with a technician who would provide you with printed instructions from the service manual and assistance determining if you could truly do the repair yourself.
- Imagine parts departments empowered to sell you brand name parts, or provide you with a list of compatible models you might look for on your next trip to the pick-a-part.
- Imagine dealerships empowered to pay scrap value for non-running cars at end-of-life, encouraging customers to bring them back for the ultimate in long-term reliability evaluation, while also providing a supply of inexpensive raw materials for future manufacturing.
The auto industry is one of the largest on the planet, yet for all the power of this industry, they seem to be narrowly focused on new car sales and dealership service. There is more to the automotive ecosystem than that. The OEM which empowers its agents to act in the best interests of the customer will be doing more than competing on ecosystem – they will be completing the ecosystem.