The rapid pace of technological and social change has made innovation a matter of vital importance for today’s companies. Overcoming new challenges and making the best use of opportunities necessitates developing innovative strategies which involve the modification or creation of new value propositions. The displacement of once-undisputed home video industry leader Blockbuster by Netflix and Redbox illustrates the impact of innovative strategies. The automobile industry may be due for a similar upheaval in the not too distant future.
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Innovation in the automotive industry is primarily driven by social change in the form of increased environmental concerns and regulations. While making existing vehicle lines more eco-friendly represents one prong of adaption, new offerings such as electric or hybrid cars are the more innovative and promising solution. Electric vehicles also enable new business models, such as selling or renting car chargers. Although well-established car companies such as Ford, BMW, and Mercedes offer electric vehicles, Tesla’s surpassing achievements in this area threaten to put these companies on the same track as Blockbuster. In their haphazard attempts to innovate, they repeat the former home video giant’s mistakes of failing to adopt a consistent innovative strategy. To avoid its fate, they would need to overhaul their organizational structures to be more innovation-friendly and increase spending on research and development. Perhaps most importantly, they should not merely try to play catch up with Tesla but experiment with original ideas and designs. It is not too late for Ford, BMW, and Mercedes to retake the initiative.
For innovation to be effective, it needs to become a genuine priority for the company. A comprehensive innovative strategy requires arranging consistent organizational and financial support for innovation. Although electric and hybrid cars and their infrastructure represent a promising avenue for progress in the automobile industry, adding electric vehicles to a company’s products would not be enough for success. Instead, major companies such as Ford, BMW, and Mercedes should seek out new innovative opportunities, whether related to electric vehicles or not. Allocating resources to support experimentation and implementing promising designs could allow these companies to reassert their industry leadership by creating new value propositions.