Steve Young Blog: Are we all jackdaws

By automotive-mag.com 7 Min Read

A combination of news items and conversations over the last few weeks have made me think about companies who chase the latest trend or fashion, and in doing so divert resources away from the core business and take unnecessary risks.

There is clearly some sort of dividing line here, as we are all aware of the classic examples like Kodak and digital photography and Blockbuster and movie downloads where the established businesses had the opportunity to get in early to what became the dominant technology but chose instead to remain focused on a business that was ultimately doomed.

However, I think there are more examples of businesses with a solid foundation but with some opportunities to evolve and improve but instead are distracted by something new and innovative, like the stereotype of the jackdaw that is always attracted to shiny things.

Clearly somebody has to make the first move to commercialise a new concept or technology but it takes a different mindset and level of agility to succeed in this area as opposed to managing and continuously improving a long established business.

This is the role of start-ups and venture capital.  When big businesses try to innovate within the normal corporate framework they often over-invest and progress too slowly due to the inertia of decision making in large organisations.

The technology or business practices can be developing faster than the product or service that they are trying to launch.  That is why over the years some exceptional products from large organisations have actually been developed in skunkworks teams rather than the core product development activity, and why some companies who have an interest in early-stage ideas invest through a dedicated innovation arm which can operate outside the corporate world.

Within the world of car manufacturers, the last decade has seen massive investments into fully autonomous cars and different forms of car sharing service.

Although there are exceptions, most of these have been sold off at fire sale prices or closed down with little or no return on the investment.

I presume that there were some at the board level who questioned the original decisions, but the supposed fortunes available through a transformation of the mobility model that some claimed existed and the investment community were looking for, drove the investment decisions.

We see similar problems in the shift to electromobility.  All the companies who set out on multi-billion (Euro, Pound, Dollar) transitions to 100% BEV are now being forced to back off as the customer demand and reliability of government incentives have not kept pace.

In the aftersales area we see a continual flow of new tools that it is claimed will dramatically improve workshop or bodyshop efficiency, but whilst a number of these are technically impressive, they often involve large fixed investments in each facility that cannot be financially justified.

The successful innovations have been in the form of some central knowledge base that can be accessed easily through smartphones and tablets but which then yields relatively small savings across whole networks with very modest local investment.

This week, we have now seen Cazoo enter into the final death throes as the operating businesses have filed notice that they will be put into administration.

Whilst this was a start-up rather than an investment by an established business, it shared the same “we’re going to change the world” mentality, applying a flawed business model on a massive scale almost from Day 1.

There was no opportunity to evaluate the model before wasting billions of investors’ funds, though the founder did walk away with $200 million…

Similarly in the software area, projects which are based on a clean sheet of paper – whether by a business for its own use, or by a software provider who develops products for sale to third parties – have a very chequered history.

There are obvious attractions to starting with a clean sheet of paper when you are very aware of the issues in a current system, but the fresh start too often brings fresh problems at the same time as solving some of the old ones.

Without labouring the point, the same issues apply to the transition to agency models – a ‘big bang’ transition that tries to move in a single leap from the old world to a brave new world will always face huge challenges, and often fail.

I am not advocating that the industry should not innovate, or that an overly risk-averse approach makes business sense.  My point is that the risk and the investment of cash, management time, staff and all other resources should be more tightly managed.

Rather than jump the chasm from old world to new world and fall down the gap, we need to build a bridge that makes it easier and more reliable for us all to travel.

Does avoiding investment in bold new ideas mean that you should stick your head in the sand?  No, but building on existing business success incrementally rather than through headline-grabbing transformations, yes.

Steve Young is managing director of ICDP

Share This Article
Leave a comment

Leave a Reply

Your email address will not be published. Required fields are marked *