If General Motors Co. and Ford Motor Co. get their way, the road they’re traveling more frequently to Silicon Valley will become a two-way street.
“We’re looking for that innovative mindset through the total business,” says Raj Nair, Ford’s executive vice president of product development. “It’s just as critical to the core business as it is to these emerging opportunities. I wouldn’t say there is a sense of panic, but there is a sense of urgency and speed.”
There they are, the three words signifying what today’s Detroit industry is craving most from Silicon Valley’s entrepreneurial culture — innovation, urgency and speed. Why? Two reasons: first, because the necessary restructurings of GM and Ford amid the global financial meltdown are insufficient as new competitors encroach on a business long controlled by legacy automakers.
And, second, because the horsepower and speed Detroit can produce in its design studios and assembly plants do not necessarily represent the pace these companies and the people inside them move. Traditional risk-averse bureaucracies allergic to failure, the prototypical Detroit way, are antithetical to Silicon Valley’s speed and higher tolerance for risk.
That needs to change faster than it is. As much as this town’s heavyweights want competitive advantage in the emerging buckets of transportation services, connectivity and autonomous cars, their leaders should push to embed aspects of that techy culture in the more prosaic, cash-generating pieces of the traditional car and truck business.
They know it. And they know that doing it, imbuing a culture fashioned over nearly a century with the alien values of speed and change, is far harder than talking about it in the abstract. It takes more than wearing jeans to the office or renovating mid-century office buildings into a 21st-century campus; it takes blunt leadership, realistic veterans and fresh blood untainted by the past.
The axis connecting Detroit with Silicon Valley is not just a business opportunity for the auto industry. It’s a potentially symbiotic relationship that Detroit, especially, could use to infuse its traditional business culture with some of the entrepreneurial attributes epitomized by the epicenter of high tech.
That’s partly why Ford, in roughly a year, expanded its center in Palo Alto to 120 from a dozen, a move Nair says is intended to make the Blue Oval “part of the” Silicon Valley “ecosystem as opposed to being a visitor in it.” Since that expansion, Ford has talked with 200 startups and has active projects underway with about a third of them.
That’s partly why GM CEO Mary Barra took her 14-member executive leadership team to Silicon Valley last summer to see how (and how fast) its top players operate. It’s partly why GM is separating its Cadillac brand from Detroit and planning to eventually report its own financials.
It’s certainly why GM took a $500 million stake in Lyft Inc., the ride-sharing company; invested a reported $1 billion in Cruise Automation to speed development of GM’s own autonomous cars; created Maven, a car-sharing service — and in each case pledged not to smother the entrepreneurial cultures with what’s known as the GM “bear hug.”
Scoff at your peril, folks. The business is changing, and it will change because American society is changing. Government regulators and their rules dictate product development decisions in increasingly expensive and draconian ways that the public appears willing to accept, if it bothers to think about them at all.
Environmental awareness, re-urbanization, connected technologies and the quest to field a workable self-driving vehicle are driving reappraisals of what personal transportation is likely to be. That will impact traditional automakers in ways it is so far difficult to quantify.
“Autonomous will change the industry,” says Mike Ableson, GM’s vice president of portfolio planning and strategy. “We can argue when and how quickly. You can’t win by just using traditional auto industry skills. After you’ve been through bankruptcy, you can’t go into denial about how the industry may change and put you out of business.”
He’s exactly right. Detroit, and the people who depend on its success for their pay, their pensions or both, ignore (or ridicule) these unmistakable trends at their peril. An industry built on selling cars and trucks to private owners for private use is not likely to flip overnight, or even in the next 10 years, but assuming the future will track the past is the triumph of hope over experience.
You’d think this town, with its epic record of hubris and arrogance, would have learned two things by now: one, that competition born of changing market demand and technology should not be ignored and, second, that the cornerstones of Detroit are never too big to fail.
Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.