In Defense of OEMs

Swear to the Goddess, I will slap the next person I hear say, “people who work at automotive OEMs are stupid and don’t understand technology.” POW! Seriously.

I get it – Silicon Valley is “new”, “fast”, “consumer focused”, “disruptive” and automotive is “old”, “slow”, “inward focused”. Automotive needs a re-boot, to be disrupted, to take lessons from advances in computer science, mobile communications, and – hey, the “cloud”, man… fur sure, of course it does. And it is. Seriously. The automobile industry is actually taking lessons from Silicon Valley.

…the misperception exists — that automotive OEMs don’t know anything about mobile technology.

But what I have noticed most since taking up residence in Menlo Park and working in Palo Alto, is the sheer amount of IGNORANCE about automotive and a thoughtlessness that is astounding.

Take today, for example. I met with a CEO of a fleet telematics startup who said to me (besides admitting he had zero focus) that he thinks no OEMs have mobile apps. Really. I mean honestly. This guy doesn’t even know how to use Google to check his facts. Of course, automotive OEMs have experience designing, developing, and launching mobile apps! Almost all OEMs have apps that work with their cars, apps for shopping, gaming apps. And I would wager that creating an app that controls aspects of your vehicle are some of the hardest mobile apps to create.

But the misperception exists — that automotive OEMs don’t know anything about mobile technology.

Let’s start with some basics. Automotive is huge… like really, really, really huge. According to the Organization of International Automotive Manufacturers, the automotive industry employs well over 10 million people globally, directly at OEMs and over 50 million indirectly, when you include the immense automotive supply chain and support. Combined global product totaled over 84 million vehicles last year.

Automotive contributes over $2 trillion to the global economy. Take one small slice – television advertising in the U.S. – automotive companies spent almost $700 million in the second quarter of this year. Telecoms were second at about $350 million. Automotive advertising is so huge that television seasons were created around model year release cycles. Don’t believe me? Watch Mad Men, you will see how important automotive advertising was. And remains.

Mobile telecom is a huge industry as well, contributing somewhere close to $1.3 trillion to the global economy. I have not been able to locate a global employment number, but suffice it to say, mobile is huge. It is also growing really fast while automotive is not.

Because of their size, automotive OEMs attract all types of people. But the generally described, often maligned, stereotype I hear bantered around Silly Valley is flat assed wrong. Yes, any huge bureaucracy is going to attract lazy, risk-adverse people who hide from reality, collecting a paycheck, stick in mud, adverse to change, and hoping not be noticed or make a significant impact. I would argue you find those people in any big company. In my 13 years of automotive OEM experience, those people were usually concentrated in accounting and HR.

Most of the people I worked with were beyond excited. They were passionate, dedicated, intelligent, and really engaged, working to make the products they love better and customers even more satisfied.

I spent the past decade working in an obscure offshoot of automotive – telematics. We dreamed of harnessing advances in computer science, mobile communications, and advanced design, to change and improve the in-vehicle experience, respond faster in times of crisis, and make life easier for drivers.

And many of us did make life easier for some drivers if not all drivers.

Automotive manufacturing is insanely complex. The monies involved are enormous. This is not a phone/computer/tablet – it is a 4,000 lb hunk of electronics, leather, plastic, and metal that can travel at 90 miles per hour. The amount of coordination it takes to bring a car to market would reduce the average cell phone manufacturer to tears in under 30 seconds. It is hard, takes years to master, and carries with it enormous risks.

And unlike your smart phone, a car can kill.

Which brings me to a really ugly word, but must be uttered – LIABILITY. The fact of the matter is your cell phone is not going to kill you. Yes, I know that some people believe phones cause brain tumors and maybe they do. But using a phone while driving will kill you or some innocent victim faster. The fact is, OEMs get sued every day for lots of things.

Automotive OEMs have huge legal staffs, lots of outside counsel, and have to fight the most inane, ass-backward claims you have ever heard. Even if you don’t like lawyers, you should go find a lawyer who works at an automotive OEM and give them a sympathy hug. Their jobs can really suck, not just because of what owners inflict upon them, but also the nature of the industry.

My point is, no matter how bad you think OEMs must suffer the slings and arrows of liability, it is far worse than you can imagine. And it takes its toll on what OEMs can and are willing to do, especially when it relates to in-vehicle technology deployment.

Every automotive OEM has a different risk profile. Their respective risk profiles will impact what technologies are often chosen and how that technology is deployed. If you don’t think having your senior executives hauled before Congress to answer claims that NASA proved were invalid doesn’t have an impact on a company’s risk appetite, think again (yes, I’m talking about Toyota’s unintended acceleration woes). Or how about another company that decided to improve their user interface with a software update to address customer complaints, and ended up with a class action lawsuits? When Apple changed the UI and UX for their iPhones, sure some people complained, but they didn’t get hit with a class action lawsuit.

The fact is, like it or not, liability concerns impact the features and services OEMs will bring to market. And a vehicle is different from other products, with unique concerns and needs. Being thoughtful of the unique qualities of automobile manufacturing, sales, and services, does not make people who work at OEMs stupid and uninformed. It makes them subject to complexity that requires thoughtful consideration and planning for the entire ecosystem. They cannot reach for the SIMPLE button, because it is not simple.

For my next post, I’ll dig into DEALERS.

Stay tuned.