“Eliminating human error from driving will help eradicate nearly 90 percent of car crashes caused by human error.”

Andreas Mai, Director Smart Connected Vehicles at Cisco Systems

Innovation in the Age of Hyper-Connectivity

Innoboard: There is no consistent definition for innovation. Every industry and every department has its own definition. How would you define innovation with respect to the software industry and Cisco?

Andreas Mai: The Internet of Everything, the connection of things, data, processes and people continues to transform industries and to redefine the traditional dimensions of innovation. Standalone products are being connected to the value chains of the enterprises that produce them, and are also increasingly connected to products of non-traditional ecosystem partners and their value chains. This hyper-connectivity  helps enable the creation of completely new services, but also drives the need to digitize the business operations.

Hyper-connectivity is disrupting the automotive and insurance industries. For example, the emergence of connected autonomous vehicles is driving a fundamental business model transformation – from building cars to selling personal travel time well spent – and will propel the convergence of personal and public transportation. Eliminating human error from driving will help eradicate nearly 90 percent of car crashes caused by human error, which will transform the traditional auto insurance value chain and business model.

Scale and speed of these disruptions requires new approaches to innovation. At Cisco, we use multiple innovation centers around the globe to work closely with customers and partners to develop proofs of concept for new technologies. Cisco’s M&A team works to acquire companies for innovation and growth of our core business. A separate Cisco innovation fund makes strategic investments in technology companies that have the potential to disrupt Cisco’s core business. Regularly, we are crowdsourcing innovation internally and with external innovation challenges. The best internal innovations are incubated with dedicated funding outside of the regular operations budget. Promising start-ups are financially supported and coached by dedicated Cisco experts to ‘spin-in’ innovation. In addition, Cisco has a tradition of spinning-out and seed funding innovative teams that are then acquired by Cisco when milestones are met.

At IAA Car 2015 most of the CEOs pointed out the importance of connectivity, digitization, data privacy, automated driving and e-mobility. In this context, Dieter Zetsche underscored that the trends of digitization and connectivity require new alliances with technology companies. Do the automotive industry and the software industry need closer cooperation? What are the main barriers for collaboration?

The value of the core product “vehicle” is eroding and virtual mobility services and business models are commanding a growing share of the value add. This requires automakers to expand their value proposition beyond the confines of the car selling business and to connect their vehicles with critical elements of an increasingly virtual personal mobility value chain (e.g., Uber).

With automakers and their suppliers, telecom operators, Google and Apple, and start-ups like Octo Telematics, Zubie, Automatic and Dash (just to name a few) controlling pieces of the connected vehicle value chain, and aspirations to fish in everybody else’s pond, incompatible business and technology strategies are slowing if not toppling mutual success.

Many mission critical technologies for connected autonomous vehicles come from innovation leaders outside of the traditional automotive supply base. Some of these innovation leaders have “skin in the future mobility game” and are at least equally as big as automakers (e.g., Google, Apple). Therefore, a traditional automotive supplier-buyer relationship is insufficient. New innovation and business models are needed to share costs and benefits of connected vehicle services. For all mobility value chain partners, it boils down to what technology or cost elements of the value creation process can be solely controlled in the long run or should be shared for mutual advantage? Similarly, where does controlling or sharing access to customers or data turn into a sustainable single or larger mutual advantage for delivering value and differentiation?

What is the position of Cisco in this huge trend? What and how will Cisco contribute to this development? 

The value of hyper-connectivity will heavily rely on cost-efficient extraction, transport, storage and processing of data, and availability of contextual analytics results when and where they are needed: A high performing, smart and highly secure network is a key enabler.

Cisco provides network software and services for highly secure, seamless, reliable and fast network connections of vehicles and other Internet of Things devices. Our technologies filter relevant data from noise, and reduce the amount of data and associated transport cost.

Cisco’s end-to-end security solutions help protect connected devices, networks and data centers against modern cyber attacks.

In addition, Cisco provides platforms to manage networked devices, and portals to integrate and automate processes, and to manage and monetize APIs. Cisco technologies also help connect on-premise and in-cloud systems, bridge enterprise system silos and connect systems across enterprise boundaries with partners.

With Cisco technologies being ‘the glue’ for hyper-connected ecosystems, we are a ‘matchmaker’ between traditionally unrelated industries and aim to help create new mutually beneficial business architectures in non-traditional partnerships.

What will the car of the future look like in terms of connectivity, digitization and automated driving?

Vehicles will become ‘smart helpers’ by connecting to other “Internet of Things” like connected homes, roadsides, traffic lights, and to value chain partners like automakers, dealers, gas stations, insurance companies, road and public transportation authorities, and parking providers, just to name a few.

The next evolution of connected vehicle services will expand our personal mobility options to other modes of transportation, and services like car and ride sharing.

Autonomous vehicles will accelerate the growth of the personal mobility on demand business. The convenience of being able to use an autonomous vehicle will make car sharing a much more convenient and cost-efficient mode of transportation for many.

 

ILI CONSULTING AG thanks Mr. Mai for this expert interview.

About the author:

Andreas Mai is an expert in business and technology architectures for ‘The Internet of Everything’ for automotive and insurance companies, service providers, and governments and is frequently asked to speak at conferences worldwide.

During his career, Mai has advised automotive OEMs and suppliers, industrial equipment and aerospace suppliers, and private equity investors in North America and Europe.

He has conducted and published a number of studies, at ITS and SAE World Congresses, including “Internet of Cars: A Business Case”, “Global Product Development—Innovation Never Sleeps,” “Enter the Dragon—Lessons Learned in China Sourcing,” and “The Odyssey of the Auto Industry—Suppliers’ Changing Manufacturing Footprint.”

Mai holds a Diplom-Kaufmann in European Business from the universities of Osnabrück, Germany; ESTE Universidad de Deusto, Spain; and Buckinghamshire, United Kingdom.

He serves on multiple task forces of the World Economic Forum, and the board of the Connected Vehicle Trade Association, The Connected Car Council, as well as Octo Telematics and Cohda Wireless.

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