We believe new models for large companies to collaborate with entrepreneurs will be a key factor in future growth.
Software continues to eat the world1. The commercial vehicle industry might not appear to be the most delicious target, until you look at the trillion dollar goods transportation business. The commercial vehicle industry is no exception to the well-known fact: It is a challenge for any hardware-focused manufacturer to cope with the rapid pace of software development and the inherently different development style of successful software companies. In the commercial vehicle industry, IT has gone from being an important internal tool to being an essential component in customer value propositions. As such, it is all the more key for manufacturers in this space to successfully collaborate with software companies in order to stay ahead of new technology developments and deliver a combined product that exceeds customer expectations.
Volvo Group has identified seven technology mega trends that will have a big impact on both internal processes and future service offerings.
The Seven Mega Trends
Mobility & mobile cloud – The continued increase in cloud-connected mobile device penetration still has major potential to impact processes and enable new business models
Human Computer Interaction – Designing products to enable different users (e.g., technicians, drivers, fleet owners) to efficiently access and interact with information and systems.
Internet of people – Levels of connectivity continue to increase and new ways to use the internet and connected services continue to grow
Internet of things – Things connected to the internet with sensors generating data provide new opportunities to control, visualize and measure activities and deliver new services across multiple domains.
Big data – Data is becoming so voluminous or complex that we can’t use “normal” data management tools, giving rise to new types of data management technology.
Smart machines – The emergence of autonomous vehicles, autonomous robots, intelligent personal assistants, smart advisors and advanced global industrial control systems.
Anything as a service – The Internet model for acquiring resources through pay-as-you-go models or by tapping into “the cloud”. Overall connectivity is a key enabler for this trend, which will have a big impact on future business models.
We use these trends as a guide to bring new solutions to our operations and to our customers. A small agile team, Volvo Group Planning & Innovation has a hands-on model to enable rapid testing of new solutions together with internal stakeholders, innovative partner/supplier companies and customers. The business prototyping model is inspired from agile design thinking and lean start-up methodologies. We take an outside-in approach, aiming to look beyond the traditional commercial truck industry when searching for new value for our customers, and seek to co-create with third parties in the prototyping phase. This business prototyping method has been used within Volvo Group for the last 12 years. In that time, more than 80 business prototypes in various domains have been explored. Key principals for the business prototypes are:
- A rapid & agile development period of 12 weeks
- Outside-in approach, searching for inspiration from other industries
- Co-creation with multiple innovative technology or service providers, customers and users
- Experimental and hands-on field testing to gain insights on both opportunities and barriers
After the prototyping phase, a cross-functional committee decides either to end the project or transition to a pilot phase. When prototypes are stopped, progress in the area can continue to be monitored and possibly re-engaged in the future.
The findings from the prototypes are always communicated broadly within the Volvo Group via different channels such as webinars, seminars and the intranet with the purpose of transfering insights and spurring new ideas.
Some examples of innovation prototypes we’ve explored during the years:
Volvo Group Venture Capital partners with fantastic entrepreneurs and, in addition to capital, makes sure that Volvo Group thoroughly explores opportunities for collaboration with external companies. As a core principle, Volvo Group Venture Capital maintains a separation between its investments and any commercial agreements.
The “not invented here” mentality, management turnover and simply access to the right people in a large, global company can all be significant hindrances for entrepreneurs or young companies trying to strike deals. Volvo Group Venture Capital has a strong track record of breaking down those barriers and enabling win-win situations that leverage the strengths of the large company and the speed, focus and agility of start-ups.
Combining the Venture Capital team’s model with the Planning & Innovation team’s approach to testing joint opportunities in real conditions creates a strong solution. We look forward to accelerating these activities, building value for customers, the Volvo Group and entrepreneurs. If you work on software-based solutions for the transportation industry and have ideas for partnerships, you know where to find us!
Jonas Landström, Head of Americas, Volvo Group Venture Capital
Tommy Hansson, Business Innovation Manager, Volvo Group Planning & Innovation
1. Interview with Marc Andressen where he lays out his “Software eats the world” thesis, http://www.wired.com/2012/04/ff_andreessen/5/