Successful digital transformations for tier-one automotive suppliers often focus on six core areas:
- Digital strategy and targets: Develop a distinctive digital strategy that considers the myriad new ways digital technology can create value.
- Organizational structure for the digital transformation: Businesses are most successful in achieving digital transformations by organizing around one of three primary archetypes. Establish a new, separate digital unit (archetype 1) or embed a digital business within an existing business unit (archetype 2) are valid options. But establishing a digital center of competence (archetype 3) is most relevant to auto suppliers (since units typically are large and operate relatively independently).
- Pilot projects that use a test-and-learn approach: Most suppliers have already launched some digital pilots, but the mind-set of failing fast and moving on that is central to the test-and-learn approach has not caught on at nearly the scale necessary to accelerate transformation.
- Talent and capabilities: Digital transformations often require technical capabilities (software development, sensor processing/fusion, cybersecurity, artificial intelligence) that legacy organizations lack.
- Ecosystem: Success today requires suppliers to collaborate in new ways with former competitors from the auto sector and new digital players, which are often based in tech hot spots. In this environment, a company’s value proposition will increasingly depend on its ability to attract the right partners.
- Culture change: Automotive suppliers will need to foster changes in culture and mindset to digitize successfully.