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Relevance lessons from the Volkswagen – Microsoft partnership

by StayRelevant
4th October 2018

Volkswagen announced last week a strategic partnership with Microsoft to build together an automotive cloud and provide new services to their customers. You can find all the details form the press release here.

It is a significant transformation move to increase their customer relevance. It made me think of five things:

1. The digitisation of the car industry is ready to take off. As a user, I can say, thank goodness for that. Relevance is about meeting or exceeding the ever-changing customer expectations. This is not always happening in the car industry. Except for navigation systems, most drivers still get a non-digital experience in their cars, way behind how we live and interact outside of the vehicles.

Why do people reach out to their mobile phones for information or entertainment? Because traditional cars do not provide entertainment and connectivity. In the age of Netflix, most drivers´ only option is to tune to a through-air radio station of their choice or plug in a USB device. Customer expectations are unmet.

Like most industries, the automotive industry needs to play catch up meeting expectations and creating value-adding services and this alliance is an excellent step in this direction.

2. Partnership. Partnering with others is a critical business skill in the digital age because nobody can do it on his or her own, not even traditional industry giants. Partnerships will be open and equal. It is critical to choose the right players to help you co-create the future. Trust will be a fundamental way to measure and decide with whom we want to do business.

3. The digitisation of business models. Digitisation is all about creating ecosystems, and the new VW cloud will be no exception. It opens the doors for other players to enhance the ecosystem and it will result in an active and fast-moving environment. Companies need to create new business models to avoid being left behind.

4. The explosion of IoT is coming. IoT potential has not materialised yet, and security is the main factor to blame. However, it is easy to see a formidable acceleration coming, due to the business value it brings and the progress and maturity we see in the area of security.

IoT follows a pattern of adoption similar to the cloud and if we are to use the cloud as a reference, we better jump on IoT. Security helped companies to delay cloud adoption for a few years, but cloud growth is huge given the massive advantages it brings and the need for flexibility (elasticity) to be relevant. IoT follows a similar trend. We need to capture and use data for the benefit of the customer, our partners and ourselves.

Any company responsible for managing assets needs to provide predictive maintenance, accelerate response, reduce cost and create new value for customers and dealers in the operational value chain. To be able to do it, it needs to automate the exchange of data from their fleet. The sooner you are in, the better.

5. The importance of openness. Since Nadella took the lead, it is impressive and refreshing to see Microsoft´s break from proprietary thinking and their commitment to openness and partnership as ways to empower customers. Their open data initiative launched together with SAP and Adobe reaffirms this commitment and shows an example of the new idea of partnering with companies we continue to see in the digital world.

There are multiple ways to move towards your customers. Learn from digital lessons, innovating from within and partnering with the right players. Get in contact to see how we can help you accelerate.


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