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This Month’s Industry Spotlight with Peter Els

Early adopters of new technology can also be early losers

Peter Els
Contributor: Peter Els
Posted: 04/18/2016

New technologies in the automotive industry are a dime a dozen and like the proverbial kid in a candy store, manufacturers are hard pressed to decide which of these to adopt to trump the competition. 

Early adopters often see the implementation of the latest technology as being a means to leapfrog the opposition: But do the potential benefits outweigh the risks associated with the implementation of an immature technology?

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I’m not talking about innovation: There’s a significant difference between innovation and early adoption. In its simplest terms, innovation is the use of critical thinking to improve upon current technologies, processes, and management structures. Its importance within any organisation cannot be understated. 

Early adopters, on the other hand, separate themselves through a conscious decision to champion, most notably, new technologies before their competitors.

Customers want the latest technology

According to J.D. Power, a 2014 U.S. Avoider Study has shown that buyers consider the newest technology amongst the top 10 reasons when deciding a purchase. 

Defining the trend, a 2015 U.S. Tech Choice Study presented at the Automotive Press Association indicated that vehicle-buyers expected the latest technologies, such as blind-spot detection and night-vision assistance, in their next vehicle.

It’s therefore not surprising that carmakers are becoming a familiar sight at tech shows. Some manufacturers have even chosen these events to roll out new models to woo a generation of consumers who question the need for a car that only gets them from A to B. 

At one such event, the 2016 Mobile World Congress in Barcelona, Ford unveiled the company’s latest in-cockpit technology, Volvo showed off a keyless car and Mercedes-Benz Formula 1 driver Lewis Hamilton appeared on a panel with the president of chipmaker Qualcomm.

Premature adoption of technology is hurting the industry

But this drive toward early adoption of what many consider being immature technologies has a downside which the barometer of vehicle quality, J.D. Power, disturbingly highlighted with the Initial Quality Study (IQS) on 2015 cars. While the report hailed several quality improvements, the industry was also delivered a glaring black eye because of the failure of in-vehicle technology to deliver on customers’ expectations.

The J.D. Power IQS, which measures problems experienced in the first 90 days of new-vehicle ownership, substantiated that for the third consecutive year the feature most derided by owners was their new vehicles’ entertainment and connectivity systems. Drill down just a little further and the most frequent complaints continue to be about voice-recognition, meant to control various system functions, followed by Bluetooth connectivity for mobile phones.

It’s no secret that these driver interface systems have emerged as a chief buying point for many consumers. And the car companies endlessly tout their ability to deliver, not the least of which is the promise for voice control to enhance safety by enabling the driver to stay focused on the road.

Under this glaring competitive spotlight, the technology isn’t cutting it with customers. In short, voice recognition still isn’t doing a good-enough job of understanding voice commands, and this has new-car owners fuming.

As Doug Betts, Chrysler Group’s senior vice president of quality puts it: “An owner’s quality perception is as much about delivering the latest technology as it is about minimizing dislikes such as a voice recognition system that misunderstands commands. It’s important to continually update the product line and introduce new technologies, but that can have a short-term adverse effect on the brand.”

J.D. Power reports in the 2015 IQS study that the majority of vehicles offering voice-recognition functions have 10 or more reported problems specifically related to voice recognition. With an overall industry average of 112 problems per 100 vehicles, encompassing every issue recorded, almost 10 percent of a new vehicle’s entire universe of problems is related solely to voice recognition! This finding should be a flashing red light, cautioning the motor industry against the early adoption of untried technology.

High-tech Infotainment systems frustrate users

Early-adopter Ford bore the initial brunt of criticism for its frustrating MyFord Touch infotainment system glitches but has since responded by adding knobs and buttons to the center console and sending out software updates to remedy problems. 

Nevertheless, results of the latest J.D. Power vehicle quality study demonstrate all car companies need to make urgent improvements in certain aspects of in-vehicle technology, particularly voice recognition and Bluetooth mobile-phone connectivity.

According to David Sargent, vice president of global automotive at J.D. Power, “Things will stabilize, with early adopters of this type of system starting to see some improvement, but coming behind them are lots of other manufacturers who are now introducing similar technologies. Once we get through that first round, I suspect that we’ll see some improvement. Maybe three to four years before we start to see significant improvement.” But can companies afford three years of frustration while customers develop the product?

And early adopters are not restricted to infotainment systems: Six years ago, Israeli software engineer Shai Agassi announced that he had solved the range limitation of electric vehicles by pioneering cars with removable batteries that could be exchanged at robot-operated stations. 

“Better Place” was founded with the goal of being a game-changing company. Agassi predicted he would sell 5,000 cars by 2011 and that electric vehicles would dominate the market on Israel’s roads by 2016. 

He built 38 swapping stations across Israel, and held court at press conferences and test drives in Israel, Denmark, the United States, and Australia, promising to change the world! But after raising $850 million from A-list investors in the United States, Europe, and Israel, “Better Place” never delivered on the promises, leaving early adopters and investors high and dry.

Early adopter, Lotus, gets it wrong

Following the pioneering work carried out by Lotus on Formula 1 active suspensions in the early '80s, manufacturers soon tried to apply the technology to street cars.

It seemed like the technology of the future, but the future never came. The Lotus system, which used hydraulic rams to control the wheels, cost thousands of dollars, added 150Kg, and required about 4Kw to drive the system's 150Bar hydraulic pump, which killed fuel economy. Furthermore, the system wasn’t compliant enough to respond to small sharp inputs often found on secondary roads.

So, within a short few years, mechanical active-suspension disappeared from the automotive scene and has only recently been resurrected thanks to new cost-effective technology.

Timing is everything

Companies that can adapt quickly are usually less prone to competitive threats, but being the first isn’t necessarily an advantage.

In essence, remaining an early adopter has become nearly impossible. No one company can keep up with each innovation as it becomes available, nor should they. With the number of new technologies being developed, not all of them will last. In the same way we don’t hear about the companies who failed to be Apple, we remain largely unaware of the technologies that flopped.

The issue that many businesses face is not just whether or not they can keep up, but how quickly they can change when they’re wrong. Success, which could almost be defined as “survival”, comes from the ability to swiftly implement technologies as they prove their worth within the marketplace.

Ultimately, the decision comes down to when to adopt new technologies. When implementing new technologies, organisations must thoroughly understand the balance between the risks of adoption and the time delay for competitors or new entrants to implement superior innovations. Those who master this juggling act will achieve success as early adopters.

Remember Apple didn’t create the mp3 player, smartphone or the tablet, but they did follow it quickly, and they were better at it.

Peter Els
Contributor: Peter Els
Posted: 04/18/2016