How to make Automotive Cooperation work: 5 key drivers for successful Cooperations
Cooperation has never been more important than today. So let´s take a look into the world of automotive OEMs, where competitors join forces to stay ahead in a fast-paced industry. We will explore the factors that often make or break these ventures and learn how to succeed where others fail.
Amidst the rapid evolution of the automotive industry, OEMs are facing disruptive challenges such as the transition to e-mobility, autonomous driving, connectivity and decoupling of hardware and software engineering. Remaining ahead of the competition and overcoming the innovator’s dilemma requires great effort, financially, organizationally and technologically. Therefore, automotive OEMs are increasingly forming cooperations to pool resources and expertise to gain the edge. Get used to it: Cooperating with former competitors will become the norm for R&D-heavy fields such as automotive development. But even though cooperations offer great business opportunities, roughly 50% of partnerships fail to deliver. Understanding and proactively addressing the challenges linked to a cooperation project is therefore key for success. It is all about the right way to do it. Years of expertise in OEM cooperations have led us to identify five crucial success factors in cooperations:
1. Finding the right partner and setting up an effective cooperation governance
Securing that the targeted outcome will in fact be mutually beneficial for both organizations is the foundation of success for any type of partnership. As there are tremendous risks associated by investing in cooperation and sharing business know-how and intellectual property, it is absolutely crucial to find the right partner. Besides having access to the necessary resources to sustain the project in the long run, a cooperation must secure access to complementary expertise, customers and markets, so that pooling these features creates opportunities both partners individually could not seize. Furthermore, an effective governance framework respecting all project stakeholders must be set up from the start.
An effective cooperation framework may very well significantly differ from individually established governance principles at the participating organizations, as the project scope goes beyond regular business and is subject to cooperation-specific requirements. In particular, the governance framework design must outline a clear definition of roles and responsibilities, effective escalation and decision-making processes, as well as lean reporting mechanisms for project steering.
2. Identifying and overcoming communication and cultural barriers
Organizations differ in their culture and the way people collaborate and communicate. Consequently, in a cooperation, these differences are likely to turn into barriers that prevent the kind of close collaboration necessary for its success. The need to bring together different organizational cultures and ways of working to create a shared cooperative culture therefore cannot be overstated.
To promote a common culture that suits all aspects of successful collaboration and communication, both organizations must focus on establishing a shared vision and values, as well as open and transparent communication channels. This way, both parties are on the same page, can address issues promptly, and cooperate effectively. In addition, regular refinement of the cooperations outlook and targets as well as team building activities have proven to contribute to the level of trust required to effectively cooperate within this kind of rapidly changing project environment.
3. Living the core values of business agility
Cooperations in R&D-heavy fields are usually set up for a duration of several years, during which time external framework conditions may change: For example, geopolitical events may lead to unexpected shifts in market demands or disruptive technologies may incur the necessity of rethinking the underlying cooperation purpose. At the same time, unforeseen complications from within the cooperation, such as technical, legal or personal difficulties may result in a loss of trust and endanger the business success persistently. Both aspects require the ability to adapt swiftly, ensuring the partnership remains competitive and relevant at any time.
By leveraging agile ways of working and promoting a flexible project organization, cooperation partners can respond efficiently to challenges that inevitably occur. Lean principles should be considered to further streamline the project, as they will especially help to identify and avoid redundant processes and unnecessary documentation.
Additionally, cross functional teams equipped with a divers skillset as well as the right (IT) tools to share information throughout relevant working groups have proven to be a key success factor in a dynamic and evolving business landscape. This approach promotes alignment between all the parties, enhancing project efficiency and therefore minimizing delays and cost overruns.
4. Securing technical compatibility & standardization
Information exchange is at the core of any cooperation and so is system compatibility. In the automotive industry, companies have traditionally used established toolchains to handle their data flow. In order to adapt to the demands of cooperation projects, it is likely that partners must now set up new interfaces and develop scalable technical solutions that enable a seamless exchange of data.
Identifying potential for standardization and consolidation of interfaces results in additional benefits in terms of cost-efficiency and quality. Therefore, the definition of unified interfaces and the development of customized IT solutions for data exchange in the early stage of a cooperation is a significant success factor.
Given the challenges linked to data exchange between two partners, a centralized solution such as a Data Exchange Center has proven to be very effective. This platform is specially designed to consolidate data transfer from multiple sources into one interface.
Moreover, the solution can be customized with additional services to process data and therefore automate tasks such as clearing intellectual property from sensible files as well as translating and mapping different product languages. Due to its scalability, the exchange center allows for streamlined data transmission to multiple cooperation partners and by that serves as an essential building block of a cost efficient and sustainable IT-infrastructure.
5. Developing a clear exit strategy
While it may seem counterintuitive to consider an exit strategy as a success factor for cooperations, it is also important to have a plan in place for how the partnership will conclude, be it due to the achievement of objectives, a change in circumstances, or as a contingency plan. A carefully thought out exit strategy ensures a smooth transition once the cooperation comes to an end and avoids legal turmoil. In order to be prepared for all scenarios, the set up a comprehensive risk management is inevitable.
Analyzing what the individual exit scenarios entail in terms of organizational, financial and technical effects is key to avoiding unpleasant surprises and provides confidence as companies embark on their next cooperative venture.
Cooperations offer great advantages by pooling resources and expertise with competitors for efficiency gains. Yet, despite this edge of cooperations, roughly 50% of partnerships fail. In order to ensure the success of large-scale OEM collaboration initiatives, it is vital that these five success factors are respected.
At accilium, we understand and live the pivotal role these success factors play in automotive cooperation. With our extensive industry and cooperation experience, we have guided many OEMs through the intricacies of forming and managing successful automotive cooperations.
