Continental: Speeding towards the new world of connected cars
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Continental: Speeding towards the new world of connected cars

Jim Mortleman — April 2016
Companies in the automotive sector must innovate fast — or die, argues Seval Oz, CEO for intelligent transportation systems at global tire and vehicle systems maker Continental.

Of all the industries set to be transformed by the Internet of Things (IoT), transportation is among the most acutely affected. In all areas — from freight and logistics to private cars and public transport — there is huge potential for disruption as connected vehicles and smart cities become a reality. But for traditional businesses operating in the sector getting to a position where they can grasp the opportunities takes more than just technology — it requires a whole new mindset, fundamental shifts in organizational culture, structure and strategy, and the ability to navigate a raft of challenges around open data, privacy, security, standards, collaboration, consumer experience and trust.

Few people have greater insight into this seismic shift than Seval Oz. A leading light in the development and marketing of Google’s self-driving car, she joined German tire and automotive products giant Continental in mid-2014 to become CEO of the €39.2 billion ($44.4bn) company’s new Silicon Valley-based digital innovation unit, Continental Intelligent Transportation Systems (ITS).

Seval Oz
Seval Oz, CEO, Continental ITS
As she highlights, the stakes for business couldn’t be higher. “Huge, monolithic companies in this industry that are wedded to very specific tools and ways of doing things urgently need to innovate. If they don’t, they’ll go the same way as Kodak and any other number of companies that failed to see the future coming. And that future is happening now. We’re in an incredibly disruptive environment where if we’re not innovating alongside our traditional business then we will not be able to compete — period.”

“What’s really exciting is not IoT but the Internet of intelligent things — being able to aggregate and analyze data and create layers of intelligence.”

With a strategy to create intelligent networks of different modes of transport and new traffic-guidance systems, Continental sought out a maverick leader like Oz to act as a direct challenge to the corporate norms of the 145-year-old company. She argues that companies right across the automotive industry need to quickly absorb lessons from already-successful disruptors.

“Why does Uber work, for example: because it has amazing logistics and back-end capabilities that gets you a car within minutes. If that [underlying infrastructure] didn’t exist, Uber wouldn’t work. Businesses need to look at the skill sets required to create these new [platform] capabilities — you need to be able to integrate data systems and the cloud infrastructure while understanding much more about technologies such as machine-to-machine, artificial intelligence and image recognition,” she says.

Traditional car manufacturers are fast evolving to take advantage of these developments, but Oz believes they need to adopt far more radical business models if they are to thrive in future. “Four years ago when I was developing the Google X car, nobody in automotive dared say anything about self-driving vehicles — now they’re being talked about in every [automotive company] boardroom. But the car manufacturers are trying to innovate on their own, when what’s really exciting is not IoT technology in itself, but the Internet of intelligent things — being able to aggregate and analyze data from multiple sources and create layers of intelligence,” she says.
Decaying models

But it isn’t just the technology that’s evolving fast — attitudes to ownership and access to transportation are changing fast. “People are waking up to the fact their car is basically a cost center — it sits in their driveway 96% of the time doing nothing, a depreciating asset. Most millennials are questioning why they’d want something decaying and costing them money when all they really need is the ability to access transportation within [a few] minutes,” says Oz.

“The industry understands this, but they’re still telling themselves they’re in the business of selling cars. It needs to think intelligently about it and be courageous. What you’re selling is not really cars — it’s vehicle miles. So if you can get people to travel more because you’re providing better access, then your market becomes much wider and your vehicle miles start to grow. Now a car doesn’t depreciate in 10 years, it depreciates in three because all of a sudden it’s doing 100,000 miles in those three years.”

As those radical new models take shape, Continental is pushing ahead with other new digital services enabled by car connectivity. Later this year ITS will launch a service in the US that allows people to order goods online and have them delivered to the trunk of their car within minutes. Users are able to securely provide the driver delivering their order with a one-time, digital key to their trunk’s Internet-connected lock. (Volvo is already offering a similar service in Sweden.)

Developing the service has meant overcoming a host of obstacles. Perhaps most impressively, all the major US car manufacturers have signing up to support the service, a fact Oz puts partly down to Continental’s solid reputation in the market. “It’s certainly a big challenge to aggregate the platforms of all these different partners. Many operate like secret, siloed societies and they’re not used to exchanging data. But Continental has more than 140 years of relationships emanating from this industry, and our partners know we understand how to handle data and won’t compromise safety or security,” she says.

As such automotive platforms and services continue to mature and self-driving vehicles start to colonize the roads, vehicle sharing will become a compelling proposition, whether the cars themselves are owned by organizations or individuals, Oz predicts. “You could take any vehicle and with the new technology on board turn it into a microtaxi without the need for an Uber. The sharing economy is a usage-based economy — it’s being driven by ever greater asset utilization,” Oz says. “There are incredibly exciting opportunities out there to create new efficiencies, innovative services and really change the game.”

• Seval Oz was speaking at IoT Tech Expo 2016 in London
First published March 2016
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