Digital Transformation of the Automotive Industry Through Collaboration Hubs

(a) Situation faced: The prospects of digitalization in the automotive industry are enormous with emerging technology concepts, such as electrification, autonomous driving, connected mobile services, and new business models. However, digital innovation has proven difficult for original equipment manufacturers (OEM) due to complex organizational structures, corporate cultures, and technological inertia associated with the automotive industry. In a recent rating of the 50 firms that best combine new technology with effective business models, only 2 were automotive companies. The obstacles to digital innovation are related to closed innovation processes and to deficient collaboration forms with external development firms, i.e., startups. (b) Action taken: To overcome these challenges, a coalition of incumbent automotive and telecommunication firms set up a joint incubator, the Mobility X Lab (MXL), to engage with startups to support internalizing external technologies. Since its inception, the incubator has gone through several development phases and is currently transforming into a collaboration hub. So far, MXL has admitted 5 batches including 40 startups. An important distinguishing characteristic of MXL is that it only admits startups with two or more coalition partners involved. (c) Results achieved: MXL started as an incubator with a mentoring-based accelerator program. As MXL has developed, it has transformed into a collaboration hub and a neutral partner for fostering startup collaboration and engagement in the automotive industry. Based on lessons learned from startup batches and partner discussions, MXL has advanced, from offering traditional mentoring support, to be a central node in the innovation ecosystem of future mobility in Sweden, thus becoming a matchmaker for startup collaboration, providing guidance and access for startups to incumbent automotive and telecommunication firms and at the same time providing the partners with access to external technology, supporting them to stay relevant. (d) Lessons learned: Through the development of MXL, a coalition of established automotive and telecommunication firms have learned to manage some of the tensions related to digital transformation of their industry. By examining the case of MXL, a number of lessons can be learned: (1) Ensure partner interest through the “two partners” criteria, (2) initial emphasis on engaging startups and less focus on a complete process, (3) announce partner needs without disclosing partner pain-points, (4) coach startups and corporate partners simultaneously, (5) manage expectations early for both startups and corporate partners, (6) develop and implement sound collaboration measures, and (7) joint headship requires a consensus-based governance model.