Open Innovation Might be Key to Growing the Auto Industry

Industry specialists in the automotive industry often point to open innovation projects, i.e. the incorporation of external ideas and research, as key to company growth and maintaining a competitive edge. Large corporations in South East Asia and across Europe are increasingly focusing on establishing long-term partnerships with universities, as well as absorbing smaller corporations through mergers and acquisitions to keep their perspective fresh.

[protected]Atheneum studies across 2012 showed that automotive manufacturers are proactively approaching universities to offer funded, longer-term research projects. Topics can vary from fuel efficiency to enhancements for electric vehicles. Also promising are short-term collaborations with specialized educational programs.

The advantages to these partnerships are numerous. They can be leveraged on a needs-basis to fill internal labor or knowledge gaps or to achieve better use of facility space. Partnerships can also alleviate temporary strains on employee recruitment and retention. In fact, building company awareness on campuses through these partnerships is an effective way to keep the application pipeline full of interesting candidates. Numerous universities worldwide are already involved in these initiatives, including: the Rochester Institute of Technology, Purdue University, MIT, Carnegie Melon and Tsinghua University, among others.

Also becoming more common are joint ventures and mergers and acquisitions. The strategy of absorbing or partnering with an existing company – as long as it is coupled with proper oversight – can enhance a manufacturer’s reach into specialized, niche markets and diversify the focus of its business units. Companies can also expand internationally more rapidly. Several leading automotive manufacturers have established internal departments that are fully focused on exploring and identifying these new venture opportunities.

Some manufacturers will find that open innovation projects will not be easy to implement for highly customized product lines. These efforts may need a more dedicated approach or specialized facilities. However, even in these circumstances, it can be advantageous to leverage external resources on a project-basis to bridge any internal gaps.

Atheneum interviews with experts have found that those involved in the open innovation decision-making process mainly focus on three basic criteria: proximity to the research center, specific know-how and university reputation. 

As universities invest more in their facilities and adopt an increasingly hands-on curriculum, automotive manufacturers – as well as other related companies – will find open innovation more viable. It is already common practice in consulting and other business fields to welcome student-managed case studies; a trend that will very likely spread to the main players in the automotive industry in the next years.[/protected]