MBA 580 Module 8 Final Innovation Strategy Proposal example

Beyond the Model Year: A Connected-Vehicle Innovation Strategy for a Composite U.S. Automaker

[Student Name]

Southern New Hampshire University

MBA 580: Innovation and Strategy for High-Performance Organizations

Module Eight Final Project

[Instructor Name]

[Date]

The organization, setting and figures below are a composite written as a model document. No real employer, client, colleague or patient is described.

Beyond the Model Year: A Connected-Vehicle Innovation Strategy for a Composite U.S. Automaker

The Case for Change

Crestline, the carmaker this course has followed, has built its reputation on reliable vehicles that improve steadily from one model year to the next. That strength is real, and it funds the company. But the industry is shifting toward vehicles defined by software and connected services, in which value comes partly from features and data delivered over a vehicle's life (Porter & Heppelmann, 2014). Research on established firms shows that companies excellent at incremental improvement are especially likely to underinvest in this kind of change, because it begins small and does not serve their best customers' current demands (Christensen, 1997). This proposal recommends a deliberate, staged strategy that keeps Crestline's core strength while building the capabilities it will need.

The Innovation Portfolio

Crestline should manage connected-vehicle innovation as a portfolio of three bets with different levels of risk, return and time horizon. Table 1 summarizes them.

Table 1

Connected-Vehicle Innovation Portfolio

Note. Composite estimates from the financial justification report.

Why a Portfolio

The three bets reinforce one another. Diagnostics produces the data, customer consent and dealer relationships that later services depend on. Fleet telematics brings in early recurring revenue and teaches the company how to sell subscriptions. The software platform creates the architecture for improvements not yet imagined. A portfolio also balances risk: the first two bets are likely to succeed and will fund learning, while the third carries the most uncertainty and the most strategic importance. Funding only the safe bets would make Crestline better at a business that is shrinking in relative value; funding only the platform would stake the company on a single uncertain wager.

Organizing for Ambidexterity

Crestline must run two kinds of innovation at once, and its current structure is built for only one. The proposal creates a connected-vehicle and software organization with its own budget, hiring practices and release process, reporting to the chief technology officer, while vehicle programs continue to own the vehicles themselves. A steering committee of the chief technology officer and the head of vehicle programs resolves conflicts between the two. This follows research recommending that exploratory units be structurally separate but connected to the core through senior leadership (Tushman & O'Reilly, 1996). Because established firms often stumble when a product's architecture changes, the new organization will own the centralized vehicle software architecture outright rather than negotiating each component with separate engineering groups (Henderson & Clark, 1990).

Three-Year Roadmap

Table 2 shows the roadmap, with each stage followed by a gate that releases the next round of funding only when the agreed evidence is in hand (Cooper, 1990).

Table 2

Connected-Vehicle Roadmap and Gates

Note. Composite plan.

Measuring Success

Success will be judged on more than financial returns in the early years. The executive team should track owner opt-in and retention of connected services, the accuracy of maintenance alerts, fleet subscriptions, update reliability, security incidents, customer satisfaction with connected features and the retention of new software hires. Financial measures, warranty savings and subscription revenue, will be tracked against the business case, but no bet should be ended solely because it has not yet paid back in the first two years, since the portfolio was designed with longer horizons. Each gate will ask whether the evidence supports continued investment, which keeps the company honest without applying short-term metrics to long-term work.

What Could Go Wrong

Three risks could derail the strategy, and the proposal addresses each in advance. The first is talent: Crestline competes with technology companies for software engineers, and if it cannot hire and keep them, the platform will slip. The response is to partner for commodity layers such as cloud services and infotainment, concentrate internal hiring on the vehicle software core and give the software organization its own pay structure and culture. The second is customer trust. If owners believe Crestline is collecting data for its own benefit, opt-in will stall and a single privacy failure could damage the brand. The response is plain consent choices, a visible benefit for every piece of data collected and security designed in from the start. The third is internal resistance from vehicle programs and dealers whose goals conflict with the new strategy. The steering committee, shared dealer revenue from predictive maintenance and revised performance measures for program leaders are the answers. Each risk has an owner on the steering committee and will be reviewed at every gate.

Leadership Commitments

The strategy will succeed only if senior leaders make three commitments. First, they must protect the software organization's budget and talent from being redirected to urgent vehicle program needs, a recurring pattern in established firms. Second, they must accept that some experiments will fail and that stopping a project at a gate is a success of the process, not a failure of the team. Third, they must change how performance is measured for leaders whose careers have been built on launch timing and cost per vehicle, so that support for the connected-vehicle strategy is rewarded rather than resisted. With those commitments, Crestline can remain excellent at building cars while becoming capable of improving them after they are sold, and the company that customers know for reliability can become known for vehicles that keep getting better.

References

Christensen, C. M. (1997). The innovator's dilemma: When new technologies cause great firms to fail. Harvard Business School Press.

Cooper, R. G. (1990). Stage-gate systems: A new tool for managing new products. Business Horizons, 33(3), 44-54. https://doi.org/10.1016/0007-6813(90)90040-I

Henderson, R. M., & Clark, K. B. (1990). Architectural innovation: The reconfiguration of existing product technologies and the failure of established firms. Administrative Science Quarterly, 35(1), 9-30. https://doi.org/10.2307/2393549

Porter, M. E., & Heppelmann, J. E. (2014). How smart, connected products are transforming competition. Harvard Business Review, 92(11), 64-88.

Tushman, M. L., & O'Reilly, C. A., III. (1996). Ambidextrous organizations: Managing evolutionary and revolutionary change. California Management Review, 38(4), 8-30. https://doi.org/10.2307/41165852