Just like every other carmaker, back in 2008, BMW was going through a bumpy ride. With the global financial crisis, the german company saw its sales drop significantly – according to the Financial Times they had a “90 per cent drop in profits year-on-year in 2008”. The overall mindset of the younger population was also changing. People became more environmentally conscious and chose other types of transportations instead of covering the expenses of owning a car.
The future was happening and it looked like BMW was being left behind. And this is something that other big companies will find familiar. It’s like your industry is moving forward but somehow you’re dragging behind. Startups are coming up with new technologies and new business models, and you’re stuck with your core product that will most likely be obsolete in the next decade if you just stand still.
For BMW, it was clearly time to roll up their sleeves and gear up.
In this blog-post, I’ll tell you how BMW turned the tables and was able to maintain its position as a leading player in the industry, by boosting innovation and creativity.
Want to learn from BMW’s innovation strategy? Join us at the Lisbon Investment Summit where we’ll have Sohaila Ouffata, investment principal at BMW i Ventures, as speaker.
In the case of the german carmaker, the challenge was obvious. How could they improve their product and service, while looking for new business models? How could BMW be more than a car company? How could they develop environmentally friendly technologies but still have a personalized and luxurious experience?
How to kick-off the new strategy
To kick-off this mindset shift, BMW started something called “project i”. A special unit to develop new ideas on mobility, and its sustainability. Their goal? To reduce the environmental impact, and solve the mobility challenges of those who live in big cities. They spoke with several experts on these issues to understand how transport would evolve, and which products BMW could build to keep holding its position as a leading player in the industry.
“Project i” turned into “BMW i”, a sub-brand of the company, which led the efforts of developing lightweight eco-friendly urban electric car concepts, including what we now know as the i3 and i8 electric cars. They also launched BMW i Ventures, so that they could make strategic investments in innovative solutions with the same focus of BMW i. At Beta-i, we’ll actually learn more about BMW i Ventures, as we’ll have Sohaila Ouffata, investment principal of BMW i Ventures, as a speaker at the Lisbon Investment Summit so, feel free to join us.
Another thing BMW did was that they established relevant partnerships to think of new business models. One of those partnerships was with Sixt, a car rental company, to create something called DriveNow, a premium car-sharing service that started in Munich and quickly expanded into other European cities. In September 2015 DriveNow was operating over 4,000 vehicles in five countries worldwide and with over 500,000 customers.
Gearing up for the next 100 years
However, this couldn’t possibly be enough for a company like BMW…. The German carmaker raised the bar and defined 3 main challenges: optimizing production, improving mobility through new technologies, and creating environmentally friendly solutions.
The best of real and virtual worlds
On optimizing production, an interesting example of what BMW is up to is about making the process of creating new car designs as quick and painless as possible. According to TechCrunch, “the carmaker has tapped Unreal Engine’s rendering capabilities to generate virtual surfaces and objects overtop 3D-printed prototype vehicle pieces, letting designers and engineers preview how various materials or surfaces will look on a final shipping vehicle without having to actually make the thing first.” This solution not only decreases costs, as the carmaker spends less money on prototyping, but it also pushes for the development of better products and increases the collaboration between designers and engineers in other parts of the world.
Dynamically drive yourself or relax while being driven
As to new technological developments, BMW has announced in 2017 their vision for the next 100 years. It’s like Back to The Future, but with fancy gadgets. The car of the future is much more than any of us could wish for. BMW is pushing for self-driving cars, where you can either relax and enjoy the ride or drive it yourself and have a dynamic experience. All of this, to serve who they imagine as the “ultimate driver”. According to BMW, tomorrow’s “ultimate driver” will have 5 key characteristics: totally calm, relaxed all the way, a role model for sustainability, always up to date, and always in good mood. Check the video of this campaign to get the whole picture:
But, until these new technologies show up at our doorstep, the german car company keeps us on the edge with other cool features. One of them is related to connectivity. Over a year ago, they launched BMW Labs and were the first carmaker to integrate with an IFTTT service. This basically means that if you want to turn your house lights off by turning on your car, you can, thanks to BMW’s new integration with the IFTTT service that allows personalized connections just like that. This makes testing and implementing easier for BMW, as they get to test features with a few customers before full implementation.
Environmentally friendly solutions
BMW has stated that “in future, vehicles will be measured more than ever before according to the effects they have on people and the environment, and not only in terms of their energy consumption and CO2-emissions – the production process, sourcing of materials and their recyclability will all play a crucial role.” This is why their goal for the next 100 years is to develop personalized mobility experiences while thinking about the environment and how it can shape the society we live in.
What can your company learn from BMW’s innovation strategy
So, to sum this all up, what can your company learn from BMW’s innovation strategy? Well, don’t get left behind and think of new business models and new products in your industry. The challenge here, though, is to do that without losing sight of your core product and your role in the market.
Focus on customer development, and understand what your customers expect, and how you can solve their problems. Work alongside startups and innovative projects to bring those solutions closer to your companies. Define your innovation strategy and stimulate a culture of innovation in your team, and spark creativity. If you need any help, let us know 🙂
Was this case-study useful to you? Then, join us at the Lisbon Investment Summit this June, to learn from BMW’s experience, as well as other big companies, on how to drive innovation and creativity, and how to invest in startups from your industry.