How can you transform your business to stay relevant in an increasingly digitized world and unlock new revenue streams? Develop a strategy for digital transformation that's unique to your business and adaptable to changing conditions. Our Digital Transformation (Part 2) collection, which you can download and customize to use for any industry, provides detailed slides on the top digital transformation tools, such as transformation readiness, transformation mapping, operational needs, implementation, and post-assessment.
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Why are automakers charging for basic services in their cars? BMW wants to charge $18 a month for heated seats, and even more for remote start and dash cam features. At the same time, GM just announced that it will add 50 new digital features and subscription services to its cars by 2026, with plans to build a Netflix-sized subscription service business by 2030. Subscription services are just one way the automaking industry is shifting to a digital focus. With new software and fully connected cars on the horizon, cars are evolving from simply a mode of transportation to full-on computers on wheels.
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Car companies want to boost revenue through post-purchase subscription models and software features that can be patched in remotely. Some of those include remote-start capabilities, driver-assist features, voice recognition, and of course the heated seats. Tesla got the microtransaction trend started when it shipped cars with battery packs that had their range limited by software. Owners would have to pay a fee to unlock the full capacity. Now, GM predicts that car customers are willing to spend $135 a month on subscriptions — and that's on top of monthly finance payments. Tesla's driver-assist features like lane keeping and auto-parking already cost an extra $199 a month.
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GM says last year it earned a staggering $2 billion dollars from in-car subscriptions alone. It hopes to grow that to $25 billion by the end of the decade. The big question is whether consumers are willing to fork out the cash for features that should probably just be included in the original price tag. A survey of over 200 prospective car buyers from earlier this year revealed the answer. Only 25% said they'd be willing to pay extra to unlock a vehicle feature. The rest said absolutely not. Of that 25%, the most in-demand upgrades were additional horsepower and safety features like lane assist. The challenge for car companies will be to provide true value with their subscriptions. Otherwise, they are likely to fail.
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Automakers will use these new revenue streams to build more vehicles that are electric, connected, and even autonomous. In order to achieve this growth, they will need to assess the realities of their operations and balance strategic growth with preserving value. As autonomous cars become more commonplace closer to 2030, the demand for in-car entertainment like movies, tv, and even online shopping will grow.
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Companies like Apple are already competing to provide the best in-car INFOtainment service to automakers. Apple is in talks with Honda and Nissan to implement its next-gen CarPlay OS that will turn your iPhone or iPad into a car dashboard. But automakers will likely want to control the entertainment hub themselves in order to maximize additional revenue streams and define their customer relationships long-term.
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Transformation readiness is a way to evaluate your level of preparation and resources at your disposal. It's also useful to set goals so that priorities are established early on. The columns represent individual features of the transformation, while the rows represent the status level of each feature. These features will be different for each company and can be easily customized. To chart more components, simply duplicate the slide. (Slide 11)
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Every new feature in a digital transformation is a mixture of strategic growth and value preservation. This slide provides a method to map this out. New features that are more focused on strategic growth should be placed in the upper left, while features centered around value preservation should be mapped closer to the bottom right. Strategic growth represents more outside-the-box ideas that can enable different forms of revenue, while value preservation is focused on maintaining the value and revenue your company already has. It's important to balance these two ideals during a digital transformation so your company does not lose sight of what made it successful in the first place even as it undergoes changes. (Slide 12)
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Once you've prepared and mapped out the transformation, it's important to structure your team accordingly. At the bottom, list your goals. Assign a team member or department to each color, and adjust each colored circle to represent their level of involvement in the corresponding goal. This provides a visual way to delegate, determine which teams are involved in each task, and assess hiring needs. (Slide 16)
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Now for the implementation of digital transformation. This slide shows how features are distributed throughout the transformation. As features fail or succeed, they can be removed or added to this map. The features in the inner cycle are what enable the goals, or propositions, in the outer circle. For a more traditional roadmap, there is also a conventional left-to-right chart. (Slide 24)
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During a digital transformation, it's important to take stock of what components have matured and what still has room for growth. In this example, four is the most successful, but these numbers can be changed. A scoring system is a good way to quantify results, and the most important part of that system is how you define success. Success metrics will be different for every company and may vary between features. For some, success may be revenue growth. For others, it may be reduced operational costs. Score accordingly. (Slide 27)
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To transform your company into a digital powerhouse, download and customize this presentation to save time and hours of work as you map out your digital transformation needs. For more like this, you can go check out our presentation on Innovation and Transformation Tools , which covers the tools big corporations and startups favor, or our Innovative Solutions framework for the top tools to avoid being disrupted and overtaken by newcomers in your industry.
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