Connected vehicles as a technology platform: Don Butler, Ford Motor Company

Don Butler, executive director for connected vehicles and services at Ford Motor Company, discusses digital transformation in the automotive industry. Butler talks about what Ford means in terms of automobiles being connected and defines the three aspects of connectivity they incorporate, beamed in, brought in and built in.

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(16:04) And so we need to be cognizant of that. we need to have – not just best practice but leading practice in terms of things like encryption, in terms of things like air-gap, in terms of things like signature identification and authentication – all of those things. And we need to learn and grow quite rapidly in terms of capability and expertize in that area, and we need to benefit from what’s happening around us. And so whether it’s partnering with other automotive OEM’s as was recently announced a couple of days ago in terms of a consortium that’s coming together to making sure that we’re approaching that in the right way to aligning ourselves with other entities outside of the automotive industry.

(16:49) Along those same lines in terms of security involves doing what a lot of other companies are doing, which is doing our own intrusion testing and leveraging outside parties to help us with that. To help us see things that we don’t see and then address those things before they become critical. And it’s a never ending journey, and it’s one of certainly prevention but proactive in quick response in case something does happen.

(17:23) But we think that it’s really critical in order to do this and to truly realize that again all the benefits of the connective world that we see from the standpoint of both consumers as well as ourselves as an enterprise and then the greater good in terms of society.

Michael:         (17:41) Don, as you’re talking it’s very clear that the implications of this for the industry and for Ford are such that the skills, the competencies, the processes inside Ford, the relationships with dealers, all of this will eventually be disrupted. And so I wonder, how does a company like Ford, that has been around for such a long time, how does Ford manage all of this during the period of transition?

Don:                (18:22) I think disruption is actually a key word for us and it’s a word that our CEO Mark Fields uses constantly and it’s more than just you know, cannibalized yourself before you’re cannibalized. It’s really about thinking beyond todays constructs and thinking beyond the way we create value today for instance. And understanding that if I go back to that scenario of the past it was we’ll give you the vehicle in exchange for money, and I’m really really grossly simplifying that right.

(19:03) That was in a sense a point solution for mobility, right. The way you got around was you owned or leased a vehicle and we in a sense were in control of that entire transaction and value exchange.

(19:15) What we’re recognizing and what we are embracing and sort of not just recognizing and hoping it goes away, but what we’re recognizing and embracing is that mobility solution is now no longer single point, it’s multi-variant. And we need to recognize that we don’t play the sole role in delivering that solution. So we are going to need to understand how is that solution changing and in what ways can we plug into that and continue to be part of that solution and recognizing again we aren’t the sole provider of that.

(19:55) So for instance, we’ve engaged in a series of experiments. We call the mobility experiments around the globe that look at how are people moving getting from place to place, and in what role we as Ford play in facilitating and actually embracing that change. And we even look at it internally and we’re thinking about how do we change or disrupt our internal processes.

(20:23) Again, if I go back to that model of the vehicle of roughly 90 percent sort of hardware based in terms of value, moving to more software based. You know the way we design and develop our products today, and again I’m going to grossly oversimplify it for purposes of the conversation.

(20:39) We have program teams that start on a vehicle program and work, you know three or four years to develop it design it, get it ready for production. Then it’s manufactured and it’s sold to dealers. Then that program team moves aback to the next program and start on the next vehicle.

(20:57) Well software is very different right. You develop it and you constantly enhance it and we’ve got to change our internal processes to move from this you know, periodic program model to more of an ongoing basis, ongoing team development model. Needing to move to agile types of concepts like minimally viable product right. We’re going to deliver a capability and experience but we’re going to recognize that it gets better over time.

(21:29) Right. And so the things that we look at in terms of quality and safety and what we need to meet regulations. We’re not going to change any of that because that’s fundamental and king of key to how we run our business. But at the same time, we need to graphed on this software technology company mentality that sort of disrupts or modifies or augments those internal processes with agile to fast prototype being learn fast, fail fast kinds of model that make sense in that world.

(22:05) Obviously, do it in a way that is contextually the correct way. But when I say fail fast, obviously we don’t want an air bag doesn’t fail fast. But if we’re talking about a consumer experience that we want to understand and learn, we’ll try somethings out. We’ll test it out, we’ll update it, we’ll see what kind of feedback we get. And that’s the other notion I think in terms of disrupting our business.

(22:32) And again I’ll go back to that we’re sort of in control of that single point solution and we’re now moving into this phase of co-creation, co-creation with partners, and co-creation with customers as well.

Vala:               (22:46) So are you as you talk about agile and value of the car shifting to a 90/10 in favor of hardware to 50/50 hardware – software. And I feel like all of this connectivity is a precursor and a requirement for self-driving cars, you’re going to need that instrumentation and real time, bidirectional precision communication, built into hardware and software in automobiles. So are your competitors, at the Googles and the Apples of the world, and is this really a requirement in order to get to perhaps the next most and biggest disruptive innovation in the automobile industry and that being self-driving cars?

Don:                (23:33) Yeah, there’s a lot there, and let me touch on a few of those components. Are our competitors, Apple and Google – yes and no. They’re competitors and partners and they are competitors in a couple of different senses right.

(23:51) I mean, if we want to create this enduring relationship with customers, there is only a few brands because of mind share and just you know minimizing complexity. There’s only a few brands that will really truly be able to do that and the customers will be willing to sort of engage in that relationship with.

(24:10) So from the standpoint of that mind share and that capacity for relationship building, certainly we are competing with Google, Facebook, with Apple, with Amazon potentially and so that is a more theoretical sort of competitive sort of dimensional. But none of the less I think it’s something we have to concern ourselves with, because that is the basis on which we are going to be compared by customers. It’s not just going to be you know Ford vs. Chevy versus you know, Volkswagen. It’s going to be my Ford experience vs. my Apple experience, vs. my Amazon experience.

(24:48) And gosh when I’m on Amazon they anticipate my needs and when I’m shopping things come up and it just feels natural, and you know, we’ve got to do that same thing inside of Ford, right. It’s got to be natural, it’s got to be seamless, it’s got to be simple.

(25:02) But at the same time, those same companies because they are part of delivering those experiences, and because as I said before that mobility solution becomes multi-variant, and will be working with some of those same companies as partners, right in terms of delivering that ultimate customer experience.

(25:23) And then when you think about what is going to be necessary for autonomies, certainly connected vehicle is one of the enablers for that in terms of the vehicle robustly understanding its environment, being able to communicate with other vehicles, being able to exchange information. Being able to have real time updates in terms of mapping, and being able to again, contextualize the environment what’s the weather like, and how is that going to influence you know what the autonomous drive system is doing.

(25:59) And within Ford what we have done is because we see you know, this interconnectedness and inner dependency, we’ve grouped a number of areas within Ford underneath this one umbrella we call, smart mobility.

(26:13) And so it is connectivity and connected vehicles, it’s big data and data analytics. It’s the mobility experiments that I referred to before. It’s autonomous and where we are headed there. And in all enabling these robust customer experiences that go beyond simply, you know I buy a vehicle and it takes care of my day-to-day needs. A customer’s experience that evolves into this enduring relationship.

(26:40) And what we know is that we don’t have all the answers. We don’t have everything figured out. We are going to be again, working with partners and working with customers as we develop and find answers to sort of again, solve that multi-variant equation. But I love the fact that we are thinking that way as a company, and you know, we are organizing ourselves that way as a company. And you know, when you think about it, it’s automotive as you alluded to before, you know, it’s over 110 years old as an industry.

(27:25) And it’s been a very sort of robust industry in terms of we continue to be a growth business, right. We continue to sell more and more vehicles globally around the planet. Now, we recognize at some point there’s a limit in terms of infrastructure, in terms of space and everything else. And so you know, mobility solutions are going to need to change as a result of that, but our ongoing viability and relevance as an industry, at least from a Ford perspective we need to change, as our consumers are changing, and as the things around our consumers are changing. We need to change as well and adapt, and grow and learn.

(28:07) Again, from a Ford perspective I’m excited to be at a place where we’re embracing that as opposed to require LinkedIn fear.

Michael:         (28:14) Your project has backing at the highest level of Ford, so give us a sense of the context of where you fit into Ford as an organization.

Don:                (28:29) Sure, so actually probably the best way to do that is to describe who my bosses are. So I report to Raj Nair, who heads global product development. I also report to Stephen O’Dell, who heads marketing. And I report to Marcy Klevorn, who heads information technology. And they all directly report to Mark Fields, the CEO. Mark and I have a monthly get-together, where he understands what is the latest and what’s going on, where do you need help.

(29:07) The senior leadership team is actively involved in both in determining and setting strategy, as well as our executional plans against that strategy. And our deliverables that are matching those plans – that’s the other thing that I really love about my job for instance is that I’m interacting on a regular basis with the CEO, with IT head, with the guy that runs product development, with marketing. And there’s an understanding and it’s – I’d love to say that it’s peculiar about the way Ford works.

(29:46) I’ve always been exposed to one other large organization and you know, Ford in terms of the working together component is really really good at that. And really really good at understanding that we need to view ourselves and operate in a way that our customers are viewing us.

(30:08) And customers don’t view Ford marketing, they don’t view Ford IT, they don’t view product development. They just use Ford, right, and so we need to work together in order to deliver solutions that cut across those skittle teams and functions. And in a sense, I’m one of those living integrators, and sometimes it’s a challenge to have three different bosses. But I think it’s also a forcing function that makes sure that you know what, when we come up with something and when we deliver something, is going to be coordinated. It’s going to be comprehensive, and it’s going to be something that is not necessarily for the benefit for any particular skill team or function, but for the benefit of our customers and for the benefit of the enterprise.

Vala:               (30:50) So your title could be director of connected cars, services and Ford executive – that’s awesome. I suspect that’s a tremendous amount of synergy and efficiency that you bring just as the glue of these three critically important lines of business. And I think it was PwC that noted last year that Ford was in the top 24 R&D spending in the world, so clearly the thirst for hunger and innovation at Ford is among the best in the world. What fuels that, is it – which one of your three bosses is really pushing the envelope in terms of, let’s not just be a market taker, let’s be a market maker?

Don:                (31:40) Yeah, that’s a great phrase, market-making and value creating as well. It really starts at the top and you can actually look at Alan Mulally, our past CEO and really having that notion of working together. And you know Mark, the current CEO is really kind of taken that to the next level and injected this sense of innovation into that working together piece. And it’s really driven from the very very top in terms of first just allocating the resources in this area.

(32:24) So it’s research and development and applying it in the right way and the example of these mobility experiments, right. That’s something that you know those have gone all the way up to Mark Fields in terms of – you know not the specific detail of every experiment, but the notion of, we’re going to do these experiments, here are the areas that they will entail, here’s what we hope to learn.

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