The clockspeed dilemma is accelerating
The auto industry has long been at the forefront of innovation, building a powerful base of knowledge along the way. From the Ford Model T, to mass production, to automatic transmissions and beyond, the car has evolved into an amazing blend of road machine and sophisticated computer. Add to that a dazzling array of the latest technologies—sensors, cameras, radar, LiDAR, and sophisticated chipsets. It’s clear we have witnessed profound change. And yet, despite all this astonishing innovation, it’s becoming clearer, with each passing day, that we are currently in the greatest period of innovation in the long and storied history of the automotive industry.
Indeed, in less than just five years, cognitive computing has advanced from a novelty to a commercialized means for solving problems. In 2014, bioengineers developed a circuit modeled on the human brain: 16 “neurocore” chips that simulate a million neurons and billions of synapses, able to process information 9000 times faster than a PC and with 40,000 times the energy efficiency. Then in April of 2015, IBM declared that we have begun “a golden era” that will lead to the development of a practical quantum computer. It was also in 2015, that my colleagues and I in KPMG’s automotive practice said that, for companies to thrive in this environment, they must solve what we call “the clockspeed dilemma.”
What is the clockspeed dilemma? Albert Einstein’s theory of relativity makes the point simply enough. Einstein taught us that time is relative. It sure is in the auto industry. Car companies obey a pace—a clockspeed—required of capital intensive powertrain plants, stamping plants, and assembly lines, to ensure cars work at Six Sigma quality every time and all the time, from -40° to +130° Fahrenheit. Now they must also embrace a far faster clockspeed—actually, multiple faster clockspeeds. The faster clockspeeds are the result of new players entering the ecosystem, from technology giants to startups. Some of the new competitors operate at a much larger economy of scale. All of them fuel customer demands for cars to be repeatedly new, exciting, and sexy while still holding to the standards of Six Sigma quality. Thus the clockspeed dilemma: the need to serve two different paces at once.
In the three years since KPMG discussed the idea of the clockspeed dilemma, headlines in the media continue to highlight that the auto industry recognizes the urgency to reconcile these two different rates of change-and it’s only accelerating.
- Waymo adding up to 62,000 Chrysler Pacifica Hybrid minivans to its self-driving fleet.
- SoftBank will invest $2.25 billion in General Motors’ Cruise Automation self-driving car unit.
- Apple is partnering with Volkswagen to turn existing T6 Transporter vans into self-driving shuttles.
- Aptiv will launch a fleet of 30 self-driving BMWs in Las Vegas.
- Drive.ai will run a fleet of driverless vehicles around Frisco, TX.
- Volkswagen and Didi Chuxing have struck a partnership to co-develop self-driving cars.
It is from these examples that billions are being invested and soon a new trillion-dollar market will emerge. Those who solve the clockspeed dilemma will be the winners in this new era.