In defense of incrementalism

Industry

I’m not really a Vegas guy — I had only been there three times before I joined Automotive News a year and half ago. But I’ve since doubled my visits and have been there twice already this year: for CES and for the NADA Show.

No doubt, Las Vegas is a good place to hold big events. It has a lot of hotels, a good-sized convention center and a very efficient airport.

Dealers seem to like Las Vegas. And it’s fairly handy for Silicon Valley’s tech startups, too. Every day of owning a business is a gamble, so why wouldn’t entrepreneurs enjoy the gaming capital?

CES and the NADA Show are each important events for the auto industry, but the overlap between them is rather limited. So I was struck by the similar undertones I heard from the two events: Call it a new appreciation for incremental progress.

Everyone can see the world is changing. But it isn’t changing overnight.

It was at CES in January where I met Dennis Clark from Honda Innovations. He’s the managing director for the automaker’s strategic venture partnerships, and he told me about his model for thinking about new technology opportunities that doesn’t bank on overturning how people get around and radically changing how people pay for transportation.

He sees a shift from the CASE (or ACES, as some of you prefer) view, with potential game changers coming from technology that allows for autonomous, connected or electric transportation to what he calls STEP, which focuses on ideas that are seamless, tangential, enabling, profitable.

You can read all about it on Page 16 — please do.

The broad takeaway is that while there is important work toward a possible future where people pay by the mile to ride in robot-controlled electric taxis that can serve us our favorite happy hour beverage while driving us home, the most immediate achievements are going to be the things that help people do better what they already do today — whether that’s behind the wheel or in the factory.

Or in the dealership.

The floor at the NADA Show a month later was packed with vendors making the case that they could help retailers run their businesses just a little bit better.

Automating text alerts to service lane customers — that sounds smart.

A telephone answering system that cycles through office and mobile phones to ensure that customers can reach an actual human — there’s a dealer-specific application of useful technology.

Not revolutionary. But good stuff.

In recent years, there’s been a lot of breathless enthusiasm at the NADA Show for digital retail and new tech tools that didn’t necessarily produce better bottom-line results, said Inga Maurer, a McKinsey partner and auto industry lead.

“I think it’s because there’s been no real adjustment to the underlying cost structure,” she told me in an interview for Automotive News TV.

Adding technology to help schedule service appointments or lead the shopper through the process doesn’t improve the business if you aren’t able to reduce the number of sales associates or managers.

As a result, at this year’s NADA Show, she saw less chasing of the latest shiny object and “a bit more pragmatism.”

I’ll be careful here not to draw any conclusions about the current political environment or Wall Street.

While some more extreme views gather the most attention and support, the auto industry and others in the business community are taking a breath after a long period of growth, bracing for major change — and wary of making bad bets.

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