Conversations with Chief Innovators Ep 1: Audi Business Innovation

We are excited to launch a new interview series — Conversations with Chief Innovators, in which our former CEO Pat Sheridan discusses innovation in business with transformational leaders across industries. In the first episode, we bring two leaders from Audi Business Innovation (ABI) — Andreas Sicheneder, CEO, and Florian Beck, global website platform lead.

Watch the full episode below:

Audi Business Innovation Gmbh (ABI) is a shining example of an innovation lab that gets it right. It is creating a customer-centric digital ecosystem in the automotive industry. ABI’s projects have made a strategic impact at not just Audi but also its parent organization Volkswagen AG.

In this episode, I discuss with Andreas and Florian how ABI transformed itself from an experimental lab into a key strategic unit. We also highlight several innovation challenges that large enterprises face — from dealing with regulatory compliance to reaching traditional customers with digital channels. Here are a few excerpts from our conversation.

1. What led to the creation of Audi Business Innovation?

In 2013, we could see a few rising stars (competitors) on the horizon. Tesla was still pretty small, but we could sense where the market was headed.

So, the board at Audi realized that there was a big missing piece in the company’s capabilities — software development. We wanted to strengthen our product development skills. That’s why Audi Business Innovation was created as a spinoff unit with a specific goal — to develop digital products from the outside, evolve the thinking, and bring the innovation back to the mothership.

2. How do you ensure alignment with customer expectations?

In the past, we thought we knew what the customers wanted. This has completely changed today. The customer is literally in the driver’s seat. If you’re not centering innovation and product development around customer needs and feedback, then you’re not innovating. Our complete product development process revolves around customer feedback.

We’re no longer targeting predictable customer buying behavior like we used to. Consumers are now developing brand relationships through digital channels, but they’re still going to use the traditional dealership model. So now, with this hybrid model, it’s all about figuring out how to enable that relationship and create this customer experience that fits within your brand, even if it’s not in your control.

3. The automotive industry is highly regulated with long lead times. How do you innovate in such an environment?

In the past, we had to anticipate the car’s functions at least 72 months in advance, which was not ideal. The entire car architecture had to change to accommodate significant changes or updates.

The good thing now is that the hardware is getting more flexible. The overall software architecture in the car has undergone significant changes. So, it is now possible to update future cars on future platforms because the possibility of updates is envisioned from the beginning. This is an entirely different approach.

We are aware of the legal requirements and must fulfill them, which is an integral part of our development process. Fortunately, authorities have also started to understand the need for a change. Both sides need to have the courage and the will to do things differently. Otherwise, nothing innovative will happen. We need authorities, and occasionally we need to challenge their opinions and processes.

4. Any advice for large enterprises embarking on a transformation journey?

When we started Audi Business Innovation, we were a small company that flew under the radar. We did some sporadic innovations, but it wasn’t important work. This is not a scalable approach.

What innovation labs need is a sense of urgency. Your outcomes should have an impact on your company. One of the biggest challenges that labs often face is getting the backing from senior management, at least from one senior manager. So trust your innovation lab, empower them to make decisions, and ensure their work aligns with corporate strategy. ABI found mentors at the executive level. And this, in my opinion, is one of the major factors behind our success.

5. What are your thoughts on company culture?

Five years ago, we decided to develop our company culture from the ground up. We said, forget the hierarchies, forget the way we work. We have to work in networks, not in departments. This is now absolutely mandatory; otherwise, people will not join your team.

People are not robots; They need challenges and problems to solve. Our teams have the responsibility to organize themselves and the freedom to solve problems. This is a critical piece that helped us navigate the COVID pandemic.

Catch the complete conversation here and view more of my interviews with innovators here.