Digital Disruption in the Automotive Industry - Using Game Theory Within Stage-Gate to Launch...

36
© Priiva Consulting Corporation 2016 Using Game Theory Within Stage-Gate to Launch Products That Can Win” For Stage Gate Intl VOE Summit June 15,16 2016 By Bill Forquer @billforquer Moving Beyond Competitive Analysis to Competitive Response

Transcript of Digital Disruption in the Automotive Industry - Using Game Theory Within Stage-Gate to Launch...

Page 1: Digital Disruption in the Automotive Industry - Using Game Theory Within Stage-Gate to Launch Products That Can Win

© Priiva Consulting Corporation 2016

“Using Game Theory Within Stage-Gate to Launch Products That Can Win”

For Stage Gate Intl VOE SummitJune 15,16 2016By Bill Forquer @billforquer

Moving Beyond Competitive Analysis to Competitive Response

Page 2: Digital Disruption in the Automotive Industry - Using Game Theory Within Stage-Gate to Launch Products That Can Win

© Priiva Consulting Corporation 2016

Question #1

“Would you play chess blind-folded?

Page 3: Digital Disruption in the Automotive Industry - Using Game Theory Within Stage-Gate to Launch Products That Can Win

© Priiva Consulting Corporation 2016

Question #2:

“Do you have a structured process for

tracking events?

Page 4: Digital Disruption in the Automotive Industry - Using Game Theory Within Stage-Gate to Launch Products That Can Win

© Priiva Consulting Corporation 2016

Events are the Unit of Change in Your Market

Events Heat Map

With each major event, is our position strengthening or eroding? Can be

applied to Acquirers, Differentiators, Product Roadmap, Standoffs, etc …

Software Inc. Strategic Events Heat Map: for Recent EventsDec-2010 Dec-2010 Dec-2010 Oct-2010

Sustained economic downturn.

Unprecedented consumer

adoption of smartphone and tablet devices.

SaaS Ankle Biter Inc

announces expanded

partnership with Infor.

Won 3 year deal with Anderson Windows

Overall Favorable or Unfavorable Favorable Unfavorable Highly Divisive Favorable Favorable/UnfavorableOverall Impact Low Medium High High Low /Medium/HighHigh

Software Inc., Strategic LensVision and Differentiation Sustainability

Improve the credibility of our Vision? Our soln has an ROI in 6 months.

If w e had some vision in this area, it could help.

If w e had some vision in this area, it could help.

Great referencable account.

Improve sustainability of our #1 Differentiator…adaptive to change?

Creates hesitation to rip & replace incumbent supply chain

softw are investments.

We have no plan for smartphones or tablets.

Infor+Ankle Biter messaging the same as

our dif ferentiator.

Great referencable account.

Improve sustainability of our #2 Differentiator…lower TCO?

We have lots of proof points.We have no plan for

smartphones or tablets.

Infor+Ankle Biter messaging the same as

our dif ferentiator.

Great referencable account.

Improve sustainability of our #3 Differentiator…dominate in construction industry suppliers?

New construction is dow n; rehab construction is up.

No demands coming from this segment as of yet.

We continue to dominate…Infor likely to

target our accounts.

Great referencable account.

Relationship Position & Strength

Improve our position with Top 5 Rev Producing Customers?

Doesn’t help; doesn't hurt. No demands coming from this segment as of yet.

Infor likely to target these accounts.

Great referencable account.

Improve our position with Top 5 Prospective Rev Customers?

Doesn’t help; doesn't hurt.Apparel prospects are asking about our plans.

We can still w in against Infor in apparrel.

Need to leverage this into appareI.

Improve our position with #1 Partner?Law son also positioned as the

low er TCO ERP supplier of choice.

No demands from Law son as of yet.

Law son w ill deepen partnership w ith us to f ight

Infor.

Not a Law son customer, but a great reference anyw ay.

Improve our position with #1 Current Competitor?

Doesn't help; doesn't hurt. Ankle Biter has nothing either.

More competitive landscape.

This w as a f ierce battle to not loose this

account to Ankle Biter.

Improve our position with #1 Future Competitor?

Doesn’t help; doesn't hurt.IBM/SAP all very

aggressive in mobility.SAP/IBM tolerates us over

Infor+Ankle Biter.Great reference

account.

Improve our position with #1 Targeted Strategic Buyer?

Stunted organic grow th by SAP w ill force them to acquire.

IBM/SAP all very aggressive in mobility.

SAP/IBM/Law son may acquire us to compete w ith Infor+Ankle Biter.

SAP/IBM/Law son may acquire us to get a

toehold in construction manufacturers.

“Would you play chess blind-folded?

Page 5: Digital Disruption in the Automotive Industry - Using Game Theory Within Stage-Gate to Launch Products That Can Win

© Priiva Consulting Corporation 2016

Events Heat Map

• Choose a Lens: Use any of The Wide Lens templates

• Color Code Events each quarter as {Fav, Unfav} and {High, Medium, Low} against the chosen lens

• Consider events from World, Macro Market, Specific Market, and Internal

See Events Heat Map Handout Example

Page 6: Digital Disruption in the Automotive Industry - Using Game Theory Within Stage-Gate to Launch Products That Can Win

© Priiva Consulting Corporation 2016

Your Challenge Today…

Strategic Decision Making

Merge, Acquire, Invest, Divest, Channels, Partners, Gov’t Affairs,

Innovation/Consolidation, Litigation, …

Endless debate

Urgency

Increasing Business Complexity and

Market Disruption

Board of Directors Scrutiny

“More analysis” “More action”

Page 7: Digital Disruption in the Automotive Industry - Using Game Theory Within Stage-Gate to Launch Products That Can Win

© Priiva Consulting Corporation 2016

The Priiva Process…A Different Approach

Who is involved? Players

What can they do ?Options

What do they want ?Preferences

Where can we get to ?Predicted outcomes

How do we get there ?Tactics

What did we learn ?Insights

Game Theory

MODEL INPUTS MODEL OUTPUTS

|----------------------------------Process duration is 4-6 weeks----------------------------------||---------------- Executive Time Commitment is two half-day workshops-----------------|

Page 8: Digital Disruption in the Automotive Industry - Using Game Theory Within Stage-Gate to Launch Products That Can Win

© Priiva Consulting Corporation 2016

Sample of Priiva Success ReferencesCompany Issue Incoming

BiasPriiva

AnalysisObservation Strategic Action

PlanLarge information technology provider

Fear of disruptive entry by “gorillas”

Find lucrative replacement market or sell-out now

Model overall industry structure

Current competitors and new entrants all favor status quo fearing cascading auction

Grow and scale with targeted acquisitions since consolidation is further away than anticipated

Information Services Provider

“Googlization” and eroding demand for traditional services.

Expand into adjacent services

Analyze competitive and cooperative reaction of adjacent services

Expansion actually accelerates traditional services erosion

Change competitive positioning of the expanded services. Improve sales tools.

Large multinational manufacturer

Enter adjacent market

Alliance w/ selected competitor

Customers, regulators, and competitors

Trigger unilateral capacity expansion eroding price margins

Alliance with market leader rather than the selected competitor

Green Energy Provider

Market structure unknowns

Focus on USA market

Regional market variations

Asian markets more ready, lucrative, and provides USA toe-hold

Invest in Asian market development; advocacy only in USA market

Page 9: Digital Disruption in the Automotive Industry - Using Game Theory Within Stage-Gate to Launch Products That Can Win

© Priiva Consulting Corporation 2016

Deliverables - Quantitative

Niche Player

Struggling Incumbent

Technology Player

DivMultiNat

Customer New Entrant

Influence

1

2

3

4 5

6

7

8 9 10 11

12

13 14 15 16

17

18

19 20

21

22

23

24

Strong Agreement

Strong Disagreement Option Agreement

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Significant

Insignificant

Option significance

Niche Player

Struggling Incumbent

Technology Player

DivMultiNat

Customer

New Entrant

Prefers Status Quo Seeks Change

Change Seeking

Niche Player

Struggling Incumbent

Technology Player

DivMultiNat

Customer

New Entrant

Sensitive to Others Self Focused

Self- importance

US Gov't Favor FC N N N N N → Y Y Y

Favor wind, solar N N N N N → Y Y Y

European Gov't Favor FC N N → Y Y Y Y Y Y

Favor wind,solar N N → Y Y Y Y Y Y

Asian Gov't Favor FC N → Y Y Y Y Y Y Y

Favor wind,solar N → Y Y Y Y Y Y Y

Investors Invest in FC N N N N N N → Y Y

Invest in wind,solar N N N N N N → Y Y

Utility Providers Promote FC N N N N N N N → Y

Promote wind,solar N N N N N N N → Y

System Integrators Increase outsourcing/JD N N N → Y Y Y Y Y

Develop FC internally N N N → Y Y Y Y Y

Acquire stack developer N N N → Y Y Y Y Y

Large Multinationals Increase FC investment N N N N → Y Y Y Y

Increase Outsource/JD N N N N → Y Y Y Y

Acquire stack developer N N N N → Y Y Y Y

Increase Wind,solar investment N N N N → Y Y Y Y

Early End Users AdoptersFavor FC N → Y Y Y Y Y Y Y

Favor wind,solar N → Y Y Y Y Y Y Y

US DoD Favor FC N N N N N N N → Y

Favor wind,solar,battery N N N N N N N → Y

Outcomes

What is the progression to the outcome? Who wields the power?

What options do players care the most about?

What options are divisive (aka “domino” events)?

Who favors change? Who favors status quo?

Who is self focused? Who is sensitive to the action of

others?

US Gov't Favor FC N N N N N → Y Y Y

Favor wind, solar N N N N N → Y Y Y

European Gov't Favor FC N N → Y Y Y Y Y Y

Favor wind,solar N N → Y Y Y Y Y Y

Asian Gov't Favor FC N → Y Y Y Y Y Y Y

Favor wind,solar N → Y Y Y Y Y Y Y

Investors Invest in FC N N N N N N → Y Y

Invest in wind,solar N N N N N N → Y Y

Utility Providers Promote FC N N N N N N N → Y

Promote wind,solar N N N N N N N → Y

System Integrators Increase outsourcing/JD N N N → Y Y Y Y Y

Develop FC internally N N N → Y Y Y Y Y

Acquire stack developer N N N → Y Y Y Y Y

Large Multinationals Increase FC investment N N N N → Y Y Y Y

Increase Outsource/JD N N N N → Y Y Y Y

Acquire stack developer N N N N → Y Y Y Y

Increase Wind,solar investment N N N N → Y Y Y Y

Early End Users AdoptersFavor FC N → Y Y Y Y Y Y Y

Favor wind,solar N → Y Y Y Y Y Y Y

US DoD Favor FC N N N N N N N → Y

Favor wind,solar,battery N N N N N N N → Y

Sensitivity of Outcomes

What is the outcome if we change a player’s behavior?

Page 10: Digital Disruption in the Automotive Industry - Using Game Theory Within Stage-Gate to Launch Products That Can Win

© Priiva Consulting Corporation 2016

Deliverables – Qualitative

Standoffs

Tradeoffs

Zero Sum vs. Rising Tide

Deadlocks

Auction Robustness

Credible Signaling

Page 11: Digital Disruption in the Automotive Industry - Using Game Theory Within Stage-Gate to Launch Products That Can Win

© Priiva Consulting Corporation 2016

Benefits of Game Theory and the Priiva Process

Strategic Action Plan

Predictable Outcomes

Efficient Process Aligned Executive TeamRobust Competitive Response as Gate

Criteria

Deep Insights

Page 12: Digital Disruption in the Automotive Industry - Using Game Theory Within Stage-Gate to Launch Products That Can Win

© Priiva Consulting Corporation 2016

Autonomous Vehicles

Our Working Session

Page 13: Digital Disruption in the Automotive Industry - Using Game Theory Within Stage-Gate to Launch Products That Can Win

© Priiva Consulting Corporation 2016

Auto Industry Disruption

DISRUPTIONDISRUPTION

DISRUPTION

Autonomous Vehicles

Internet of Things Electrification

DISRUPTIONDISRUPTION

DISRUPTION

Direct to Consumer

Sharing Economy Car as a Service

Page 14: Digital Disruption in the Automotive Industry - Using Game Theory Within Stage-Gate to Launch Products That Can Win

© Priiva Consulting Corporation 2016

Autonomous is a Continuum

Level 1 Level 2 Level 3 Level 4

Primitive Controls

More Controls

Cede Driving

Driverless

Eg, Cruise Control

Eg, Crash Detection

Still requires a

driver

A living space

Levels 1-4 are the adopted definitions imposed by FHTSA

Page 15: Digital Disruption in the Automotive Industry - Using Game Theory Within Stage-Gate to Launch Products That Can Win

© Priiva Consulting Corporation 2016

Recent Headlines• Mar 11, 2016 – GM Acquires Cruise Automation for

$1B to Accelerate Autonomous Vehicles• Apr 27, 2016 - Ford and Google Lead Lobbying

Coalition• Apr 28, 2016 – Google and Fiat-Chrysler Nearing

Tech Agreement• May 5, 2016 – Ford Invests $182M in Pivotal to

Strengthen Mobility Software• May 14, 2016 – Apple Invests $1B in Didi• May 24, 2016 – Uber & Toyota Confirm Strategic

Investment and Leasing Deal• …

Page 16: Digital Disruption in the Automotive Industry - Using Game Theory Within Stage-Gate to Launch Products That Can Win

© Priiva Consulting Corporation 2016

Recall the 3 Inputs to a Model

Page 17: Digital Disruption in the Automotive Industry - Using Game Theory Within Stage-Gate to Launch Products That Can Win

© Priiva Consulting Corporation 2016

Our Players

1. Tech Player – Apple, Google, MSFT2. Car Mfg Incumbent – Ford, Fiat-

Chrysler, Honda, Toyota, BMW, …3. GM4. Car Disruptor – Tesla, Faraday

Future, …5. Car as a Service – Uber, Lyft, Car2Go6. Govt – Federal, state, local

Who is involved? Players

Page 18: Digital Disruption in the Automotive Industry - Using Game Theory Within Stage-Gate to Launch Products That Can Win

© Priiva Consulting Corporation 2016

Players and OptionsTech Player1 Dev Full Stack (Car and OS)Car Mfg Incumbent2 Dev their own Car OS3 Partner Exclusively with a Tech Player for Car OS4 Partner Non-Exclusively with Tech Player(s) for Car OS5 Partner with GM for Onstar as Car OSGM6 Aggressively fund OnStar to be ubiquitous Car OS7 Sunset OnStarCar Disruptor8 Dev their own Car OS9 Partner Exclusively with a Tech Player for Car OS10 Partner Non-Exclusively with Tech Player(s) for Car OS11 Partner with GM for OnStar as Car OSCar as a Service12 Favor Tech Players13 Favor Car Mfg Incumbents14 Favor GM15 Favor Car DisruptorsGovt16 Impose Light Regulations17 Impose Moderate Regulations18 Impose Heavy Regulations

OptionsWhat can they do ?Options

18 total options

Each option has a

unique identifier

Page 19: Digital Disruption in the Automotive Industry - Using Game Theory Within Stage-Gate to Launch Products That Can Win

© Priiva Consulting Corporation 2016

Preference Tree SyntaxPreference Tree

Car Mfg Incumbent

-1-161813-17 More Important

4 IF (17)-6 + Denotes Desire

-12-14 - Denotes Fear-157 IF Denotes Conditional

-11-9 Less Important or Indifferent

-10-8-235

Players and OptionsTech Player1 Dev Full Stack (Car and OS)Car Mfg Incumbent2 Dev their own Car OS3 Partner Exclusively with a Tech Player for Car OS4 Partner Non-Exclusively with Tech Player(s) for Car OS5 Partner with GM for Onstar as Car OSGM6 Aggressively fund OnStar to be ubiquitous Car OS7 Sunset OnStarCar Disruptor8 Dev their own Car OS9 Partner Exclusively with a Tech Player for Car OS10 Partner Non-Exclusively with Tech Player(s) for Car OS11 Partner with GM for OnStar as Car OSCar as a Service12 Favor Tech Players13 Favor Car Mfg Incumbents14 Favor GM15 Favor Car DisruptorsGovt16 Impose Light Regulations17 Impose Moderate Regulations18 Impose Heavy Regulations

Page 20: Digital Disruption in the Automotive Industry - Using Game Theory Within Stage-Gate to Launch Products That Can Win

© Priiva Consulting Corporation 2016

PlayersPlayer PersonaTech Player (Google, Apple, MSFT)

Aggressive technology disruptor

Car Mfg (Ford, Fiat-Chrysler, BMW, Audi, Toyota, Honda, Kia, et al)

Incumbents from USA, Germany, Japan, Korea, etc

GM Incumbent with connected car toehold via OnStar, CaaS toehold in Lyft, and Cruise Acquisition

Car Disruptor (Tesla, Faraday Future)

Disruptive with autonomous features as well as electrification, biz model, and driver experience

Car as a Service (Uber, Lyft, Car2Go et al)

Disruptor wanting to end personal car ownership

Govt Regulates transportation and safety

Who is involved? Players

Page 21: Digital Disruption in the Automotive Industry - Using Game Theory Within Stage-Gate to Launch Products That Can Win

© Priiva Consulting Corporation 2016

Lets do the first preference tree together

Preference Matrix GM Govt

Tech Player1.) Dev Full Stack (Car and OS)Car Mfg Incumbent2.) Dev their own Car OS3.) Partner Exclusively with a Tech Player for Car OS 12 -1 -1 -1 -18 14.) Partner Non-Exclusively with Tech Player(s) for Car OS 4 -16 -16 -18 16 45.) Partner with GM for Onstar as Car OS 3 18 18 16 1 8GM -18 13 14 15 4 66.) Aggressively fund OnStar to be ubiquitous Car OS 16 -17 5 8 10 107.) Sunset OnStar 1 4 IF (17) 11 10 9 17Car Disruptor -2 -6 -3 9 3 128.) Dev their own Car OS 10 -12 -2 -17 11 159.) Partner Exclusively with a Tech Player for Car OS 9 -14 -4 -11 5 1410.) Partner Non-Exclusively with Tech Player(s) for Car OS -11 -15 -8 -12 6 1311.) Partner with GM for OnStar as Car OS -14 7 -9 -13 -17 5Car as a Service -8 -11 -10 -14 -7 -212.) Favor Tech Players -5 -9 -17 -4 -2 313.) Favor Car Mfg Incumbents -17 -10 -7 2 -8 -714.) Favor GM 13 IF (3) -8 6 3 12 915.) Favor Car Disruptors -6 -2 -12 5 15 11Govt 7 3 -13 7 13 -1816.) Impose Light Regulations 15 IF (9) 5 -15 -6 14 -1617.) Impose Moderate Regulations18.) Impose Heavy Regulations

Preference MatrixTech

PlayerCar Mfg

Incumbent GMCar

DisruptorCar as a Service Govt

Tech Player1.) Dev Full Stack (Car and OS)Car Mfg Incumbent2.) Dev their own Car OS3.) Partner Exclusively with a Tech Player for Car OS 12 -1 -1 -1 -18 14.) Partner Non-Exclusively with Tech Player(s) for Car OS 4 -16 -16 -18 16 45.) Partner with GM for Onstar as Car OS 3 18 18 16 1 8GM -18 13 14 15 4 66.) Aggressively fund OnStar to be ubiquitous Car OS 16 -17 5 8 10 107.) Sunset OnStar 1 4 IF (17) 11 10 9 17Car Disruptor -2 -6 -3 9 3 128.) Dev their own Car OS 10 -12 -2 -17 11 159.) Partner Exclusively with a Tech Player for Car OS 9 -14 -4 -11 5 1410.) Partner Non-Exclusively with Tech Player(s) for Car OS -11 -15 -8 -12 6 1311.) Partner with GM for OnStar as Car OS -14 7 -9 -13 -17 5Car as a Service -8 -11 -10 -14 -7 -212.) Favor Tech Players -5 -9 -17 -4 -2 313.) Favor Car Mfg Incumbents -17 -10 -7 2 -8 -714.) Favor GM 13 IF (3) -8 6 3 12 915.) Favor Car Disruptors -6 -2 -12 5 15 11Govt 7 3 -13 7 13 -1816.) Impose Light Regulations 15 IF (9) 5 -15 -6 14 -1617.) Impose Moderate Regulations18.) Impose Heavy Regulations

Which option 1-18 is the most important

to Tech Player?

Page 22: Digital Disruption in the Automotive Industry - Using Game Theory Within Stage-Gate to Launch Products That Can Win

© Priiva Consulting Corporation 2016

Build Preference Trees for all other Players …

Page 23: Digital Disruption in the Automotive Industry - Using Game Theory Within Stage-Gate to Launch Products That Can Win

Player's interests are directly reflected in the preference trees

Player Represents Description

Tech Player (Google, Apple, MSFT)

Aggressive technology disruptor

Wants every car depending on their Car OS. Wants govt to impose light regulations. Will manufacture cars (ie, the full stack) if that is the pre-requisite to winning every car. Doesn’t want incumbents or Car Disruptors developing their own OS, but are not overly sensitive to that because they believe those players will fail doing so.

Car Mfg (Ford, Daimler, BMW, Audi, Toyota, Honda, Kia, et al)

Incumbents from USA, Germany, Japan, Korea, etc

Favors status quo and fears disruption. Fears Tech Players entering with a full stack. Fears that govt will be light handed but wants them to be heavy handed to slow down others giving themselves more time to develop. Needs to win new car sales of CaaS fleets. Does not view Onstar as a viable Car OS. Tech Players need to fail at manufacturing so they become more amenable to partnering for the Car OS.

GM Incumbent with connected car toehold via OnStar

Not as fearful as Car Mfg incumbents as Onstar and Lyft investment provide toeholds. Fears the govt will be light handed but wants them to be heavy handed to slow down others and would like others to fail at their own Car OS efforts falling back to OnStar partnerships triggering more aggressive Onstar development.

Car Disruptor (Tesla, Faraday Future)

Disruptive with autonomous features as well as electrification, biz model, and driver experience

Fears Tech Players entering with a full stack. Fears heavy regulations and wants light regulation to favor autonomous features and electrification. Wants to win new car sales of CaaS fleets and is prepared to develop their own OS to do so. Not fearful of the actions by Car Mfg incumbents, GM, and does not view Onstar as a viable Car OS.

Car as a Service (Uber, Lyft, Car2Go et al)

Disruptor wanting to end personal car ownership

Wants govt out of the way and all parties to succeed getting genuine driverless cars to market which triggers their purchase of a fleet of driverless vehicles from multiple vendors and eliminates their expense of drivers.

Govt Regulates transportation and safety

Wants all players to be successful achieving driverless status as a means for the USA to regain worldwide dominance in the auto industry. Will exert moderate regulations so as to not stifle innovation and not compromise safety.

Page 24: Digital Disruption in the Automotive Industry - Using Game Theory Within Stage-Gate to Launch Products That Can Win

Simulation Summary

• The Natural Outcome:• Will develop quickly…there are no

deadlocks to slow down the market• Govt has lots of tradeoffs• Tech Player and Govt are the power

players and exert their options early• Tech Player, Govt, and CaaS interests

align well with the Natural Outcome• Car Mfg Incumbent, GM, and Car

Disruptors must act quickly

Page 25: Digital Disruption in the Automotive Industry - Using Game Theory Within Stage-Gate to Launch Products That Can Win

Influence

Tech Player

Car Mfg Incumbent

GMCar Disruptor

Car as a Service

Govt

The Influence Chart measures a player's ability to influence the behavior of other players.

The larger the slice…• the more importantly other players view their options• the more influence they have over the behavior of the other players

Page 26: Digital Disruption in the Automotive Industry - Using Game Theory Within Stage-Gate to Launch Products That Can Win

Self Importance

Tech Player

Car Mfg Incumbent

GM

Car Disruptor

Car as a Service

Govt

Sensitive to Others Self Focused

The Self Importance Chart measures how important the player's owned options are to themselves.

The more important the player is, the less likely they are to be influenced by the behavior of others.

The less important a player is, the more likely they are to be influenced by the actions of others.

Page 27: Digital Disruption in the Automotive Industry - Using Game Theory Within Stage-Gate to Launch Products That Can Win

Natural Outcome vs. Player’s Interests

0

2 0

4 0

6 0

8 0

1 0 0

Tech Player

Car MfgIncumbent

GM

Car Disruptor

Car as a Service

Govt

Radar

Natural Outcome R6

The Radar Chart•Maps how well aligned Outcomes are with the different player's Interests•A point near the origin represents the least preferred outcome•A point near the terminus represents the most preferred outcomeThe Happiness Map

Page 28: Digital Disruption in the Automotive Industry - Using Game Theory Within Stage-Gate to Launch Products That Can Win

Change Seeking

Tech Player

Car Mfg Incumbent

GM

Car Disruptor

Car as a Service

Govt

Prefers Status Quo Seeks Change

The Change Seeking Chart measures a player's appetite for change to occur.

A preference toward the status quo may indicate fear of consequences of change as well as preference for the status quo.

Page 29: Digital Disruption in the Automotive Industry - Using Game Theory Within Stage-Gate to Launch Products That Can Win

Interest Alignment

Tech Player Car Mfg IncumbentGM Car Disruptor Car as a Service GovtTech PlayerCar Mfg IncumbentGMCar DisruptorCar as a ServiceGovt

The Interest Alignment Chart reflects alignment of interests. Green indicates good alignment and may reveal hidden allies. Red indicates mis-alignment and may reveal hidden enemies.

Page 30: Digital Disruption in the Automotive Industry - Using Game Theory Within Stage-Gate to Launch Products That Can Win

Tech Player,

Govt, and CaaS

interests align well with the Natural

Outcome

The Natural OutcomeTech

Player

Develops their own full stack and non-exclusively licenses their Car OS. More regulation than they prefer.

Car Mfg Incumbent

Non exclusively licenses Car OS. Operates in fierce competition and with less regulation than desired. Expect consolidation.

GMEventually develops OnStar due to a late developing partnership. Lyft toehold may be an (expensive) savior.

Car Disruptor

Non exclusively licenses Car OS. Operates in fierce competition amongst its differentiators.

Car as a Service

Has lots of options to own driverless car fleets and cut driver costs.

Govt Imposes moderate regulation so as to stimulate innovation and ensure safety.

Page 31: Digital Disruption in the Automotive Industry - Using Game Theory Within Stage-Gate to Launch Products That Can Win

Game Model ProgressionPlayers Option List Moves

Tech Player Dev Full Stack (Car and OS) N → Y Y Y

Car Mfg Incumbent Dev their own Car OS N N N N

Partner Exclusively with a Tech Player for Car OSN N → Y Y

Partner Non-Exclusively with Tech Player(s) for Car OSN N → Y Y

Partner with GM for Onstar as Car OS N N N → Y

GM Aggressively fund OnStar to be ubiquitous Car OSN N N → Y

Sunset OnStar N N N N

Car Disruptor Dev their own Car OS N N → Y Y

Partner Exclusively with a Tech Player for Car OSN N → Y Y

Partner Non-Exclusively with Tech Player(s) for Car OSN N → Y Y

Partner with GM for OnStar as Car OS N N N N

Car as a Service Favor Tech Players N N N → Y

Favor Car Mfg Incumbents N N N → Y

Favor GM N N N → Y

Favor Car Disruptors N N N → Y

Govt Impose Light Regulations N N N N

Impose Moderate Regulations N → Y Y Y

Impose Heavy Regulations N N N N

1. Government imposes moderate regulations to encourage broad investment in AV.

2. Tech Players invest in full stack dev, especially knowing moderate regulation.

3. Car Disruptors pursue all their options.

4. Car Mfg Incumbent’s attempt to partner with Tech Players

6. CaaS are agnostic, looking to drive down costs via aggressive competition

5. GM and a Car Mfg Incumbent finally partner triggering OnStar development

Page 32: Digital Disruption in the Automotive Industry - Using Game Theory Within Stage-Gate to Launch Products That Can Win

What CarMfgIncumbent Should Do• Tech Player’s option to Dev Full Stack and Govt’s Option for Moderate

Regulation are power events that occur early and largely dictate the Natural Outcome.

• Car Mfg Incumbent needs to alter or embrace one or both of those player options IMMEDIATELY

• Incumbents could tie other investments with regulations favorable to incumbents

• Incumbents should establish an early partnership with a Tech Player and a CaaS player

• Incumbents should explore if the insurance lobby can increase govt regulation and slow down the market

• Incumbents should innovate new car features that stave off eroding personal car ownership as driven by CaaS

• Incumbents interests align well with Car Disruptor. Explore partnering opportunities.

• Incumbent(s) could partner with GM and tie further Onstar investment with regulations favorable to incumbents

Page 33: Digital Disruption in the Automotive Industry - Using Game Theory Within Stage-Gate to Launch Products That Can Win

© Priiva Consulting Corporation 2016

Events are the Unit of Change in Your Market

Events Heat Map

With each major event, is our position strengthening or eroding? Can be

applied to Acquirers, Differentiators, Product Roadmap, Standoffs, etc …

Software Inc. Strategic Events Heat Map: for Recent EventsDec-2010 Dec-2010 Dec-2010 Oct-2010

Sustained economic downturn.

Unprecedented consumer

adoption of smartphone and tablet devices.

SaaS Ankle Biter Inc

announces expanded

partnership with Infor.

Won 3 year deal with Anderson Windows

Overall Favorable or Unfavorable Favorable Unfavorable Highly Divisive Favorable Favorable/UnfavorableOverall Impact Low Medium High High Low /Medium/HighHigh

Software Inc., Strategic LensVision and Differentiation Sustainability

Improve the credibility of our Vision? Our soln has an ROI in 6 months.

If w e had some vision in this area, it could help.

If w e had some vision in this area, it could help.

Great referencable account.

Improve sustainability of our #1 Differentiator…adaptive to change?

Creates hesitation to rip & replace incumbent supply chain

softw are investments.

We have no plan for smartphones or tablets.

Infor+Ankle Biter messaging the same as

our dif ferentiator.

Great referencable account.

Improve sustainability of our #2 Differentiator…lower TCO?

We have lots of proof points.We have no plan for

smartphones or tablets.

Infor+Ankle Biter messaging the same as

our dif ferentiator.

Great referencable account.

Improve sustainability of our #3 Differentiator…dominate in construction industry suppliers?

New construction is dow n; rehab construction is up.

No demands coming from this segment as of yet.

We continue to dominate…Infor likely to

target our accounts.

Great referencable account.

Relationship Position & Strength

Improve our position with Top 5 Rev Producing Customers?

Doesn’t help; doesn't hurt. No demands coming from this segment as of yet.

Infor likely to target these accounts.

Great referencable account.

Improve our position with Top 5 Prospective Rev Customers?

Doesn’t help; doesn't hurt.Apparel prospects are asking about our plans.

We can still w in against Infor in apparrel.

Need to leverage this into appareI.

Improve our position with #1 Partner?Law son also positioned as the

low er TCO ERP supplier of choice.

No demands from Law son as of yet.

Law son w ill deepen partnership w ith us to f ight

Infor.

Not a Law son customer, but a great reference anyw ay.

Improve our position with #1 Current Competitor?

Doesn't help; doesn't hurt. Ankle Biter has nothing either.

More competitive landscape.

This w as a f ierce battle to not loose this

account to Ankle Biter.

Improve our position with #1 Future Competitor?

Doesn’t help; doesn't hurt.IBM/SAP all very

aggressive in mobility.SAP/IBM tolerates us over

Infor+Ankle Biter.Great reference

account.

Improve our position with #1 Targeted Strategic Buyer?

Stunted organic grow th by SAP w ill force them to acquire.

IBM/SAP all very aggressive in mobility.

SAP/IBM/Law son may acquire us to compete w ith Infor+Ankle Biter.

SAP/IBM/Law son may acquire us to get a

toehold in construction manufacturers.

“Would you play chess blind-folded?

Page 34: Digital Disruption in the Automotive Industry - Using Game Theory Within Stage-Gate to Launch Products That Can Win

© Priiva Consulting Corporation 2016

Your Stage-Gate Process• Track and codify

events as they occur

• Apply structured approach for your bigger bets (i.e., M&A)

Software Inc. Strategic Events Heat Map: for Recent EventsDec-2010 Dec-2010 Dec-2010 Oct-2010

Sustained economic downturn.

Unprecedented consumer

adoption of smartphone and tablet devices.

SaaS Ankle Biter Inc

announces expanded

partnership with Infor.

Won 3 year deal with Anderson Windows

Overall Favorable or Unfavorable Favorable Unfavorable Highly Divisive Favorable Favorable/UnfavorableOverall Impact Low Medium High High Low /Medium/HighHigh

Software Inc., Strategic LensVision and Differentiation Sustainability

Improve the credibility of our Vision? Our soln has an ROI in 6 months.

If w e had some vision in this area, it could help.

If w e had some vision in this area, it could help.

Great referencable account.

Improve sustainability of our #1 Differentiator…adaptive to change?

Creates hesitation to rip & replace incumbent supply chain

softw are investments.

We have no plan for smartphones or tablets.

Infor+Ankle Biter messaging the same as

our differentiator.

Great referencable account.

Improve sustainability of our #2 Differentiator…lower TCO?

We have lots of proof points.We have no plan for

smartphones or tablets.

Infor+Ankle Biter messaging the same as

our differentiator.

Great referencable account.

Improve sustainability of our #3 Differentiator…dominate in construction industry suppliers?

New construction is dow n; rehab construction is up.

No demands coming from this segment as of yet.

We continue to dominate…Infor likely to

target our accounts.

Great referencable account.

Relationship Position & Strength

Improve our position with Top 5 Rev Producing Customers?

Doesn’t help; doesn't hurt. No demands coming from this segment as of yet.

Infor likely to target these accounts.

Great referencable account.

Improve our position with Top 5 Prospective Rev Customers?

Doesn’t help; doesn't hurt.Apparel prospects are asking about our plans.

We can still w in against Infor in apparrel.

Need to leverage this into appareI.

Improve our position with #1 Partner?Law son also positioned as the

low er TCO ERP supplier of choice.

No demands from Law son as of yet.

Law son w ill deepen partnership w ith us to f ight

Infor.

Not a Law son customer, but a great reference anyw ay.

Improve our position with #1 Current Competitor?

Doesn't help; doesn't hurt.Ankle Biter has nothing

either.More competitive

landscape.

This w as a fierce battle to not loose this

account to Ankle Biter.

Improve our position with #1 Future Competitor?

Doesn’t help; doesn't hurt.IBM/SAP all very

aggressive in mobility.SAP/IBM tolerates us over

Infor+Ankle Biter.Great reference

account.

Improve our position with #1 Targeted Strategic Buyer?

Stunted organic grow th by SAP w ill force them to acquire.

IBM/SAP all very aggressive in mobility.

SAP/IBM/Law son may acquire us to compete w ith Infor+Ankle Biter.

SAP/IBM/Law son may acquire us to get a

toehold in construction manufacturers.

Page 35: Digital Disruption in the Automotive Industry - Using Game Theory Within Stage-Gate to Launch Products That Can Win

© Priiva Consulting Corporation 2016

Benefits of Game Theory and the Priiva Process

Strategic Action Plan

Predictable Outcomes

Efficient Process Aligned Executive TeamRobust Competitive Response as Gate

Criteria

Deep Insights

Page 36: Digital Disruption in the Automotive Industry - Using Game Theory Within Stage-Gate to Launch Products That Can Win

© Priiva Consulting Corporation 2016

About Priiva

1. A boutique strategy consulting firm.2. Specialized in applying game theory methodology to optimize the outcome

of strategic business decisions.3. Our clients engage us for…

a) Strategy developmentb) Executive development (on competitive landscape and external environment)c) Mgmt retreat curriculum (on competitive landscape and external environment)d) Risk mitigation (ie, 2nd opinion on a decision already taken)

4. Principals are industry executives from IT, Energy, Chemicals, Financial Services, and Automotive industries.

5. Hundreds of business cases analyzed with 85% prediction accuracy.6. Fixed price consulting engagement OR fixed price insights report on an

industry topic. Bill ForquerPrincipalPriiva ConsultingBio: www.priiva.com/Bill.htmlTwitter: @billforquer