With COP26 in Books, Can U.S. Meet Green Auto Push?

The COP26 international climate summit has finally wrapped. And as with any large climate-related meeting of the minds, automotive was once again front and center in discussions.

There’s no way around the fact that automotive is one of the foremost contributors to the emissions issues plaguing the planet today.

And although slow on the uptake at the beginning, automakers around the world have ramped up their emissions reduction and electrified-vehicle efforts – whether as a result of legislative pressure or a sense of moral urgency.

This is evidenced by the fact that OEMs are set to spend more than $500 billion on EVs by 2030. Combine this with the hundreds of millions in planned green energy investments from the government, and one would think the U.S. and its auto industry are surefire bets to hit their climate goals and stake out a leadership position for the rest of the world to follow. Unfortunately, this is not the case.

Political wrangling aside, the U.S. – both in a public and private sense – simply doesn’t have the innovation infrastructure in place to facilitate the rapid gains necessary to meet both our stated climate goals, and the ever-encroaching deadline to avert a full climate catastrophe.

Year upon year, millions of dollars are poured into the green vehicle revolution. Yet while the number of EVs, charging stations and other tentpole components of the green automotive push continue to rise, progress is still incredibly slow-moving.

Innovation in key areas such as batteries, semiconductors and lightweighting continue to be a huge obstacle to EV proliferation.

The good news is that this state of affairs can change with the right strategies in place. With that in mind, below are a few key cogs that each U.S. automaker can implement to bolster innovation performance and claim its place as a leader in the world of green vehicles.

Shift Away From Incrementalism

When viewed through a traditional business lens of ROI, taking incremental innovation steps makes a lot of sense. They’re more easily trackable and their outcomes are far more predictable than big-picture bets on the future.

The problem for American automakers and stakeholders is that due to the climate crisis and surge in internationally driven innovation, U.S. automotive stakeholders no longer have the luxury of rolling out a subtle improvement here and there.

Instead, big innovations are needed, and fast. Therefore, auto decision makers must rebalance their innovation approach toward medium- to long-term priorities and away from innovating primarily one model year to the next. In fact, it could be argued that incrementalism has led us to many of the issues we’re facing today.

For example, rather than doubling down on battery production and improvement years ago, automakers prioritized minor improvements to drive immediate vehicle sales and now face a shortage of batteries and can’t meet demand.

By shifting to a “horizon-focused” approach in which the mid- and long-term horizons aren’t treated as an afterthought, we can avoid similar barriers in the future.

Use Metrics to Industrialize Innovation Ops

Since the early 2000s, and more recently with the full-scale embrace of cloud computing, business intelligence has advanced rapidly.

So much so that it’s hard to find an organization that doesn’t have some sort of data-driven infrastructure and strategy toward tracking and making business decisions – except when it comes to their innovation operations.

Today, organizations commonly speak ad nauseam about the importance of innovation to their business, with many sinking tons of money into fancy innovation centers and startup incubators.

The problem is that unlike finance, sales or other departments, innovation and R&D departments lack the overarching measurement framework to drive growth.

More often than not, classic methods for justifying investment such as NPV, ROI and IRR have been imported from other departments without enough thought as to whether they are effective valuation methods for innovation. The result: confusion, missed opportunities, slow progress and wasted time and money.

Companies need to design innovation metrics that are fit-for-purpose, especially when it comes to mid- and long-term programs that are inherently speculative but also critical to the company’s future success.

Fit-for-Purpose Leadership

Today’s C-Suite is undergoing a massive makeover with the roles of each member being redefined from one quarter to the next. As the world speeds up, and as auto manufacturers feel increasing pressure to deliver groundbreaking innovation, there needs to be a place in the C-Suite for a corporate innovation leader whose job is to drive strategic innovation-fueled growth.

All too often, innovation is placed several levels under the CEO, either matrixed across the organization or buried within another function.

Chris Townsend

Thus, many innovation programs lack the in-depth short-, medium- and long-term strategic outlooks and decision-making support to drive a corporate innovation portfolio with any power or consistency.

This can be rectified by introducing a new strategic head that’s solely focused on innovation, such as a Chief Innovation Officer. To succeed, this role must serve as a conduit between the C-Suite and the frontline innovation workforce while maintaining a core innovation team that can source and incubate strategic bets before trying to scale them across the business.

By being bold in its innovation approach and by implementing commonsense operating practices for innovation, the U.S. automotive industry can quickly hit new levels of innovation efficiency and carve out its place atop the green automotive pyramid.

Chris Townsend (pictured, above left) is chief marketing officer of Wellspring, a provider of Innovation Ops software and solutions for corporations, universities and government agencies.