Digital Transformation and the Automotive Industry

Automotive technology touches all of us every day. For the automobile industry, digital transformation means using the vehicle as a platform to deliver software-based services based on data, sensors, and analytics. In this rapid-approaching future, cars represent a shift towards a truly mobile Internet of Things (IoT) world and autonomous vehicles.

Don Butler, Executive Director of Connected Vehicle and Services, Ford Motor Company, shares his perspective on how Ford and the entire automotive industry are transforming. Previously, Butler was head of marketing for Cadillac at General Motors. He is a leading authority on how the auto industry will transform using technology and data.

Transcript

Michael:         

(00:06) Hello, greetings everybody digital transformation, whatever that buzzword means is affecting every industry including one of the largest, longest and most well-established industries on the planet which is the automotive industry. And today on episode number 109, with my co-host Vala Afshar.

Vala:   

(00:43)Hello Michael.

Michael:         

(00:45) Hello Vala, we have as our guest Don Butler, who is responsible for connected cars and services for the Ford motor company.

Vala:   

(00:57) Welcome Don.

Don:    

(00:58) Thanks Vala and hello Michael.

Michael:         

(01:00)Don, how are you. Thank you for joining us today.

Don:    

(01:03) Thank you, it’s good to be here.

Vala:   

(01:05) Don could you start the show with background, a little bit of background about yourself and what you do at Ford.

Don:    

(01:14) Sure, sure, so I have an electrical engineering degree from General Motors Institute, now known as Kettering University and I have an MBA from Harvard and have spent a vast majority of my career in the automotive industry. First in a series of engineering positions and then in planning, marketing, general management roles, business development roles.

(01:45) Spent actually a brief period of time at a start-up called Inrix, which they do traffic data services. They’re based in Kirkland, Washington and I’m now with Ford. And at Ford as you said I lead connected vehicle and services for our organisation and I work across what we call our functional skill team, so product development, information technology and marketing, and I lead our thrust in terms of connected vehicle services and experiences, and how we are thinking differently about you know the products and services that we deliver to the customers, as well as increasing the experiences that we deliver to customers as well all in the context of connectivity.

Michael:         

(02:38) So when I think about cars driving down the road, I’m not thinking about wires hanging off the car, I’m just thinking about just going down the road. So what does it mean connected vehicles and services?

Don:    

(02:50) Sure, so probably the best thing is to start with our kind of simple definition of connectivity and what we mean when we say connectivity and we divided into three facets. We talk about beamed in, brought in, and built in.

(03:10)And if you think about connectivity as the ability of the vehicle to have access to information that’s outside the vehicle in either transmitting information or receiving information, actually since the days of the AM radio right we’ve had connected vehicles right. So that’s the first most basic form of connectivity.

(03:31)Constant information that is beamed into the vehicle, so today that is much much more sophisticated obviously with things like satellite radio and not only you know media and content that you get through satellite radio for instance, but data as well, traffic data, services, you know weather forecast data that kind of thing.

(03:52)And from a Ford standpoint, you know we’ve had the lead in the element of connectivity that we call brought in connectivity. So that is leveraging the content, the capability, the communications capability, the media, contacts on a smart device – smart phone that you bring into the vehicle and so with sync going all the way back to 2007, you know we’ve had the sort of foresight to understand in that consumers want to stay connected even when they’re in a vehicle environment, and we do that in a way that is safe, seamless, leveraging voice for instance for control to allow consumers to keep their hands on the wheel and eyes on the road – for now, right. And we can get into what the future might hold.

(04:42)Then the other aspect of connectivity is what we call built in. So the vehicle has its own independent node on the network, joining the Internet of things. Having

Michael:         

(00:06) Hello, greetings everybody digital transformation, whatever that buzzword means is affecting every industry including one of the largest, longest and most well-established industries on the planet which is the automotive industry. And today on episode number 109, with my co-host Vala Afshar.

Vala:   

(00:43)Hello Michael.

Michael:         

(00:45) Hello Vala, we have as our guest Don Butler, who is responsible for connected cars and services for the Ford motor company.

Vala:   

(00:57) Welcome Don.

Don:    

(00:58) Thanks Vala and hello Michael.

Michael:         

(01:00)Don, how are you. Thank you for joining us today.

Don:    

(01:03) Thank you, it’s good to be here.

Vala:   

(01:05) Don could you start the show with background, a little bit of background about yourself and what you do at Ford.

Don:    

(01:14) Sure, sure, so I have an electrical engineering degree from General Motors Institute, now known as Kettering University and I have an MBA from Harvard and have spent a vast majority of my career in the automotive industry. First in a series of engineering positions and then in planning, marketing, general management roles, business development roles.

(01:45) Spent actually a brief period of time at a start-up called Inrix, which they do traffic data services. They’re based in Kirkland, Washington and I’m now with Ford. And at Ford as you said I lead connected vehicle and services for our organisation and I work across what we call our functional skill team, so product development, information technology and marketing, and I lead our thrust in terms of connected vehicle services and experiences, and how we are thinking differently about you know the products and services that we deliver to the customers, as well as increasing the experiences that we deliver to customers as well all in the context of connectivity.

Michael:         

(02:38) So when I think about cars driving down the road, I’m not thinking about wires hanging off the car, I’m just thinking about just going down the road. So what does it mean connected vehicles and services?

Don:    

(02:50) Sure, so probably the best thing is to start with our kind of simple definition of connectivity and what we mean when we say connectivity and we divided into three facets. We talk about beamed in, brought in, and built in.

(03:10)And if you think about connectivity as the ability of the vehicle to have access to information that’s outside the vehicle in either transmitting information or receiving information, actually since the days of the AM radio right we’ve had connected vehicles right. So that’s the first most basic form of connectivity.

(03:31)Constant information that is beamed into the vehicle, so today that is much much more sophisticated obviously with things like satellite radio and not only you know media and content that you get through satellite radio for instance, but data as well, traffic data, services, you know weather forecast data that kind of thing.

(03:52)And from a Ford standpoint, you know we’ve had the lead in the element of connectivity that we call brought in connectivity. So that is leveraging the content, the capability, the communications capability, the media, contacts on a smart device – smart phone that you bring into the vehicle and so with sync going all the way back to 2007, you know we’ve had the sort of foresight to understand in that consumers want to stay connected even when they’re in a vehicle environment, and we do that in a way that is safe, seamless, leveraging voice for instance for control to allow consumers to keep their hands on the wheel and eyes on the road – for now, right. And we can get into what the future might hold.

(04:42)Then the other aspect of connectivity is what we call built in. So the vehicle has its own independent node on the network, joining the Internet of things. Having its own independent capability of transmitting and receiving information and so in that case we are talking about a data modem that is part of that vehicles architecture that allows it to transmit, receive information to allow customers for instance to remotely interact with that vehicle to do things like lock, unlock, remotely start the engine. In the case of an electric vehicle for instance, check the status of the battery charge and then leveraging also that built in, connectivity to be able to do things like software updates and make sure that that vehicle actually gets better over time. And the challenge within that is that it’s fundamentally different than what we’ve historically done both for a vehicle development standpoint as well as the way that we approach our customers.

(05:47) You know, to this point in time, you know really if I could simplify it, it’s been we’ve provide customers with a vehicle and they give us money in exchange and its essentially a onetime transaction. There is no real ongoing relationship through that ownership period or user period, and so what we’re doing now is understanding that like many other brands, services, and experiences we need to stay connected, we need to develop that longer term relationship, both with the vehicle and the customer.

Vala:   

(06:22) I saw a video, I think it was at Mobile World Congress where you demonstrate and I believe it was a Ford Focus electric car and it was pretty amazing on a mobile app from how much you can charge the device and all of the ways that you can control and have all this intelligence to and from the vehicle, it felt like you know you’re connecting and having the opportunity to build real customer intimacy by providing  tremendous amount of capability on what is ultimately becoming the remote control for life.

Don:    

(07:02)A smart phone

Vala:   

(07:03) Yeah, a smart phone so it feels like the largest mobile device in our lifetime will be a car – mobile connected device. I mean why is all of this important and you talked about the different kind of connectivity but is it really enhancing the customer experience and building that more than one time interaction, is that ultimately what’s driving the innovation.

Don:    

(07:27) That’s absolutely a key, and I love the phrase that you mentioned ‘customer intimacy’ and it’s really about us as an industry, adapting more and more to what customers are already doing and how are customers are living their lives today.

(07:50)We kind of joked about it, but it’s true. The smart phone has become in a sense you know that hub of our digital life, and you know, even the phrase ‘digital life’ at some point digitals going to be like we joke about it here. You don’t say the electrified home right, it’s just – of course, homes are electrified and you’ve got electricity.

(08:13) So consumers are increasingly connected and living digital lifestyles so in order for us to remain relevant you know we need to be part of that and and take advantage of devices that their using like the smart phone for instance, and enabling experiences that wouldn’t otherwise be possible because we’ve got that connection and the Ford Focus energy is a great example of that, of you know one of the areas around electric vehicles is obviously you know, charging is a much different context than you know them being able to stop by the gasoline station.

(08:51) So there’s increased sensitivity for obvious reasons around you know, what the state of charge, you know how long is it going to take me to get to a particular destination, is my battery charge capacity enough for me to get to that destination.

(09:08) And so with our mobile app for instance we empower customers to understand, what is the state of charge of the battery and then translate that into a meaningful way for them to understand it.

(09:20) So if they’ve got a particular route or destination, they can use the smart phone app to understand here’s where I’d like to go, and then we give them a very simple indicator in terms of a red, yellow, or green of what’s the likelihood of the battery charge being able to take you to that destination and then by the way know what are the charging points that’s either along the route or conveniently located that you can take advantage of.

(09:47) And so again, it’s about integrating ourselves into how our consumers are already experiencing life and living life and moving sort of that automotive context more into a consumer experience, digital experience and connected lifestyle context.

Michael:         

(10:10) So don, when the vehicle becomes a software platform it enables you at Ford to have an ongoing relationship that extends far beyond you know just that functional drive time.

Don:    

(10:31) Absolutely, and I believe it was a Morgan Stanley study that show a high level of what they use today sort of loosely, but today – or I should say in the resent passed roughly 90% of a vehicles value you know has been in hardware components right. The power trains, the suspension, the body, the interior and roughly 10% of it was in software and control modules.

(11:06) And as we go forward we see that ratio shifting quite dramatically such that you know, roughly 50% of the vehicles value will be in that hardware and the other 50% is divided between software and experiences and sort of out of vehicle sort of content.

(11:31) And a couple of things that really enable us to do first, we are as you allude toable to maintain sort of an ongoing connection we have the benefit of you know what software enables which is capability that gets better over time.

(11:52) And so you know, unlike a suspension system that you know, you take your best inputs, take customer inputs, you understand what’s going on competitively, you understand you know what are the requirements of this vehicle. You’ve designed and built the best suspension system that you can but once you commit to it you’re done right. you done have you know upgradable control arms, but we will have upgradable software and that in a sense empowers the consumer to have a vehicle that you know potentially that two to three years from now is as good as you know the vehicle that someone buys new in that time frame.

(12:34) It also enable us to benefit from you know the data that is a result of those interactions and leveraging that data, and first of all it’s the customer’s data and we are stewards of it on their behalf. That’s our position for it here at Ford.

(12:54) But leveraging that data to enhance that experience and that relationship with the consumer to provide more more and provide better and more contextual experiences.

(13:03) Again so that we become more and more part of how customers are living their lives and the vehicle becomes you know par tof a solution to a multi-variant equation of you know customers are using and again in terms of how they’re perusing life and  living life.

Vala:   

(13:20) So you know, as you’re building this innovation to bolster customer intimacy and use software technology to create stronger connection between the driver, passenger, and Ford. There’s an awesome amount of responsibility in terms of security and as someone who is also a technologist it must be a tremendous of Fords part to encryption technology to monitoring back end systems to whatever you do to ensure the personal information of Michael, Vala, and Don are safe and secure and you’re using it only to add value and to enhance the experience of the driver. Can you talk a little bit about that?

Don:    

(14:07) Sure you’re absolutely right Vala and the way we look at it is this notion of connected platform delivering compelling experiences which result in you know during the relationships with customers, none of that is possible unless it’s built on a foundation of trust. We’ve literally got a graphic here that illustrate all of this literally on a foundation of trust, and there’s two components to that trust and again you’ve alluded to them.

(14:40) You know first is privacy and second is security. You know so as a customer or a user, what do I want ford or other parties to know about me and to know about the vehicle. You know that’s the privacy element and the security element, what is Ford doing to protect me and my data from hacking and from threats.

(15:06) So on the privacy side I’ve talk you know about our philosophy of being stewards of the customers data. It’s the customers data and we’re stewards on their behalf, and we believe that giving customers control over how that data is used is absolutely the right thing to do and we believe that to the extent that we are providing value commits with that permission that we’ve got a balance there, and we need to always think about what is going to be valuable for the customer, not you know what can we do with this data.

(15:42) On the security side, it’s understanding that you know practically as we become more connected in terms of the vehicle and in terms of you know the cellular networks and in-vehicle networks and mobile apps that you know the threat surface grows exponentially.

(16:04) And so we need to be cognizant of that. we need to have – not just best practice but leading practice in terms of things like encryption, in terms of things like air-gap, in terms of things like signature identification and authentication – all of those things. And we need to learn and grow quite rapidly in terms of capability and expertize in that area, and we need to benefit from what’s happening around us. And so whether it’s partnering with other automotive OEM’s as was recently announced a couple of days ago in terms of a consortium that’s coming together to making sure that we’re approaching that in the right way to aligning ourselves with other entities outside of the automotive industry.

(16:49) along those same lines in terms of security. And then doing what a lot of other companies are doing which is you know, doing our own intrusion testing and leveraging outside parties to help us with that. To help us see things that we don’t see and then address those things before they become critical. And it’s a you know it’s a never ending journey, and it’s one of certainly prevention but proactive in quick response in case something does happen.

(17:23) But we think that it’s really critical in order to to this and to truly realize that again all the benefits of the connective world that we see from the standpoint of both consumers as well as ourselves as an enterprise and then the greater good in terms of society.

Michael:         

(17:41) Don, as you’re talking it’s very clear that the implications of this for the industry and for Ford are such that the skills, the competencies, the processes inside Ford, the relationships with dealers, all of this will eventually be disrupted. And so I wonder, how does a company like Ford  that has been around for such a long time, how does Ford manage all of this during the period of transition.

Don:    

(18:22) I think disruption is actually a key word for us and it’s a word that our CEO Mark Fields uses constantly and it’s more than just you know, cannibalized yourself before you’re cannibalized. It’s really about thinking beyond todays constructs and thinking beyond the way we create value today for instance. And understanding that if I go back to that scenario of you know in the past it was we’ll give you the vehicle in exchange for you know money, and I’m really really grossly simplifying that right.

(19:03) That was in a sense a point solution for mobility, right. the way you got around was you owned or leased a vehicle and we in a sense were in control of that entire transaction and value exchange.

(19:15) You know, what we’re recognizing and what we are embracing and sort of not just recognizing and hoping it goes away, but what we’re recognizing and embracing is that mobility solution is now no longer single point, it’s multi-variant. And we need to recognize that we don’t play the sole role in delivering that solution. So we are going to need to understand how is that solution changing and in what ways can we plug into that and continue to be part of that solution and recognizing again we aren’t the sole provider of that.

(19:55) So for instance, we’ve engaged in a series of experiments. We call the mobility experiments around the globe that look at you know, how are people moving getting from place to place, and in what role we as Ford play in facilitating and actually embracing that change. And we even look at it internally and we’re thinking about how do we change or disrupt our internal processes.

(20:23) Again, if I go back to that model of the vehicle of roughly 90% sort of hardware based in terms of value, moving to more software based. You know the way we design and develop our products today, and again I’m going to grossly oversimplify it for purposes of the conversation.

(20:39) You know, we have program teams that start on a vehicle program and work, you know three or four years to develop it design it, get it ready for production. Then it’s manufactured and it’s sold to dealers. Then that program team moves aback to the next program and start on the next vehicle.

(20:57) Well software is very different right. You develop it and you constantly enhance it and we’ve got to change our internal processes to move from this you know, periodic program model to more of an ongoing basis, ongoing team development model. Needing to move to agile types of concepts like you know, minimally viable product right. We’re going to deliver a capability and experience but we’re going to recognize that it gets better over time.

(21:29) Right. And so the things that we look at in terms of quality and safety and what we need to meet regulations. We’re not going to change any of that because that’s fundamental and king of key to how we run our business.  But at the same time, we need to graphed on this software technology company mentality that sort of disrupts or modifies or augments those internal processes with agile to fast prototype being learn fast, fail fast kinds of model that make sense in that world.

(22:05) Obviously, do it in a way that iscontextually the correct way. But when I say fail fast, obviously we don’t want an air bag doesn’t fail fast. But if we’re talking about a consumer experience that we want to understand and learn, we’ll try somethings out. We’ll test it out, we’ll update it, We’ll see what kind of feedback we get. And that’s the other notion I think in terms of disrupting our business.

(22:32) And again I’ll go back to that we’re sort of in control of that single point solution and we’re now moving into this phase of co-creation, co-creation with partners, and co-creation with customers as well.

Vala:   

(22:46) So are you as you talk about agile and value of the car shifting to a 90/10 in favor of hardware to 50/50 hardware – software. And I feel like all of this connectivity is a precursor and a requirement for self-driving cars, you’re going to need that instrumentation and real time, bidirectional precision communication, built into hardware and software in automobiles. So are your competitors, at the Googles and the Apples of the world, and is this really a requirement in order to get to perhaps the next most and biggest disruptive innovation in the automobile industry and that being self-driving cars.

Don:    

(23:33) Yeah, there’s a lot there, and let me touch on a few of those components. Are our competitors, Apple and Google – yes and no. They’re competitors and partners and they are competitors in a couple of different senses right.

(23:51) I mean, if we want to create this enduring relationship with customers, there is only a few brands because of mind share and just you know minimizing complexity. There’s only a few brands that will really truly be able to do that and the customers will be willing to sort of engage in that relationship with.

(24:10) So from the standpoint of that mind share and that capacity for relationship building, certainly we are competing with Google, Facebook, with Apple, with Amazon potentially and so that is a more theoretical sort of competitive sort of dimensional. But none of the less I think it’s something we have to concern ourselves with, because that is the basis on which we are going to be compared by customers. It’s not just going to be you know Ford versus Chevy versus you know, Volkswagen. It’s going to be my Ford experience versus my Apple experience, versus my Amazon experience.

(24:48) And gosh when I’m on Amazon they anticipate my needs and when I’m shopping things come up and it just feels natural, and you know, we’ve got to do that same thing inside of Ford, right. It’s got to be natural, it’s got to be seamless, it’s got to be simple.

(25:02) But at the same time, those same companies because they are part of delivering those experiences, and because as I said before that mobility solution becomes multi variant, and will be working with some of those same companies as partners, right in terms of delivering that ultimate customer experience.

(25:23) And then when you think about what is going to be necessary for autonomies, certainly connected vehicle is one of the enablers for that in terms of the vehicle robustly understanding its environment, being able to you know communicate with other vehicles, being able to exchange information. Being able to have you no real time updates in terms of mapping, and being able to again, contextualize the environment what’s the weather like, and how is that going to influence you know what the autonomous drive system is doing.

(25:59) And within Ford what we have done is because we see you know, this interconnectedness and inner dependency , we’ve grouped a number of areas within Ford underneath this one umbrella we call, smart mobility.

(26:13) And so it is connectivity and connected vehicle. It’s big data and data analytics. It’s the mobility experiments that I referred to before. It’s autonomous and where we are headed there. And in all enabling these robust customer experiences that go beyond simply, you know I buy a vehicle and it takes care of my day-to-day needs. A customers experience that evolves into this enduring relationship.

(26:40) And what we know is that we don’t have all the answers. We don’t have everything figured out. We are going to be again, working with partners and working with customers as we develop and find answers to sort of again, solve that multi variant equation. But I love the fact that we are thinking that way as a company, and you know, we are organising ourselves that way as a company. And you know, when you think about it, it’s automotive as you alluded to before, you know, it’s over 110 years old as an industry.

(27:25) And it’s been you know, a very sort of robust industry in terms of we continue to be a growth business, right. We continue to sell more and more vehicles globally around the planet. Now, we recognise at some point you know, there’s a limit in terms of infrastructure, in terms of space and everything else. And so you know, mobility solutions are going to need to change as a result of that, but our ongoing viability and relevance as an industry, at least from a Ford perspective we need to change, as our consumers are changing, and as the things around our consumers are changing. We need to change as well and adapt, and grow, and learn.

(28:07) Again, from a Ford perspective I’m excited to be at a place where we’re embracing that as opposed to require LinkedIn fear.

Michael:         

(28:14) Your project has backing at the highest level of Ford, so give us a sense of the context of where you fit into Ford as an organisation.

Don:                

(28:29) Sure, so actually probably the best way to do that is to describe who my bosses are. So I report to Raj Nair, who heads global product development. I also report to Stephen O’Dell, who heads marketing. And I report to Marcy Klevorn, who heads information technology. And they all directly report to Mark Fields, the CEO. Mark and I have a monthly get-together, where he understands what is the latest and what’s going on, where do you need help.

(29:07) The senior leadership team is actively involved in both in determining and setting strategy, as well as our executional plans against that strategy. And our deliverables that are matching those plans – that’s the other thing that I really love about my job for instance is that I’m interacting on a regular basis with the CEO, with IT head, with the guy that runs product development, with marketing. And there’s an understanding and it’s – I’d love to say that it’s peculiar about the way Ford works.

(29:46) I’ve always been exposed to one other large organisation and you know, Ford in terms of the working together component is really really good at that. And really really good at understanding that you know, – we need to view ourselves and operate in a way that our customers are viewing us.

(30:08) And customers don’t view Ford marketing, they don’t view Ford IT, they don’t view product development. They just use Ford, right, and so we need to work together in order to deliver solutions that cut across those skittle teams and functions. And in a sense, I’m one of those living integrators, and sometimes it’s a challenge to have three different bosses. But I think it’s also a forcing function that makes sure that you know what, when we come up with something and when we deliver something, is going to be coordinated. It’s going to be comprehensive, and it’s going to be something that is not necessarily for the benefit for any particular skill team or function, but for the benefit of our customers and for the benefit of the enterprise.

Vala:   

(30:50) So your title could be you know, director of connected cars, services and Ford executive – that’s awesome. I suspect that’s tremendous amount of synergy and efficiency that you bring just as the glue of these three critically important lines of business. And I think it was PWC that noted last year that Ford was in the top 24 R&D spending in the world, so clearly the thirst for hunger and innovation at Ford is among the best in the world. What fuels that, is it – which one of your three bosses is really pushing the envelope in terms of, let’s not just be a market taker, let’s be a market maker.

Don:                

(31:40) Yeah, that’s a great phrase, market-making and value creating as well. It really starts at the top and you can actually look at Alan Mulally, our past CEO and really having that notion of working together. And you know Mark, the current CEO is really kind of taken that to the next level and injected this sense of innovation into that working together piece. And it’s really driven from the very very top in terms of you know, first just allocating the resources in this area.

(32:24) So you know, research and development and applying it in the right way and you know, the example of these mobility experiments, right. That’s something that you know those have gone all the way up to Mark Fields in terms of – you know not the specific detail of every experiment, but the notion of, we’re going to do these experiments, here is the areas that they will entail, here’s what we hope to learn.

(32:45) And it’s really about keeping one foot sort of firmly in the present, right. Because we have got $100 billion plus business that we need to run on behalf of our shareholders and other stakeholders. We need to do that in the most efficient and effective way as possible. So is keeping one foot in the present and doing that really really well, while also having a foot in the future, and a future that we are trying to create as opposed to a future that will inherit.

Michael:         

(33:17) So it’s very hard to talk about this topic without thinking about Tesla. And I hope that’s not rude of me to bring up Tesla but they are dedicated to this, whereas Ford is obviously a much larger and older company which has its pluses and minuses. So can you maybe talk a little bit about your view of Tesla and the industry as a whole?

Don:                

(33:40) Sure I think Tesla is I’ll use the word microcosm and I don’t mean that in a diminishing sense. But is a microcosm for where the industry is headed and how the industry needs to think. You know, the benefit that Tesla has had is that they were able to start with literally a clean sheet of paper.

(34:06) And sort of take the best in terms of thinking like a software company, right. Because you know that was their origin and so guess what, their vehicles are updatable over the air. They do have a platform and architecture that is software-based and software capable.

(34:29) You know, and they are thinking about you know mobility models, and so not that I’m envious of Tesla but I admire what they have done and you know, we can learn from some of the things that they’re doing in the benefit that we will have and if we do it correctly and if I do my job correctly, I think we can absolutely get there.

(34:50) Being able to bring a scale and a sense of integration, a sense of a broad existing customer and dealer network that we can – in the case of the dealer network we can take advantage of as a strength and have them change, and have them evolve with us as we go on this journey.

(35:10) And that is one of the other things that you know I am really excited about. Is you know again, we aren’t looking at the future and living in fear of it and hoping it doesn’t kind of you know impose on the way we do business today. We are thinking about the future, and thinking about how do we shape the future. How do we take advantage of the assets that we have.

(35:33) How do we understand the limitations that we have and how those limitations need to change, and how we do we do this journey together. So yeah, Tesla again is a company that is admirable and you know a company that we can learn from in that sense. But also that’s something that reinforces our thinking and where we are going to be going and understanding how can we even take that to the next level as well.

Vala:   

(36:00) It’s amazing and what a journey, and I bet you love your job and I can just sense it in the way that you answer the questions with such passion and you can feel it through the screen. But in terms of when you talk about dealer network and you know a large company like Ford and this digital transformation that includes so many different stakeholders because it’s such a large ecosystem. Talk to us a little bit about the Ford culture, because Mike or experience in working in start-ups companies and public companies regardless, success factor, you know culture, people, process, and perhaps lastly technology. Talk to us a little bit about the Ford culture, because you need a great culture to be able to execute to this awesome vision – which is a great vision and that’s where we need to be as companies.

Don:                

(36:47) Yeah, you’re absolutely right. What I like most about the Fort culture is first it’s very connected to my own internal value system. My own personal viewpoint, and I’m happy that that passion has come across because it’s genuine and it’s real. You know, if you are in a place where the values of the company that you’re working for are aligned with you all internal personal values, then that is synergistic. They feed on themselves and you enjoy what you’re doing, and you enjoy the people that you are doing it with. And that is true here at Ford and it really I guess in a sense it starts with the fact that it’s Ford.

(37:39) It’s the Ford name. It’s the Ford family, it’s going all the way back to its origins as a starter, right. And so even that, and it sounds a bit hokey but even that notion of its Ford and your part of that family and your part of that original notion of opening highways for all mankind.

(38:02) And there really is something to that, and whether it is internal with Ford, or whether it is with our dealer partners, or whether it is with our UAW partners, there is this notion that we are part of this family.

(30:18) And you know within any organisation, anytime you get – and if you get more than two people together right, there is conflict, but the challenge is not in the conflict. It’s in how you resolve that conflict. And you know, I would be silly to say you know it’s all roses and rainbows every day here at Ford but I’ll tell you when we do have conflict we resolve it in a healthy way. We resolve it in a way that puts the customer first, and you know, are we expert at every single facet of that? No, but we are constantly challenging ourselves and pushing our self in that I mentioned to really again kind of help fulfil Henry Ford’s original vision of opening the highways for all mankind.

(39:07)And again to repeat a theme that we talked about earlier in the hangout, you know that originally opening highways for all mankind was a single point transportation solution that we controlled every aspect of. But increasingly, opening highways and opening experiences for all mankind is going to be you know a multipart solution, and from a Ford perspective we just want to play our part.

Michael:         

(39:31) Don, we are just about out of time and we have just a few more minutes left, so and we have about two hours of conversation that we want to continue with you. So in that spirit let’s do a lightning round of questions. We’ll ask you some questions and maybe give us some very short answers to so we can compress two hours into the next five minutes.

So you have a Palo Alto R&D Center, why? Why does Ford have a Palo Alto R&D Center?

Don:                

(40:16) A couple of quick reasons, the culture of innovation in Silicon Valley and just wanting to be present there, wanting to be part of that and understand you know the ideas and just be part of that community, because we think it’s critically important.

Vala:   

(40:33) Do you work with start-ups and if you do, what advice do you have to start-up founders who would like to approach Ford with their innovation.

Don:                

(40:43) We have absolutely worked with start-ups, and one of the ways that we do that is through some think what we call Aplink, which is a kind of internal structured API protocol inside our vehicles to allow mobile applications, to take advantage of our voice controls, our vehicle controls for instance. And we’ve got a developers site that is open to everyone from start-ups to even government entities.

(41:10) The only thing that I would say that if you’ve got great ideas, bring them. We love listening to them. We love hearing them. And we want to be a company that again, I go back to our Palo Alto office, we want to be a company that’s part of the community and part of again that co-creation, because that’s really when great things happen. I think when there is a synergy between partners create something that neither on their own can do. So from a start-up perspective leveraging things like Aplink, and even also if it is not application based but if it is technology-based, or if it is software based you know there is a way to connect to Ford either through our Paulo Alto office or here in Dearborn and you know listening for ideas and being part of the experiments that we are undertaking.

(41:56) Again, we want to think like a software company and the more we interact with software companies I think the better we are all going to be.

Michael:         

(42:03) Another question relating to start-ups and innovation. Do you think, obviously what you are describing is highly innovative disruptions, adaptations, and evolutions cars, software, hardware as a platform. Do you think consciously, deliberately about start-ups as extending Ford corporate innovation efforts, do you think about that explicitly?

Don:    

(42:37) I do, but I would say it’s more implicit than explicit to be candid. But what we have done, and again one of the reasons that we are dramatically growing our presence in Silicon Valley is to understand what are the things that we need to think about and in terms of maybe being that more explicit part of how we do our business, and how we think about the future.

Michael:         

(43:04) And one final question from me and then maybe Vala one final one, we have about two minutes. What are the appropriate measurements for corporate innovation efforts?

Don:    

(43:19) That’s a good question.

Vala:   

(43:22) That’s not a lightning round question

Don:    

(43:24) I’d say the ultimate measure is satisfied customers. Internally, there are a number of things that we are doing in terms of you know, idea generation, IP or patent applications, the extent to which employees in those innovation in areas feel excited and feel happy about what they are doing. So engagement surveys and it starts with understanding how the employees are feeling, and then goes to measuring some of the hard tangibles in terms of IP generation and what’s happening there.

(43:36) But ultimately hopefully, it will resolve and represent itself in satisfied customers.

Michael:         

(44:03) Vala do you want to take the last word.

Vala:   

(44:05) My last word is Don, this was the fastest 45 minutes of my week, so thank you so much for dropping so much science on us. It’s going to make it that much easier for Michael and are to write up a summary of this great afternoon session. Thank you so much.

Michael:         

(44:20) You have been listening to episode 109 of CXO-Talk, and we've been discussing digital transformation in the automotive industry with Don Butler, who is the executive director for connected vehicles and services at Ford. Don, as Vala said thank you so much for taking the time. We really appreciate it.

Don:    

(44:47) Hey, it’s been a fun conversation. Thank you guys.

Michael:         

(44:49) And as always Vala, I hope you have a great week ahead of you.

Vala:   

(44:57) You as well, thank you so much.

Michael:         

(44:58) Thank you Vala, and I hope everybody who is watching comes back and joins us again next time. Bye, bye.

           

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