Consider diversifying your business model across different segments, product categories or even sectors to mitigate the impact of disruption. It may be important to consider clustered, second-order and supply chain impacts. For example, the rise of electric vehicles are expected to impact demand for specific parts used in those vehicles, as opposed to traditional internal combustion engine vehicles, which will affect tier 1 and 2 suppliers. Related industries, such as rental and leasing, and auto retail, are also set to be impacted.
Invest in a parallel ‘future newco’ to test and grow a new business model, whilst continuing core business activity. This can help to manage the potential clash of cultures and capabilities from different types of organisation. For example, a digitally-enabled start-up vs a scaled group with rigorous risk controls. Ensuring continued strategic alignment and sharing of resources at the top level is key to the success of this approach.
Identify adjacent market entry opportunities, such as new geographies. For example, a number of Asian car makers are expected to enter European auto markets, particularly where their EV capabilities can fill a market gap.
Build flexibility into your assets, for example, by using relatively short-term, revolving leases (which give you the ability to exit) or securing the ability to repurpose potentially valuable assets in the long run (e.g. freeholds for city centre real estate).
Partner to share risk and assets, for example by sharing investment and production costs and benefits. We’ve seen a number of OEM alliances emerge to jointly develop and produce electric vehicles or mobility services, as well as autonomous vehicle development tie-ups with technology companies.
