Acclaimed Czech author Milan Kundera once commented that, “Business has only two functions - marketing and innovation.” Whilst it may seem a brutally simplistic view, it’s a fair comment when one strips most businesses to their bare fundamentals, i.e. to develop and maintain a sustainable competitive advantage and to sell their product to as many of their target market as possible. To achieve this in the automotive industry, a commitment to innovation is essential.
Automotive Original Equipment Manufacturers (OEM) have historically invested heavily in building internal R&D capabilities. This has worked until the point where effective innovation has become too complex and expensive for companies to achieve wholly from within (Ili et al, 2010). Price erosion and shorter product life-cycles only make the impetus for innovation more aggressive and, thus, demand that innovation be as dynamic as possible. Adopting open innovation is a potential solution.