Car talk: Innovation vs. privacy

When I first started consulting to the automotive industry, executives were still focused on manufacturing. Relationships with suppliers were antagonistic, debates about control—automakers were often pitted against their dealers—fulminated, and when people thought about innovation, they pictured Germany.

But as consumers turned to the Web to shop for cars, automakers began to prioritize competitive differentiation—and the accompanying revenues. Supply chain optimization and demand forecasting continue to be hot topics in automotive, but nowadays being competitive has everything to do with being innovative.

At a recent automotive executive forum, executives compared notes about emerging technology solutions. Most were piloting telematics, researching smart-charging infrastructures, and implementing big data solutions—all components of delivering the “connected vehicle.” According to McKinsey’s John Newman, who spoke at the event, the overall market for the connected vehicle could reach $230 billion by the year 2020.

But having a connected car means different things to different car buyers. Many of what McKinsey calls “maxed-out car enthusiasts” want a perpetual Internet connection—delivering streaming data, music, and constant two-way communications with their contact lists, their dealer’s service center, and the manufacturer’s call center. These early-adopters anxiously await self-driving cars—Tesla founder Elon Musk recently announced that “autopilot mode” would be available on the Model S Tesla by this summer. Indeed, the more features the better: personalized voice recognition, whiz-bang interactive windshield dashboards, and biometric retinal scan door locking are all part of the connected vehicle buzz.

The data privacy backlash is only a sensor beam away. The idea of a connected vehicle makes some consumers edgy. The prospect of “them”—the government, the GPS manufacturers, and the automakers themselves—being able to see where you are when you’re on the road is simply too intrusive for many.

Even savvy security experts are nervous. In 2013 Tom Kellermann, an executive with a cybersecurity company, heralded broader consumer privacy concerns by relating his own story:

“I bought a new car yesterday. And the guy says, ‘Hey, man, do you know you can turn on a Wi-Fi hot spot in your car?’ I said, ‘What the…?’ He said, ‘Yeah, it’s constantly on, bro, so all you need to do is have any of your passengers synch their devices to it, and you can get high-speed Internet while you are driving!’ I said, ‘Are you f*cking kidding me? Where is it? Turn it off!’”[1] 

Automakers, traditionally whipsawed by disruptive change, are nevertheless joining the Internet of Everything juggernaut. But with that comes pervasive access to data about consumers, how they behave, and where they travel, as well as more qualitative extrapolations about why. Dealing with concerns about data availability and access will require car companies to be even more innovative than ever.

It will be interesting to watch how they tackle the challenge, either confronting the privacy issue head-on, or instead avoiding the issue by pitching the connected vehicle to a narrower customer segment.

 As Henry Ford put it: “Whether you think you can or think you can’t, you’re right.”

John Seabrook, “Network Insecurity: Are We Losing the Battle Against Cyber Crime?” The New Yorker, May 20, 2013. See archives.newyorker.com.