Saying “shampoo.books.picturing" to the navigation system of a Mercedes-Benz would take you to a specific spot near the entrance of Bengaluru’s Cubbon Park where Kasturba Gandhi Road intersects with Queen’s Road. Isn’t that easier than keying a precise location into a GPS-enabled device?

London-based startup What3Words has mapped the world into 3x3m squares that correspond to GPS coordinates. Each square gets a unique address comprising three words from the dictionary, and it’s available in several languages. Multiple businesses use it for car navigation, e-commerce delivery, travel guidance, emergency response, and so on. Your friend could message you the three words, a business could print it on a card, or you could just find the three-word address on a map in the app.

The first automobile manufacturer to adopt it was Daimler, which integrated the What3Words app into the Mercedes-Benz navigation system. This is one of new ideas that emerged from the German car-maker’s Startup Autobahn programme to partner with startups for “open innovation."

“Automotive innovation used to be mostly product-centric and internal in the past. But now the scope for customer-centric innovation is opening up dramatically as the hype cycle of digitalisation matures," says Suresh Komirishetty, who led the Startup Autobahn programme in Singapore before moving to India last year as CIO of Mercedes-Benz India.

“Digitization and technology touch every part of a customer’s journey from experiencing product information online and booking a test-drive to post-sale services," Komirishetty says.

Matching idea and industry

This broader range of innovation is driving the need to work with startups. But new challenges also arise. Apart from the difficulty of matching an industry requirement with an externally sourced solution, the corporation may have to rope in venture capital companies for funding or pull in other stakeholders who will help the startup build a sustainable business.

“We realised we had to go the extra mile while working with startups, unlike working with a typical vendor," says Komirishetty. The Startup Autobahn programme created three tracks: the first involves young startups who show potential but need lots of support; the second one sets out problem statements and identifies startups that can tackle them; and the third track is for mature startups whose ideas just need fine-tuning. Startup Autobahn also brought in a partner accelerator, Plug and Play, which helps run open innovation programmes by bringing startups and corporations together.

In spite of this level of institutional commitment, challenges run deep. Sales tech startup Lucep, for example, already had a revenue-earning solution in other industries like banking and insurance when it came into Startup Autobahn. Capturing customer behaviour from digital channels and sending leads to sales people was “very useful" for Daimler when it tried it out in its Singapore dealership network. And yet, it took time to roll it out across the organisation in other markets.

“When I look at it independently, the idea is brilliant. We have to work within a micro-services environment, and it’s a perfect fit from that context," says Komirishetty. “The challenge is in integration."

This takes different forms. One dealer was excited by what it could do for sales, but was worried about opening up customer data to competitors, he explains. There can also be an overlap with internal innovation initiatives.

Capturing customers

“Online forms push leads in real time to the app which routes them to sales persons automatically, cutting out middlemen. Customers can be contacted ‘in the moment’ when they’re excited about the product," says Moksh Sinha, Director of Possibilities at digital marketing agency Route33, which is helping a bike brand implement sales tech software.

The effects of analytics have become increasingly apparent to dealers, agencies and brands, especially in the last three years with all stakeholders becoming more result-oriented with everything they do online. Companies that help with actionable insights from their digital tools are correspondingly gaining in demand.

Indian startups in the automotive space have attracted $1.37 billion this year to date, significantly higher than the $812 million raised last year, according to data tracker Tracxn. What’s more, leading Indian brands like Mahindra, TVS, and Hero MotoCorp are at the forefront in not only engaging with startups but also investing in them.

Malavika Velayanikal is a contributing editor with Mint.

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