Vehicle maker-lead customer relationships in the development of environmentally friendly vehicles

Demands for the reduction of emissions call for vehicle makers to develop environmentally friendly vehicles, based on technological innovation such as hybrid technologies. According to the innovation literature, however, products based on new technologies take a long time to become competitive on regular markets, which are dominated by products based on established technologies (Abernathy and Utterback, 1978). Thus niche markets often play a significant role in the early progress of the products embodied by new technologies (Abernathy & Utterback, 1978; Rip, 1995; Christensen & Rosenbloom, 1995). These markets are often limited geographical areas with particular customer requirements in which the merits of the new technology are of great value, whereas its imperfections are less problematic. Such markets allow for testing, experimentation, demonstration, adaptation, and further improvement of new products (Kemp et al., 1998; von Hippel, 1988); and provide a valuable interplay between producers and lead-users/customers. Such an interplay/ interaction is an important factor for supporting further innovations (von Hippel, 1988; Lundvall, 1988) and facilitating learning for the involved parties (cf. Aggeri and Elmquist, 2009).  

 

This study is devoted to explain how interplays between vehicle makers and lead customers take place in niche markets during the development of hybrid heavy vehicles. Two research questions are central:

§ What types of niche markets may exist for this type of innovations (hybrid vehicles)?

§ How do vehicle maker – lead customer interplays need to be managed in these niche markets in order to facilitate learning and to support further innovations of the products?

 

To answer these questions this study will conduct comparative analysis of the collaborations between two Swedish vehicle makers (Scania and Volvo) and their lead customers in selected urban markets: Scania and Volvo and the public transport providers of Stockholm and Gothenburg, respectively; and the Volvo collaboration with the refuse collection firms Renova and Ragn-Sells (Gizmag, 2008). These bus and refuse collection operators are professional customers who have strong technical knowledge; hence, close relationships with such customers could be assumed to be essential in the development processes of the products based on these new technologies. In all these cases the vehicle makers interact and sell their products to established customers (e.g. the city bus and refuse truck operators). But due to the different technologies embodied in these hybrid vehicles compared to their existing offerings, this might require vehicle makers to develop new types of interaction mechanisms with these lead customers (cf. Collinson and Wilson, 2006).

 

Furthermore, given the facts that these vehicle makers conduct the collaboration with established customers, the study can observe the differences between maker –customer collaboration when introducing products based on existing technologies (i.e. conventional diesel engine technologies) and that when new technologies (i.e. hybrid technologies) are involved.  Hence, it is possible two design several comparative case studies: between the two vehicle makers and their collaborations; between different projects at the same customer (i.e. city bus operator), and between different types of customers (i.e. city bus operators and refuse truck operator).  Data collection will mainly be based on interviews with experts involved in the projects. In order to capture more comprehensive evidence, the study will address the issues from both customers’ and vehicle makers’ perspectives. This means that the interviews will be conducted with people from both the vehicle makers and the lead customers. Close contacts with drivers an important aspect for the vehicle makers to get their feedbacks and acceptances; therefore user interviews with drivers of the vehicles will also be conducted.

 

The contributions of this paper will be twofold. At an empirical level, the study is expected to provide in-depth real-time data on the development of new types of vehicle maker-customer relationships in traditional markets.At a theoretical level, the study will expand existing studies on the management of producer- lead customer interactions in niche markets. Existing literature mainly addresses this topic based on relationships between producers and new customers (references), whereas this study is based on cases where relationships are conducted between producers and their existing customers in conservative, technologically demanding and at the same time cost-sensitive markets.

 

 

Abernathy, W.J. and Utterback, J.M. (1978): Patterns of industrial innovation. Technology Review, June-July, 41-47

Aggeri, F., Elmquist, M., and Pohl, H. (2009) ‘Managing learning in the automotive industry – the innovation race for electric vehicles’, Int. J. Automotive Technology and Management, Vol. 9, No. 2, pp. 123-146

Christensen, C.M. and Rosenbloom, R.S. (1995): Explaining the Attacker’s Advantage: Technology Paradigm, Organisational Dynamics, and the Value Network. Research Policy, 24, p. 233-257.

Collinson, S. and Wilson, D.C. (2006): Inertia in Japanese Organizations: Knowledge Management Routines and Failure to Innovate, Organization Studies, 27 (9), p. 1359-1387.

Kemp, R., Schot, J., Hoogma, R. (1998): Regime Shift to Sustainability through Process of Nich Formation: the Approach of Strategic Niche Management. Technology Analysis & Strategic Management, 10(2), p. 175-195.

Rip, A. (1995): Introduction of new technology: Making use of recent insights from sociology and economics of technology. Technology Analysis and Strategic Management, Volume 7, p. 417-431.

Von Hippel, E. (1988): The Sources of Innovation. New York: Oxford University Press.

Lundvall, B. A. (1988): Innovation as an interactive process: from user-producer interaction to the national system of innovation. In: Dosi, G; Freeman, C; Nelson, R; Silverberg, G; Soete, L. (editors): Technical change and economic theory. London: Pinter Publishers, p. 349-369.

GreenAutoblog, 2009

http://green.autoblog.com/2009/04/30/volvo-starts-testing-hybrid-bus-in-goteborg-sweden/ , accessed on 1^st February, 2011.

Gizmag, 2008

http://www.gizmag.com/worlds-first-hybrid-refuse-truck-volvo-sweden/9131/, accessed on 1^st February, 2011.