How GM Lost — And Found — The Path To Innovation

Jon-Lauckner-240x300Since 1912, when Charles Kettering invented the electric self-starter to replace the hand crank on automobiles, General Motors has been a leader in automotive innovation. The Detroit carmaker is responsible for scores of industry firsts, including the first four-wheel brakes (1924); the first air bag (1973) and the first catalytic converter (1974). Today GM still ranks as the top innovator among automotive and transportation companies, according to The Patent Board, a consulting firm which analyzes and values patents.

But in recent decades, it’s become harder for GM to get inventions from the laboratory into the marketplace. Financial troubles, along with industry shifts, led GM to divest virtually all of the component subsidiaries it had once relied on to manufacture innovations hatched by its in-house army of scientists. Operating units like Delphi, Fisher Body and Guide were either sold, spun off or folded. And other parts makers weren’t eager to step in and work with GM on new technology because of the carmaker’s history of treating independent suppliers poorly. Chief Executive Officer Dan Akerson’s effort to transform the company includes repositioning GM as an innovation leader by making sure it has access to the best technology.

So GM’s decision last May to cut its advanced Research & Development staff by 25 percent, from 400 people to 300, alarmed many outside the company who wondered if GM, having survived bankruptcy and a federal bailout, was now allowing its Brain Trust to wither. Had GM’s new top scientist, Chief Technology Officer Jon Lauckner, gone mad?
Not at all, said Lauckner, a veteran GM engineer who played a key role in the development of the Chevrolet Volt plug-in hybrid, and now wears three GM hats: chief technology officer, vice president of research and development, and president of GM Ventures, a $100 million venture capital fund.

Instead, he argued, GM is adapting to the changing realities of automotive innovation. Many of the best ideas for cars of the future won’t come from car companies at all, but rather from non-traditional auto suppliers, like Microsoft or Google, and from start-up enterprises that are on the leading edge of fields like advanced materials, telecommunications and green technology. “We no longer rely solely on our in-house expertise, which is a big change from where we’ve been in the past,” Lauckner told me.

I sat down with Lauckner on the eve of the North American International Auto Show in Detroit, the world’s showcase for automotive innovation, to talk about GM’s new philosophy toward research and development.

“I’m not interested in hobbies and science fair projects. What I’m interested in are technologies that are being developed that can do one of three things for us — that can build our technology footprint, that can bring cost efficiencies to our business, or that bring technology benefits to our customers.”

He’s directing GM’s smaller r&d work force to focus on technologies that stand a good chance of making their way into future cars and light trucks, rather than simply patenting innovations that will never see the light of day.

“Innovation really has two parts, and this is what some people miss,” he explained. “The first part of innovation is the development, invention, patent or some other form of intellectual property. The second piece of innovation is the commercialization of that into products and services. It’s only when you commercialize that intellectual property, that know-how, that you transform an invention into an innovation,” he said. “That’s why it’s important for us to be working with suppliers and partners, because the path to innovation for us has changed over time.”

Although Detroit has gotten some attention lately as a new home for tech start-ups, very few of them, surprisingly, are focused on the automotive industry. So Lauckner spends a lot of time away from Detroit, especially in Silicon Valley and Israel, two hotbeds of innovation, looking for technology partners that can help GM get a leg up on the competition.

The company’s focus is in five areas of technology: clean energy (for advanced propulsion); vehicle connectivity (for infotainment); advanced materials (to improve fuel economy and safety); sensors, processors and memory (for development of autonomous cars), and manufacturing technology (to boost productivity and reduce costs).

On vehicle electrification, for instance, GM is partnering with Korea’s LG Chem to develop next-generation batteries, motors and power electronics. It has a joint venture with Teijin, a Japanese company, to develop high-volume production methods for lightweight carbon fiber to improve fuel economy. It’s also working with researchers at Carnegie Mellon University on autonomous driving.

Lauckner is cagey about revealing much about the companies GM has invested in through its $100 million GM Ventures Fund for fear of tipping off competitors. It has disclosed a few investments, and others have leaked out.

For instance, in 2011, GM Ventures bought a stake in Envia Systems, of Newark, Calif., for access to its breakthrough lithium-ion cathode technology for its potential to dramatically lower the cost and range of electric vehicles. Last August, GM Ventures invested in NanoSteel, a Providence, R.I., company that developed patented alloys to create a new class of strong, lightweight steel. Lauckner called the new alloys “a potential game-changer” for the auto industry. And it’s working with start-ups in Israel, which is a leader in advanced microprocessors.

From cars that need to be hand-cranked to cars that might soon drive themselves: the auto industry has come a long way.

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11 thoughts on “How GM Lost — And Found — The Path To Innovation

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