Autonomous Trucks & Organizational Redesign in Transportation Industry

Recommendations for Organizational Redesign

In the late 1990s, the internet grew with tremendous speed and this growth was driven by consumer demand for information and services. Companies that reacted quickly to this disruptive technology often gained a competitive advantage while companies that were slow to adopt web-based technologies failed. The success of many companies is not solely isolated to the early adoption of technology but also to the adaptation of the organization. The organizational redesign was necessitated by many companies in order to facilitate the R&D as well as the alterations of many operations. Today, businesses and society are faced with another major disruption in technology known as autonomous trucking. Specifically, companies such as Freightliner will need to make tremendous organizational redesign to its processes and activities. As this technology is already being tested the question of organizational redesign focuses on how will trucking companies, such as Freightliner, redesign their organizations in order to better meet the consumer demands as well as remaining competitive? The answer to this question may find some of its solution within recent organizational redesign efforts of a Chinese Multinational Firm studied in 2018.

The Prediction and Handling of Organizational Redesign

In a case study performed on a Chinese multinational firm’s organizational redesign process, the researcher followed a company that underwent a dramatic change due to anticipation of changing manufacturing and development technologies (Luo, Van de Ven, & Jing, 2018). In 2014, the company (known from here forward as the Firm) made the decision to redesign the company to meet the demands of new digitally driven markets in order to avoid the company outdating and becoming obsolete due to redesign issues (Luo, Van de Ven, & Jing, 2018). The Firm ultimately underwent this change in order to maintain a competitive advantage in the markets and the key to this advantage was the need for redesign in order to maximize efficiency.

Prior to the redesign effort, the Firm experienced a strong successful history since the early 1980s, but the warning signs for redesign became clear (Luo, Van de Ven, & Jing, 2018). Competing firms adjusted to technology disruptions by creating smaller units for R&D and other processes to increase efficacy through faster reacting departments that worked collaboratively (Luo, Van de Ven, & Jing, 2018). The Firm created micro-enterprises with other large corporations which acted and competed with other micro-enterprises for advancements in R&D as well as product improvement (Luo, Van de Ven, & Jing, 2018). By 2016, the Firm’s redesign efforts were realized and the company experienced its largest growth and market expansion since the late 1980s (Luo, Van de Ven, & Jing, 2018). The Firm’s decision to redesign the organization in this manner provides an important example of the need to redesign organizations as disruptions in technology occur.

Freightliner & the Need for Organizational Redesign

Freightliner Trucks was founded in the United States in 1929 as a truck manufacturer (Freightliner, 2020). The company is owned by Daimler Trucks of North America a subsidiary of Daimler. Freightliner builds trucks for commercial use including semis, box trucks, and vans. The company currently operates with three manufacturing facilities in the US and is headquartered in Portland, Oregon (Freightliner, 2020). Freightliner is one of the largest truck manufacturers supplying freight and commercial vehicles to companies around the world.

Freightliner stands to gain or lose tremendous market value with the advent of autonomous truck technology. This risk and reward scenario prompted Daimler to invest heavily in the development of autonomous vehicles to ensure the survival and competitive advantage of Freightliner. Daimler is currently spending billions of dollars on R&D along with many other companies as they race to the market (Frost & Sullivan, 2018). In this development and testing era, the organizational redesign has already been necessitated in terms of R&D. The cost of R&D for autonomous vehicles is proving to be too much companies such as Daimler, and partnerships with GM and software companies such as Microsoft have been forged (Corwin & Pankratz, 2017).

Similar to the Firm, Daimler created partnerships, micro-enterprises, and shared study of the product in order to ensure the successful development of large-scale autonomous trucks and other autonomous vehicle manufacturing (Daimler, 2019). These redesign efforts in research have also led to innovations in autonomous vehicles as well as deepening the understanding of organizational redesign efforts for Freightliner.

The Firm similarly discovered that its organizational redesign efforts would need to take into account product development in a more entrepreneurial manner but also the need as well as the need to restructure product selling through different channels necessitating different selling, financing, and marketing operations. The Firm would need to redesign itself with a more open structure to facilitate faster and more efficient development (Luo, Van de Ven, & Jing, 2018). As such the redesign of the Firm meant that sales departments would operate more independently and even competitively for market share (Luo, Van de Ven, & Jing, 2018).

Similarly, data gained during the R&D efforts of Daimler and its partnerships reveal a similar need to redesign different parts of the company. Sales, marketing, and financing services will notably need to undergo similar redesign efforts as the Firm. In a study of autonomous vehicle disruptive technology impacts, a leading market research firm Frost & Sullivan performed a study for Microsoft and revealed the necessity for organizational redesign due to this new technology. For example, the first generation of autonomous trucks are not fully independent and still have drivers (Frost & Sullivan, 2018). Drivers are still necessary to navigate certain areas and to give commands when certain circumstances present themselves. This source reflects the need for organizational change in terms of selling and leasing these trucks to freight companies and other long-haul services (Frost & Sullivan, 2018). The first-generation trucks that are already being tested are already being ordered by the fleet from large freight services (Daimler, 2019). This marketing and selling will force organizational redesign within Freightliner in terms of financing and repair services (Frost & Sullivan, 2018). Small independent drivers will likely no longer be needed since the cost of driving will diminish radically. This presents a disruption to a large market area of vehicle financing.

Much like the Firm underwent a full redesign of its organization, Freightliner will undergo a similar redesign of processes. The disruption of autonomous vehicles cannot be overstated because its implementation will require a full alteration of society and its view of vehicles in order to take advantage of this technology (Corwin & Pankratz, 2017). The cost of this technology is tremendous and is so high that only large companies will employ them at first such as Uber with its fleets. This factor will redefine how people travel as well as how companies sell vehicles (Corwin & Pankratz, 2017). In the wake of this technology, companies such as Freightliner will need to create entirely new divisions such as remote piloting and vehicles designed specifically for workspaces or living spaces (Frost & Sullivan, 2018).

Owning vehicles will primarily be a luxury purchase and the mode of transportation will become more of a pay as you go model (Frost & Sullivan, 2018). Only extremely large corporations will have the capability of financing fleets of autonomous vehicles (Frost & Sullivan, 2018). For Freightliner, the financing of vehicles will alter fundamentally as more B2B consumers enter the market and less independent single owner consumers (Frost & Sullivan, 2018). Ultimately, these changes will lead a driverless society as human driving skills and reaction times cannot compete with autonomous vehicles (Frost & Sullivan, 2018). The redesign of Freightliner will be towards fleet selling, design, as well as new repair and leasing options due to cost and lack of independent drivers.

Factors Impacting Organizational Redesign

Freightliner’s organizational redesign will be impacted by a number of factors stemming from autonomous truck technologies. These factors can be broken down into three primary areas of importance including opportunities, social and legal changes, and new consumer needs. Each of these factors will impact organizational redesign in various ways.

Opportunities in autonomous vehicle technology will be vast allowing for many new business ventures. Autonomous vehicles represent blue and red ocean opportunities due to this technology leveraging value innovation (Kim, Mauborgne, Chen, & Olenick, 2018). For example, new driverless features such as entertainment and lifestyle enhancements will spur new features in these vehicles.

Augmented Reality

• Cars with augmented interactive games using the physical world seen through the windshield

• High-Definition HUDs and AD displays that would be responsive to touch and other inputs

Fitness

Gym equipment built into the seats and floor
Built-in monitor displays video tutorials of various work outs
Small fridge where drinks can be stored
Compartment for aromatherapy (Frost & Sullivan, 2018)

Opportunities for new business opportunities will be tremendous because of the autonomous nature of the vehicle. Daimler will need to expand its R&D beyond just vehicle technology and utilize micro organizations to create more personalized vehicle services.

Another factor impacting redesign will be social and legal changes. Autonomous vehicles will eventually eliminate the need for many traffic signaling systems as these will be coordinated through internal software (Kim, Mauborgne, Chen, & Olenick, 2018). Companies such as Freightliner will need to take into account different aspects of safety such as health monitoring and control tampering (Kim, Mauborgne, Chen, & Olenick, 2018). These types of factors will fundamentally alter the type of R&D for vehicles that are passenger safety focused as well as focused on the safety of other coordinated vehicles. R&D will likely change to more collaboratively driven systems between competing firms rather remaining isolated.

Consumer needs are another major factor impacting organizational redesign because the function of vehicles will change. In the future, it is highly likely that vehicles will serve as living spaces as well as workspaces (Corwin & Pankratz, 2017). While this may seem like science fiction the R&D is already underway in these areas (Frost & Sullivan, 2018). Organizational redesign will need to create more flexible structures that are able to adapt to the changing demands of the consumer (Luo, Van de Ven, & Jing, 2018).

Recommendations

For Freightliner, the nature of the commercial vehicle will most likely occur within the next decade which will mean building vehicles that fit a variety of consumers. Most notably transportation sectors will need vehicles that support drivers but eventually vehicles that operate at high speeds and with tremendous safety. With these factors in mind, Freightliner will need to follow the following recommendations for organizational redesign.

Form partnerships: The high cost of vehicle research and deployment will require partnerships with other manufacturers as well as the deployment of smaller organizations that focus exclusively on specific aspects of the market such as consumer needs or R&D.

Timing Analysis: Organizational redesign will be the cornerstone of Freightliners success, but this is contingent on the use of resources and their proper deployment. The deployment of redesign too early or too late can create failure. This means a constant scanning of the environment in order to determine the most effective time for deployment of redesign plans (Luo, Van de Ven, & Jing, 2018).

Redesign Planning: The redesign of the organization will need to be planned in stages and deployed as needed. The nature of this planning is steeped in the contemporary nature of organizations which are flexible and adaptive (Luo, Van de Ven, & Jing, 2018). This form of redesign is a large change process that may need to be structured over time and as such the details of the plan must be exact in order to avoid failure (Luo, Van de Ven, & Jing, 2018).

Rationale

The rational for the nature and deployment of organizational redesign for Freightliner is provided for two primary reasons. The first reason is due to the risks inherent in managerial decision making. Many companies have failed to achieve organizational redesign and other goals due to poor decision making (Callaway & Hamilton, 2006). This poor decision making is often the result of overestimations or underestimations of the technology disruption (Corwin & Pankratz, 2017). Managers react rashly to these disruptive forces and often expend resources too quickly and without results (Corwin & Pankratz, 2017). Within this framework of thought, the risks of decision-making dictate that organizational redesign must be attenuated to the changes in the market as well as the changes in processes (Corwin & Pankratz, 2017). Therefor timing analysis becomes an integral part of the organizational redesign planning.

The cost of autonomous vehicle development is so tremendous that it taxes company resources and creates risks in monetization. Many companies have failed due to inability to monetize their products properly after development and deployment (Kim, Mauborgne, Chen, & Olenick, 2018). Partnerships and strategic alliances become necessary to company survival. In order to facilitate these partnerships and alliances, companies must become flatter in structure in order to be more accessible (Kim, Mauborgne, Chen, & Olenick, 2018). For Freightliner developing alliances with other vehicle manufacturers or sellers will be necessary which will be a total restructure of the organization to a less hierarchal structure.

Freightliner’s organizational redesign efforts will be largescale changes to the organization, and this demands tremendous planning. This planning and its steps to achievement will need to become part of the change process that must take into account the timing as well as the many facets of change (Corwin & Pankratz, 2017). The planning for redesign will be detailed in order to facilitate the most effective means of implementation. For example, the organizational change kaleidoscope created by Balogun, Hailey, Johnson, and Scholes, (2008), provides a change plan that is generic in nature but can be applied to Freightliner’s needs. This plan or model for organizational change provides a practical and comprehensive means for organizational redesign that can be applied over time and segmented for deployment (Balogun, Hailey, Johnson, & Scholes, 2008).

The application of this model for change takes the form of a kaleidoscope consisting of an outer ring pertaining to factors that potentially impact the intended change either positively or negatively such as costs of change, readiness of organization, and other factors (Balogun, Hailey, Johnson, & Scholes, 2008). The inner ring of the kaleidoscope pertains to the different options for implementing the change such as policy changes, communication, etc. This is an important aspect to be considered because Freightliner will need to hire new employees skilled in autonomous technology as well as releasing employees whose jobs are obsolete. The kaleidoscope model allows Freightliner to plan for organizational redesign in a manner that is exact due to taking into account many contextual elements presented by the organizational redesign.

The need for planning, timing, and partnerships is vital to the success of autonomous technology deployment and continued R&D. These factors are at the core of many industry and company failures that occurred shortly after the advent of the internet. Without controlled change and restructuring of organizations the likelihood of successful deployment of autonomous vehicles is diminished tremendously.

Depending on how the technology impacts industries will determine the extent and type of redesign needed in an organization. However, large disruptive change will require redesign at almost all levels. While some changes remain unquantifiable, other changes and disruptions are known. Without a doubt autonomous trucks will reinvent the freight industries and will redefine how shipping occurs. To profit from autonomous trucking, changes in how the organization operates at all levels. This necessitates organizational redesign and perhaps multiple redesign efforts over the next two or three decades.

References

Balogun, J., Hailey, V., Johnson, G., & Scholes, K. (2008). Exploring strategic change. New York, NY: Pearson Prentice-Hall.

Callaway, S., & Hamilton, R. (2006). Exploring disruptive technology: the structure and control of internal corporate ventures. International Journal of Organizational Analysis, 14(2), 87–106.

Corwin, S., & Pankratz, D. (2017). Forces of change: The future of mobility. Retrieved from Deloitte: https://www2.deloitte.com/us/en/insights/focus/future-of-mobility/overview.html?id=us:2ps:3bi:confidence:eng:cons:::na:L05l5L1g:1123805542:77309476798087:bb:Future_

Daimler. (2019). Autonomous Vehicle Backgrounder. Retrieved from Daimler: https://daimler-trucksnorthamerica.com/media/1761/av-technology-backgrounder.pdf

Freightliner. (2020). Freightliner. Retrieved from Freightliner: https://freightliner.com/why-freightliner/

Frost & Sullivan. (2018, March). Global Autonomous Driving Market Outlook, 2018. Retrieved from Microsoft: https://info.microsoft.com/rs/157-GQE-382/images/K24A-2018%20Frost%20%26%20Sullivan%20-%20Global%20Autonomous%20Driving%20Outlook.pdf

Kim, W. C., Mauborgne, R., Chen, G., & Olenick, M. (2018). Driving the Future: How Autonomous Vehicles Will Change Industries and Strategy. Retrieved from Harvard Business Review: https://store.hbr.org/product/driving-the-future-how-autonomous-v

Luo, J., Van de Ven, A., & Jing, R. (2018). Transitioning from a hierarchical product organization to an open platform organization: a Chinese case study. J Org Design, 7(1), 144–147.

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