Auto & Creative Destruction

“Creative destruction,” or “schöpferische Zerstörung,” is an idea from Joseph Schumpeter, an Austrian-American economist, who had it that there are profound changes that occur when there are new product and process innovations.

The simple way to think about this in the context of the auto industry is the classic “what happened to the buggy whip manufacturers after the Model T rolled out?”

The industry is undoubtedly in the midst of a huge wave of creative destruction right now.

A non-trivial bit of evidence in this regard comes from Volkswagen Group, which announced that it is in the process of hiring more than 1,000 IT experts during the next three years—and this must be taken into context: last month the Group announced that it is cutting some 30,000 globally (through attrition).

Clearly, the 1,000, while a fraction of the 30,000 goes to the point that VW understands the importance of the changes it faces.

As Dr. Karlheinz Blessing, member of the Board of Management of the Volkswagen Group, Human Resources, put it, “We are tackling the major challenges of the future with the best people: digitalization, software development, e-mobility, autonomous driving, and mobility services.”

The company is hiring robotics experts, design thinking experts, AI researchers. It is staffing up its Virtual Engineering Lab, Data Lab and Smart Production Lab.

The people are being deployed in Wolfsburg, Berlin and Munich to address Big Data, Industry 4.0, the Internet of Things, connectivity, mobility, and virtual reality.

It is even hiring gamers.

Who would have thought, even a few years ago, that an auto company would hire gamers?

Who would have thought that the auto industry would be undergoing such a radical transformation?