Product Development and Business Model Innovation
The Shift: From Hardware to Software-Defined Vehicles
In the early 2020s, the global automotive industry underwent a strategic shift. As automakers sought to redefine the value of vehicles in a digital age, the concept of the Software-Defined Vehicle (SDV) took center stage. Major OEMs began showcasing futuristic concepts at international auto shows—cars that promised to evolve even after purchase through over-the-air software updates. These vehicles marked a stark departure from traditional legacy cars. Built around software, SDVs opened doors to unprecedented innovation—from advanced autonomous driving features and dynamic UI/UX improvements, to embedded digital agents that acted like personal butlers for car owners.
But the true potential of SDVs extended beyond the cabin. By connecting vehicles to external systems, automakers began exploring holistic service ecosystems—ranging from automated parking and EV charging services to fleet management and remote diagnostics. This movement wasn’t just about individual product innovation, but about building scalable, interoperable platforms that would require cross-industry standardization, regulatory alignment, and deep collaboration.
Today, the era of speculation has ended. SDVs are no longer just a concept—they are entering the market, and the race to capture real value from them is fully underway.
The Challenge: Redefining Flagship Value for a Premium Automaker
In the midst of this transition, a leading premium automaker faced a dilemma: how to define its SDV roadmap in a way that reflected both its brand DNA and its ambition to lead—not follow—the industry.
They faced three core challenges:
Differentiation: While competitors were racing to unveil their own SDV visions, simply matching them wouldn’t suffice. The client needed a signature feature—a bold innovation that embodied their brand while standing apart from the crowd.
Feasibility vs. Vision: Brainstorming generates many ideas, but truly innovative concepts often face execution challenges. Conversely, playing it safe with minor enhancements risks disappointing both loyal customers and new buyers.
Value Validation: Prototyping in this space is complex. Full vehicle builds are costly and time-consuming, so we had to rely on modifying existing vehicles. This required both technical ingenuity and smart resource allocation. Moreover, since SDVs involve both in-vehicle and external systems, new features had to be evaluated holistically—from UX to backend integration and business impact.
My Role: Leading Business Innovation and Market Readiness
I was brought in to lead business development for this initiative. My responsibility was to identify and validate high-potential features, support rapid prototyping efforts, conduct customer research, and develop a go-to-market strategy that would secure buy-in from the automaker’s internal business planning team. Ultimately, our goal was to co-develop a viable, SDV-aligned business that could scale beyond the initial product.
The most difficult part of this challenge was twofold: first, aligning rapid prototyping and testing with the brand’s high standards; and second, translating early feature concepts into a sustainable business model that could generate value long after the initial sale.
The Strategy: A Three-Pillar Approach to Innovation
Given the ambition and urgency of the project, speed was everything. We couldn’t afford endless iterations—what we needed was focused, fast-moving execution. I centered our activities around three strategic pillars:
1. Deep Brand and Customer Immersion
I began by immersing myself in the client’s brand identity and target customer segments. Working closely with their marketing, sales, and vehicle planning teams, I studied the luxury value chain and future vehicle roadmap. We defined customer personas and examined premium lifestyle expectations through both internal data and fieldwork—visiting flagship stores, observing real users, and experiencing branded services firsthand. This allowed us to align our innovations not just with user needs, but with the emotional resonance of the brand.
2. Competitor and Patent Research to Guide Feature Strategy
I conducted extensive research into industry trends and patent activity to understand where competitors were focusing their efforts. This informed our internal discussions and helped narrow down truly differentiating ideas. Beyond just tracking trends, this research helped us prioritize features that were both feasible and unique, saving precious time and resources during prototyping and partner scouting. It also allowed the team to confidently deprioritize features with low strategic value.
3. Business Strategy Grounded in Customer Journey and Scalability
Recognizing the SDV’s potential as a platform rather than a product, I designed the go-to-market strategy around modular, scalable value. Rather than focusing on a one-off feature, we explored how new functions could interconnect over time—enhancing the user journey and generating new recurring revenue streams. I collaborated with business and marketing divisions to map these functions to specific lifecycle stages, from pre-sale engagement to post-sale monetization.
Business Model Innovation: From Feature to Platform
Even with a strong prototype and positive customer feedback, the biggest hurdle was convincing internal stakeholders of the business potential. We knew that a single feature, no matter how novel, would not trigger a full business transformation.
To break this barrier, I reframed the opportunity: how could we evolve this feature into a platform? I revisited the customer journey and identified new touchpoints—opportunities to connect with not only existing owners, but also non-owners who could engage with the brand through services. This reframing revealed new paths for customer acquisition, loyalty, and value creation.
To enable this platform shift, we developed a novel AI-driven technology that extended the reach of the initial feature and deepened user engagement. This technology was recognized for its novelty and submitted for a patent as a business-driven invention—our first “business patent” in the project.
The Outcome: Securing a Strategic Partnership and New Business Launch
Through this integrated approach—combining deep user insight, agile prototyping, technology scouting, business modeling, and brand strategy—we succeeded in securing internal approval from the automaker. Our proposed feature and its surrounding business model became the foundation for a new service line aligned with the brand’s SDV roadmap.
This was just the first launch in a broader transformation. But seeing our work recognized as a commercial product—rooted in real customer needs and future-proofed through platform thinking—was a proud moment.
More innovations will come. As the SDV era unfolds, we’re not just witnessing a new chapter in automotive history—we’re helping write it.
© 2025 Masato Nagayoshi
