From Back in the Race to Push to Pass

After the successful implementation of the “Back in the Race” recovery plan by the end of 2015, which was launched in April 2014 and set to be completed in 2018, PSA Peugeot Citroën (who by the way recently changed their official name to Groupe PSA) released its new strategy plan “Push to Pass” on April 5th 2016. Now that the company is in solid financial and structural shape, it’s time to set the goals to the next step.

So what is this next strategic plan all about? Basically, PSA want to be ready for the so called automobile revolution, that has already started and will probably go on for the coming decade. In short, PSA has realized that they have to focus on their customers, more so than on the cars themselves – from VIN number to the person. In this day and age where everything is getting digital and connected, the companies that will be successful tomorrow are the ones that have access to customer information and know how to get the most out of them. Anyone heard of Big Data before? Obviously, PSA will continue building cars as their core business, but it sees its future as a mobility services provider, more so than just a car manufacturer.

Once again, the focus will shift from ‘just’ building and selling cars through their traditional dealership network, to a customer centered approach. By that PSA means using the the data provided by the customers through whatever connected device they are using. Hence, experience, rather than ownership will be important in the future. Providing mobility services due to their digital transformation.

Connected Life

What exactly does digital transformation mean? It means that most aspects of our life are being integrated into the internet of things: Every object and even living being will soon be connected to the internet in order to make their application more user-friendly and customer tailored. Houses (lighting, heating, access, oven,…), cars, watches, glasses, lawn mower, your dogs localization and even your puls monitor and many more things will be connected to the cloud where many people already have their agenda, photos, videos and social media accounts.

Let me give you an example: You go to bed in the evening and set your alarm clock on your smartphone for the following day. The smartphone picks up the traffic news in the morning, knows that the commute to work will be longer due to a traffic jam. It automatically sets the alarm clock earlier for you to have enough time to get ready and get to work on time. Coffee machine and toaster prepare breakfast as you switch off your shower. Your autonomous car will pick you up at the entrance door and drive you to work while you can prepare your meetings.

Granted, this is just an example of what it could look like and who knows when exactly that will be accessible to the broad majority of people. However, it shows that automobile corporations, such as PSA see where the trend is going and how the generations Y and Z will want to live. So far I haven’t said anything about the privacy issues and hacking risks that this technological evolution will bring, but that’s another subject.

Back to PSA

Anyway, let’s focus on PSA. Carlos Tavares, Chairman of the Managing Board, seems to have set his people in the right direction. Let’s take a more in-depth look at their plan and look at the five core transformation elements.

By 2021, PSA wants to be transformed into the mobility provider it has now set its strategy for:

1. From product to customer: Shifting the view from only building cars to the customer and it’s mobility needs.
2. From ownership to experience: Being a PSA customer doesn’t necessarily restrain it to car owners alone.
3. From car to mobility: People want the right mobility for any given time, which can mean renting a car, traffic infos, or even having access to carsharing models like Uber or Lyft.
4. From one business to a portfolio of businesses: In conclusion, putting the customer in the center of attention suddenly opens the door to a variety of businesses connected to mobility that include life facilitating apps and information.

Can PSA make it?

Whereas these new business models would have been unthinkable ten to fifteen years ago, it is now absolutely necessary for the car companies to diversify their activities within the digital and connected world if they want to survive. Technology companies like Alphabet (Google), Apple and Tesla are likely to become serious competitors in the future, as those elements will become the center of development.

But can PSA really make it? Four years ago the corporation was as good as bankrupt. Furthermore, Volkswagen and other major established manufacturers are not sleeping, either. On a contrary, albeit the problems VW is struggling with due to their so called Dieselgate affair, they are likely to be far ahead on that subject. However, as Carlos Tavares pointed it out several times, he doesn’t believe that size is the only way to succeed as an automotive OEM, you need to be profitable and flexible. I believe that they can make it and that this new, customer focused strategy is the only thing PSA has been missing during its entire lifetime. The products have been very good for most of the time, they just had a very bad customer relationship management and didn’t really listen to them.