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Automotive assemblers and suppliers have employed a number of different strategies to deal with external uncertainty. These strategies have evolved relatively rapidly of late in part because of changes in the locus of innovation from OEMs to suppliers, changing market conditions, and the future regulations of greenhouse gases. This presents a unique challenge for the industry. Some auto firms have been more effective in dealing with market and regulatory uncertainty due to technology resource integration across platforms and integration between functions on the value added chain from suppliers to retailers.

This is an MIT Sloan Management Review article. As companies are increasingly taking on the challenge of global sustainable development, they are forced to rethink the standard business plan based on increasing consumption of products. Drawing from case studies involving Gage Products, PPG Industries Inc., and Xerox Corp., the author shows that some companies are already building their business plans around services and a few key products, and that they are seeing benefits both to the bottom line and in customer retention and acquisition. The author identifies six keys to the new model: building on existing service strengths, redesigning contracts to redefine the basis of profit to create win-win situations when product consumption is reduced and services are improved, communicating the new business plan to current customers, changing sales incentives, acquiring new organizational skills to ensure a better understanding of consumption, and learning to highlight the potential benefits of taking steps to improve the environment.