Open Innovation Revs Up the Car Industry

Published Apr-17-11

Meet Rally Fighter, the first open source car.

Local Motors, United States

The Story:

 Open Innovation Revs Up the Car Industry Local Motors creates car designs through a series of open innovation and crowdsourcing initiatives. The Arizona-based company was co-founded in 2007 based on its belief that the car industry was not making cars for its consumers.

“The auto industry was extremely out of whack with what customers were looking for," said Jay Rogers, co-founder, Iraq War veteran and Harvard Business School graduate. "I wanted to see car companies adapt more quickly."

Local Motors studied the car manufacturing status quo to provide an alternative to the high capital cost of designing a single model and pumping out hundreds of thousands of copies a year through dealerships. It's a system that it believes keeps the customers out of the loop.

Futuristic Car Design

So far the innovative company's open innovation competitions have led to the Rally Fighter, a car built for desert drag racing in the south-western United States. There have been a number of competitions to design numerous aspects of the car such as the roof lighting kits and customized car skins.

The company is using an open innovation collaborative model to create a revolution in the way that cars can be made. It is making the designing, engineering and manufacturing of automobiles open source as designers can submit their designs and the community will vote and select the winners.

The first open developed community created car was the result of 35,000 designs submitted by 2,900 community members who came from more than 100 countries.

The overall winner was Sangho Kim, a Californian student who picked up $10,000 prize money. Local Motors plans to sell the Rally Fighters for about $50,000 so the design costs are a bargain.

Power of the Community

With Rally Fighter, Sangho Kim submitted the raw design and it was refined with feedback from the community. Although he was the principal driver behind the vehicle’s look, other members contributed to separate parts of the design. The interior, for example, was designed by a different member of the community. In fact every single major car system was designed by the community.

By crowdsourcing the design and using web-based tools Local Motors was able to drastically compress the design cycle from years to months.

From Drawing Board to Drag Strip

One of the most innovative aspects of the Local Motors business model is that they don’t actually build the cars, you do. The company‘s customers are mechanics and hobbyists who like to tinker with and build cars from kit form. It’s a neat way of getting the customer involved in every aspect of the creation of a car from drawing board to drag strip.

Local Motors says that it wants to use its open innovation and crowdsourcing model to work with established vehicle makers not against them. For example it can help them to create niche models that they would otherwise pass over because the volume isn’t there to make them profitable. Or Local Motors could help to refine or overhaul car systems.

And the really great thing about all this? The neat business model does not have to be restricted to the auto industry. It can be easily adapted to help companies in other arenas to improve their innovation.

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