Jacques Aschenbroich is chairman and chief executive of Valeo, an automotive supplier that works with automakers worldwide. As a technology company, Valeo proposes products and systems that contribute to the reduction of CO2 emissions and to the development of intuitive driving. Among other things, it produces sensors that serve as the eyes and ears of autonomous vehicles and is a world leader in the production of electric motors.
In 2017, the group generated sales of €18.6 billion and invested 12% of its original equipment sales in research and development. Valeo has filed more than 2,000 patents, and last year 50% of its orders were for products that did not exist three years ago.
The company has earned recognition for its stock-market performance and Aschenbroich was named the #4 best performing CEO in the world by the Harvard Business Review in 2017, the first French business leader to earn that honor. He recently spoke with the Innovator’s editor-in-chief, Jennifer L. Schenker, about the future of mobility.
Q: How is mobility changing?
JA: Mobility and economic development belong together. Without mobility there is no economic development. We need to find ways to improve mobility to make it easier, more fluid, more affordable and more respectful of the environment. The other thing you have to bear in mind is that the cities are now becoming new regulators. By regulating traffic the goal is obviously to limit air pollution, but they should also, like I said, take care of the improvement of mobility. In Europe, where diesel is going down quicker than expected, and in China, this means a faster-growing market for hybrid and electric cars. Valeo is extremely well positioned: a pioneer and number one in the world in electrical systems, Valeo equips one out of every three cars on the planet with an electrical machine.
Q: What else is changing?
JA: Everything is changing. The entire world is today experiencing a smart-car revolution, which is in fact the combination of three simultaneous revolutions: the electrification just mentioned above, the autonomous- and connected-vehicle revolution and the digital mobility revolution. Valeo is one of the key players shaping these three revolutions and the future of mobility.
Now let’s talk about the autonomous- and connected-car revolution: the robot taxis will come relatively soon, before 2020, but fully autonomous cars that you or I can buy will take longer and be on the roads between five to ten years.
The digital mobility revolution is already here. We are all experiencing it already when we’re taking an Uber or renting a car through Drivy or sharing a car with BlaBlaCar.
Q: What role does Valeo plan to play in shared mobility?
JA: Valeo does not want to be a player in the digital mobility revolution. We want to be an enabler helping companies to develop new services, create new business models. Such as the Valeo InBlue virtual key, which can be securely passed from one smartphone to another.
Q: How does mobility change the city?
JA: The electric, shared and autonomous car is probably the reconciliation of the car and the city. It brings safer roads, more breathable and less congested cities. We have all the technologies needed to speed up the emergence of a new kind of mobility, a personalized flexible and at the same time mass transportation that will reconcile the car and the city.
Q: What does this mean for Valeo?
JA: Thanks to our leading position in these three major revolutions, we have immense growth ahead of us: with electrification, we will multiply the value that we add to cars from two to seven, depending on the solutions. With autonomous driving, we will multiply the value we add by 10. Moreover we already have had €10 billion in order intakes with our Valeo-Siemens Joint Venture dedicated to high-voltage power trains.
Q: Are you bringing any innovation from the outside?
JA: The world is moving fast. That is why we are spending more than 10% of our Original Equipment revenue on R &D, but at the same time we also go for an open-innovation strategy. Across a wide ecosystem spanning universities, laboratories, companies in other industry sectors and startups, Valeo leverages cooperative innovation to diversify its sources of inspiration and streamline its development cycles.
For example, we have some partnerships with Safran to develop some common systems, with Capgemini on a virtual key and with Cisco on autonomous valet parking.
Q: What about startups? How are you working with them?
JA: Valeo estimates that there are around 30,000 startups in our automotive world. To select the most promising cooperation opportunities, Valeo invests in venture capital funds in the U.S., Germany, Israel and China. We want to be sure that we are identifying the trends of the industry and we should ignore none of those able to challenge our position.
Q: Do you find it difficult to integrate startups into your company?
JA: There is a big difference between integrating startups and changing a company. It is easier to change rather than deal with startups. We have demonstrated over the last 10 years that we are able to change and be much more focused on innovation and growth and more balanced between growth and profits. At the end of 2009 we had 45,000 employees and as of last month we have 116,000 employees. We have been able to integrate 70,000 new employees. That has been possible thanks to our ability to adapt and to speed up.
Integrating a startup within a group is something very different, as startups are more focused on one specific topic, and can lose money for years in order to fulfill their dreams as long as they can convince investors that their dreams are worth the investment. They want to conquer the world because they think they have a product that will change the world. For them, short-term profitability is less important than long-term valuation. That is why it is not easy to integrate a startup in a big company like ours.
Q: What do you see as Valeo’s greatest challenges going forward?
JA: There are two main challenges. The first one is to maintain our speed even if we are growing. The second challenge is to find the right balance between growth and profitability.