1

Leading the DisruptionsHow to deploy future-proof innovation strategies

Confluence - 2016

Dominique CeruttiAltran, Chairman and CEO

2

R&D rules the planet

The most powerful engine of economic expansion…

…Fueled by Top 500 spenders…

0%

10%

20%

30%

40%

50%

60%

70%

80%

0 1000 2000 3000

500 companies concentrate ~61% of the global R&D spend

100 companies concentrate ~40% of the global R&D spend

Tail of top 2500 R&D spenders

2014, % of global R&D spend

Average company lifespan in S&P 500

33 years

1995 2015 2025

25 years

15 years

…Which are ever more challenged

-25%

-40%

R&D growth: 160% of GDP growth over the period

$630B(2,0% of GDP)

R&D spend

OECD, 1982-2014, $B and in % of GDP

$920B(2,1% of GDP)

$1 150B(2,4% of GDP)

1994 2004 2014

R&D rules the planet

3

Innovate or abdicate

True innovators breakingthrough to the top…

…Creating massive disruptions…

$15B R&D investmentsFocus on autonomous driving and electric mobility

…Generating battles of giants

Tesla model S market share(US premium market, m/s in volume, 2012-15)

Uber market share(North America business taxi market, %, 2014-15)

#1

20152012

3%

26%

January 2014

March 2015

August 201415%

30%

50%

Rank 2011 2016

1

2

3

4

5

6

7

8

9

10

New entrants in 2016 top 10

Top 10 market capitalization

+23 ppt.

$4.5B R&D investmentsLeading the digital era

$12.3B R&D investmentsFocus on disruptive innovation (e.g. robotics, autonomous car)

Innovate or Abdicate

4

Breakthroughtechnologies

Time to market obsession

Digital disruption

Differentiationfor competitive

separation

Draconian regulations

Global or marginal

R&DShift

1

6

35

2

4

The 6 R&D TyranniesThe 6 R&D Tyrannies

5

The 6 R&D Tyrannies: the automotive industry

Breakthroughtechnologies

Time to marketobsession

Digital disruption

Competitive separation

Draconianregulations

Global or marginal

1

6

35

2

4

Internet of Things

Modularization

Car Sharing

Autonomous Cars

Industry 4.0Globalization

Disruptive players

Zero emission

Total safety

The 6 R&D Tyrannies: the automotive Industry

6

Core vs. Context: the innovation circle

Source: Geoffrey A. Moore, Altran

COREProcess creates true differentiation and separation from competition

CONTEXTAll other processes

Mission CriticalProcess shortfall creates

serious and immediate risk

EnablingAll other processes

Differentiation

Ris

k

Flo

w o

fin

no

vati

on

Deploy differentiation at

scale

Deploy differentiation at

scale

ManageMission-Critical

processes at scale

ManageMission-Critical

processes at scale

Invent differentiated

offering

Invent differentiated

offering

Extract resources to repurpose for

Core

Extract resources to repurpose for

Core

CORE vs CONTEXT: the innovation cycle

7

…so what?CORE vs CONTEXT: Key takeaways

Focus on

COMPETITIVESEPARATION

with a deliberateinnovation strategy

Declare your

CORE

Leverage a new

SOURCING MODEL

1 2 3

8

Altran: sharpened business models to address Core & Context challenges

From deep domain expertise…

28 000 Altran experts: engineers & scientists

Product & Systems Engineering

Complex Systems Engineering

Intelligent Systems

Mechanical Engineering

Advanced Test & Simulation

Product Design & Innovation

Manufacturing & Operations

Supply Chain & Logistics Excellence

Manufacturing Techno. & Automation

Manufacturing Ops & Optimization

Civil Works, Infra. & Environment

Network Transformation & Performance

Digitization

Industrial Big Data Analytics

Digital Infra. & Governance

Digital Applications & Media

Product Lifecycle Management

Industrial Enterprise

Program Management

Security, Safety, Regulation & Risk

Enterprise Performance & Quality

Technology & Engineering Strategy

ALTRAN: Sharpened business models to address CORE/CONTEXT challenges

28 000 Altran experts: engineers & scientists

9

Altran: sharpened business models to address Core & Context challenges

… to differentiated business models

CORE CONTEXT

Critical

Enabling

Innovative Product Development

To access new technologies and explore disruptions

World-Class Centers

To accelerate, leveraging the best expertise, IP and assets on the most advanced technologies

Industrialized GlobalShore®

To leverage cost-effectivetalent pools across the

planet

ALTRAN: Sharpened business models to address client CORE/CONTEXT challenges

10

Partner to accelerate on Core: next generation E/E architecture

WHO:

A leading European car OEM

WHY:

Ambitious growth plans and exponential complexity of automotive features require urgent rethink of traditional E/E architectures to optimise costs and time to market

INNOVATION STRATEGY:

Partner and co-innovate to accelerate and create disruptive IP

Partner to accelerate the CORE: next generation E/E architecture

APPROACH:

Move from a complex architecture with 100+ dedicated ECU to a centralized domain

25% integration cost savings and 35% less cabin weight

Co-investment to develop a new software platform to manage the complexity of

embedded systems

11

Transform to optimize Context: full variant application development

WHO:

A leading European car OEM

WHY:

Significantly optimize the cost of development and time to market of full variant applications

INNOVATION STRATEGY:

Leverage outsourcing on CONTEXT activities

Transform to optimize CONTEXT: full variant car development

Co-construction of a nearshore R&D center

to developfull variant applications

APPROACH:

Greenfield set-up of an ODC for activities related to variant applications development with Altran

Strong reduction of TCO and unlocking of critical resources

12

Thank You