How TomTom weathered the perfect storm and reinvented itself

How TomTom reinvented itself

'Tech is innovation, but tech is also permanent threat'

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How TomTom weathered the perfect storm and reinvented itself

‘For TomTom, 2008 was the year of the perfect storm’, says TomTom co-founder and CTO, Peter Frans Pauwels. In the disaster year 2008, the biggest European producer of navigation systems saw an iPhone with GPS coming onto the market, the eruption of a financial crisis and, if that weren’t enough already, internet giant Google came up with free maps and route planners. Pauwels: ‘Oops, we thought!’

A few rungs lower in the business hierarchy, product manager Daan Oostveen and, with him, several TomTom employees, discovered another problem. The TomTom Go, the flagship of the navigation products, no longer met users’ expectations. With smartphones, such as Apple’s iPhone 3G (2009), clients got used to swiping, pinching, tilting, interaction. And that was not possible with the screen of TomTom products.

Oostveen, now product management director: ‘Our product was still very successful. Don’t fix it if it isn’t broken, some said. But they also saw that the average age of TomTom users was increasing. Our marketers had great trouble convincing consumers that we really made a good product.’

And it all went so well.

From the launch of the TomTom Navigator in 2002, TomTom had the wind in its sails. The TomTom partners came with the golden idea (a pocket computer for navigation) at the golden moment. The US had opened up the military GPS to the public, and the final breakthrough in digital photography forced down the price of memory significantly, while memory capacity exploded.

In the words of Daan Oostveen, the first TomTom was a ‘Big bang’. ‘Boeing 747s full of TomToms flew across the globe.’ As with Jeep, the brand name TomTom became a generic name: ‘What does TomTom say?’ Pauwels: ‘Turnover increased from two to ten to forty million per annum.’ Employee numbers increased from a few hundred to a thousand, to two thousand, three thousand. And then 2008 came along. The cash cow came under pressure, the upward curve kinked, turnover dropped. TomTom had to reinvent itself.

Pauwels knew long ago that this day would come. ‘Already with the floating of company in 2005 we realised that our still only product had a shelf live. When Google announced its free maps and route planners in 2008, I was not happy. But I also knew: this is not the end game.’

Lesson 1 Ensure that you have the right assets

  • TomTom bought Siemens VDO and thus expanded its clientele.
  • TomTom acquirerd Tele Atlas for building better digital maps.

 

Earlier, the partners in the head office in Amsterdam set themselves two goals: innovation (of the navigation system) and diversification. They’d already brought the ingredients in. Some years earlier, TomTom had taken over the employees of Siemens VDO. They had specialised in built-in systems for car manufacturers and made name as the inventors of ParkMate, which directed users to a free parking spot. Thus TomTom expanded its clientele from private users to carmakers. Pauwels: ‘Now we’re delivering parts to every carmaker.’

Besides, in 2008 TomTom had acquired the supplier of digital maps, Tele Atlas. This enabled the company to incorporate the changes in infrastructure noticed by millions of TomTom users on the road into the maps within one day. ‘But to remove the mismatch between assets and product and make this asset suitable for build-in, we had to build up architecture and software from scratch,’ says Oostveen.

Lesson 2 Ensure that you have the right people and the right mentality

  • At TomTom everyone is responsible for innovation.

 

Eventually, seven hundred people would work for two years on the new generation navigation kits plus accompanying platform. Which, Oostveen says, doesn’t mean only those seven hundred were involved. ‘At TomTom everyone is responsible for innovation.’ Pauwels: ‘Everyone joining TomTom must want to be innovative. We are, after all, tech. Tech is innovation, but tech is also permanent threat. Just look at Nokia: gone. Sony-Ericsson: gone, too. If you don’t innovate your tech company, you’re gone tomorrow. Everyone has to realise that.’

Everywhere inside TomTom, employees invented applications for the new generation navigation kits. During a workshop, Oostveen personally came on the idea of a traffic warning: the jam-a-head. ‘We asked ourselves, what if we don’t show any map, what could we put on the screen instead? That’s when we came up with the jam-a-head: there’s traffic jam in so many metres, which causes an x-minute delay.’ Oostveen attended many similar what-if sessions. What if we only had audio? What if you don’t use TomTom while driving? Oostveen: ‘Highly instructive.’

Lesson 3 Get ideas (from everyone)

  • At TomTom, everyone has two innovation days per quarter.
  • Top management always was (and is) ready for innovations.
  • Innovation is embedded in the TomTom business culture. TomTom has the soul of a start-up.

 

The so-called Innovation days also produced new solutions. ‘At TomTom, everyone has two innovation days per quarter. You can think up and pitch something in a team,’ says Oostveen. For example, two motorcycling software developers came up with the application thrilling rides: the routes with the most corners and bends, for motorcyclists. ‘A success.’

What helps with all innovations, says Oostveen, is embedding innovation in the TomTom business culture. Product managers like him find themselves between technology and marketing with one goal only: picking up innovations and improvements, thinking about them and, with a business plan attached, sending it the top: ‘Look, this is very good.’

Top management, in turn, always was (and is) ready for innovations. Pauwels: ‘You have the official route via product managers, but it frequently also happens that someone walks into my office or another manager’s: ‘Have a look. Wow. We have to make this. People also like it that the founders are still around here and not, as with many other companies, some hired big-shot director.’

TomTom may employ four thousand people in 37 countries, but it hasn’t lost the start-up mentality, says Oostveen. ‘The founders have the balls to take real risks. In that sense, they’ve never grown up.’ Actually, he needn’t say it. The fact that not a single suit walks around in the head office, Pauwels gives the interview for this article in a jacket and the gents is not indicated by an H, but by a picture of Batman, are sufficient proof that the European market leader in navigation devices has the soul of a start-up.

VIDEO: Bert and Ernie recording for TomTom GPS - behind the scenes

Lesson 4 Try out your ideas (without spending too much)

  • TomTom elaborates concepts in line with the lean start-up method.

 

The concepts for the new navigation line and TomTom’s reinvention were elaborated and visualised in the product lab, in line with the so-called lean start-up method. Oostveen: ‘In other words, we don’t build a prototype for 20,000 euros but, for example, a simulator for 2,000 euros. For instance, once we fully simulated a user experience with voice recognition. We bought a Bluetooth speaker and connected it to a Mac. The tester thought he was dealing with a speaking TomTom: “Good morning Henry, are you going to work? Yes? You will arrive in one hour.” In reality, a TomTom employee talked through the speaker. As fake as you can get; Wizard of Oz, this method is called.’

In May 2013, the new NavKit platform with the new generation navigation system came onto the market. Oostveen: ‘The mismatch between our assets and our product was gone.’ Users could swipe, pinch, tilt, set personal preferences. Thanks to Map Share, the TomToms were updated daily with new speed restrictions, changed routes and blocked roads. Countless new applications, such as the jam-a-head, made driving easier than ever for users. And the software could simply be fitted by car makers. 

TomTom rediscovered its competitive edge
Google may well have free maps. TomTom had, according to Pauwels, rediscovered its ‘competitive edge’ or USP: ‘TomTom gets you there fastest.’ Oostveen: ‘I’d like to run a pilot project with business-model innovation: users can drive around for free with our navigation app for 75 kilometres per month. I’m convinced that, after those 75 kilometres, they’ll choose us instead of free.’

Meanwhile, the diversification has also had lift-off. In 2011, Nike knocked on TomTom’s door. The sport company wanted a GPS watch for runners. Within a year, the Nike/TomTom sport watch had a quarter of the market for smart wristbands in the US in hand. Pauwels: ‘That showed us: ‘Hey, with the knowledge and technology we have, we can also market other product categories.’ In 2013 TomTom produced its own sport watch. In 2014 the first sport watch with a pulse reader followed and, meanwhile, the fitness watch also plays music. ‘Joggers can then take to the road without that smartphone.’ 

VIDEO: TOMTOM BANDIT - Steven Akkersdijk Kiteboarding in Cape Town

The TomTom Bandit quickly followed: an action camera born from the frustration of the founders. Pauwels: ‘I’m a snowboard fanatic, but the problem with filming snowboarding is that in no time you sit with a massive amount of raw footage: before you know it, half an hour’s filming requires two-and-a-half hours’ editing.’ He discussed this with one of the other TomTom founders, CEO Harold Goddijn. ‘He also likes a spot of skiing and would like a camera. We realised that the reason you buy such a camera is not filming, but sharing. So we developed a camera packed with sensors; from speedometer to compass. Based on the correlations from the measurements of all the sensors, the camera immediately shows a film afterwards for sharing via the smartphone. It saves hours of editing.’

Lesson 5 Keep an eye on the user

  • TomTom has a very large user-experience group.
  • TomTom maintain close contact with sellers across the globe.
  • TomTom has not outsourced its helpdesk.

 

According to Pauwels and Oostveen, the Bandit and the sport watch developments are exemplary of thinking by TomTom. Pauwels: ‘We always think from the user experience: how can we simplify something complex? You unpack something and then… The user, the competitive advantage, are fundamental in our innovations. It’s not for nothing that we have a very large user-experience group of around fifty people and we maintain close contact with sellers across the globe. We have not outsourced our helpdesk: direct contact with the end users is far too important. Very different from, say, Samsung. They stuff a whole bunch of features in a product, more pixels, and there you go.’

At Samsung they stuff a whole bunch of features in a product, more pixels, and there you go’The innovations pay off. In 2015, in curve kinked again, but this time upwards: turnover increased. But innovation continues. At the beginning of 2016, TomTom announced that two applications, HD Map and RoadDNA, had been nominated for the innovation awards of the European Association of Automotive Suppliers. ‘The ambition to grow strongly remains,’ says Oostveen. 

Pauwels foresees the arrival of new innovations after the summer. He doesn’t want to say which, but the entrance hall of the head office gives an idea. Among the innovations, there’s a simulator of a self-driving car. Pauwels: ‘We now have everything under one roof to make a car drive itself. The self-driving car; that is the real end game. We already foresaw that before the perfect storm of 2008.'

VIDEO: TomTom Enables Autonomous Driving

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