1. Introduction
The automotive industry is currently undergoing a significant transformation, driven by multiple simultaneous challenges (Reference Hover, Hoeborn and BoosHover et al., 2024). Among these, the transition from internal combustion engines (ICE) to battery electric vehicles (BEV) is particularly impactful, fundamentally reshaping the design, production, and market dynamics of the sector. For automotive suppliers, this shift presents unique challenges and opportunities. BEV, with their reduced complexity and fewer mechanical components compared to ICE vehicles, necessitate a rethinking of traditional production paradigms (Reference Koelmel, Fischer, Juraschek, Peuker, Stemmler, Vielsack, Bulander, Hinderer, Kilian-Yasin, Brugger, Kühn and BryschKoelmel et al., 2024). This reduction in parts not only lowers overall production volumes but also diminishes value-added opportunities in the supply chain (Reference Ziegler and AbdelkafiZiegler & Abdelkafi, 2023).
Compounding this, the production of BEV components, particularly batteries and electric drivetrains, demands significantly different technologies, materials, and production processes (Reference Pradhan, Keshmiri and EmadiPradhan et al., 2023). Traditional expertise in areas such as gear boxes, exhaust systems and other ICE-related components must now be complemented or even replaced by capabilities in other areas (Reference Vajsz, Horváth, Geleta, Wendler, Bálint, Neumayer and VargaVajsz et al., 2022). For suppliers deeply rooted in ICE technologies, such as Germany’s forging industry, this technological shift presents significant operational and strategic challenges, as current production assets and workforce expertise may become not aligned with the demands of future markets (Reference Jagani, Marsillac and HongJagani et al., 2024).
Suppliers face a dual challenge of declining demand in their traditional markets, coupled with significantly reduced market volumes and value-added opportunities in the BEV sector. This shift requires not only diversification of product portfolios but also the exploration of entirely new sales markets beyond the automotive sector to sustain revenue and competitiveness (Reference DiezDiez, 2018). Such transformation is further complicated by the need to achieve this evolution within constrained financial and operational environments, highly exploiting existing production assets wherever possible to minimize investment risks and enhance time-to-market efficiency.
This paper presents a structured transformation approach based on the ideas of the double diamond approach to address these challenges. By exploiting existing production and technology assets, the developed approach aims to enable companies to diversify their product portfolio into adjacent or entirely new markets. Drawing from a case study with a leading exhaust system manufacturer, the approach combines (1) a detailed production and product portfolio analysis, (2) synectics-based ideation within interdisciplinary teams, and (3) a multi-stage evaluation process to develop innovative solutions that align with market demands and corporate realities. While this study primarily focuses on exhaust system manufacturers, the proposed transformation framework is designed to be broadly applicable to other automotive suppliers facing similar disruptions, such as those in drivetrain and thermal management systems.
2. State of the art
2.1. Business model transformation
Existing research on business transformation primarily emphasizes top-down, long-term organizational strategies. These strategies involve holistic problem analysis, the definition of overarching objectives, and the implementation of comprehensive frameworks addressing key areas such as operations, human resources, and digital integration (Reference Pulido and TaherdoostPulido & Taherdoost, 2023). Similarly, Porter Reference Porter(1985) highlights the importance of leveraging competitive advantages in transformation processes, ensuring that strategic intent is effectively operationalized. The emphasis of most transformation frameworks remains at the top level, like Glaister & Falshaw Reference Glaister and Falshaw(1999) arguing that strategic planning must integrate external market dynamics to remain relevant. Levitt Reference Levitt(1965) exploration of product life cycles underscores the need for continuous adaptation but lacks in addressing the reconfiguration of production assets for new product strategies. Freeman & McVea Reference Freeman and McVea(2001) emphasize stakeholder alignment as a means of synchronizing internal capabilities with external demands, further underscoring the importance of resource integration during transformation. However, these approaches often miss the limited corporate capabilities in both, capital to invest and organizational structures, which need to response to disruptive market shift such as the transition from ICE components to BEV technologies.
2.2. Transformation within the automotive sector
Current approaches attempt to reconcile these perspectives by highlighting the potential of exploiting existing assets during transformation. Allaoui et al. Reference Allaoui, Bourgault and Pellerin(2018) highlight the necessity of tailoring business transformation frameworks to industrial contexts by leveraging existing resources and aligning legacy systems with emerging market demands. Similarly, Osterwalder et al. Reference Osterwalder, Pigneur and Clark(2010) propose the business model canvas as a tool to align internal resources with external opportunities, though its focus is primarily on conceptual modelling rather than implementation. Jeong et al. Reference Jeong, Kim and Jo(2024) emphasize the challenges and complexities of the shift to BEV addressing the interplay between industrial organization, policy frameworks, and the socio-economic implications of achieving a just transition in the automotive sector. Beibl et al. Reference Beibl, Disselkamp, Dumitrescu and Krause(2024) highlight the importance of integrating flexibility into both product and production system design, emphasizing how flexible production structures can address the challenges of volatile markets and rapid technological changes. Case studies in the automotive sector provide additional insights into these challenges, mainly from the production perspective and with a strong focus on circular economy. Schumacher et al. Reference Schumacher, Bildstein and Bauernhansl(2020) emphasize the transformative potential of digital tools within lean production systems, identifying key indicators of digitally driven change in manufacturing environments. Leite & Braz Reference Leite and Braz(2016) provide further insights by examining agile manufacturing practices for highly customized products, demonstrating their effectiveness in addressing operational performance challenges in volatile markets while Roy et al. Reference Roy, Abdul-Nour and Gamache(2023) emphasize the need for tailored Industry 4.0 strategies in manufacturing, advocating for modular design and agility as critical enablers to overcome resource constraints and enable mass customization.
2.3. Innovation management and design thinking
Methodologies like design thinking and innovation management adopt a greenfield approach, focusing on generating entirely new solutions rather than exploiting existing capabilities. Brown Reference Brown(2009) characterizes design thinking as a human-centered, iterative process aimed at solving complex problems through creativity and prototyping. This approach is mirrored in Tidd & Bessant Reference Tidd and Bessant(2021) framework for managing innovation, which emphasizes novel value creation but does not integrate the reuse of established assets. You Reference You(2022) reviews how design thinking methods enable business model innovation by focusing on co-creation, iteration, and adaptability, highlighting its potential to address gaps between strategy and execution. While innovation management and design thinking excel at fostering innovation, they often neglect the constraints of existing production systems and the need to balance innovation with operational feasibility as shown by (Agarwal et al., Reference Agarwal, Oehler and Brem2021; Hölzle & Rhinow, Reference Hölzle and Rhinow2019; Pulido & Taherdoost, Reference Pulido and Taherdoost2023).
2.4. Research gap
These findings highlight the necessity of a hybrid approach that merges the long-term, holistic perspective of business transformation with the creative, iterative techniques of innovation management, delivering short-term product solutions in the process. Porter Reference Porter(1985) argues for strategic alignment between internal capabilities and market opportunities, a principle that can guide product portfolio transitions. Christensen Reference Christensen(1997) reinforces this by highlighting the dangers of disruptive innovation when companies fail to align existing capabilities with emerging trends. Moreover, Freeman & McVea Reference Freeman and McVea(2001) propose that exploiting existing assets not only reduces transformation costs but also accelerates time-to-market for new products. The need for hybrid approaches is evident in De Padua Pieroni et al., Reference De Padua Pieroni, McAloone and Pigosso2019, who propose frameworks for integrating sustainability into business model innovation, emphasizing systemic change but without addressing the challenges of disruptive market and limited production system changes.
However, while business transformation frameworks provide a solid foundation for organizational change, their focus on long-term top-down strategies often neglects the short-term operational intricacies of product portfolio change. Similarly, while design thinking and innovation management offer valuable tools for ideation and product innovation, their emphasis on greenfield approaches limits their applicability to established industries with significant legacy assets. Bridging these paradigms requires a structured framework that integrates the strengths of both approaches, enabling companies to exploiting existing production assets while pursuing innovation and product diversification.
This paper aims to close this gap by presenting a product transformation approach. Figure 1 shows product transformation within the overall context of transformation management and its domains. Innovation management is located within the domains production system and product as an all new approach in means of product and production system change.
Figure 1. Product Transformation in context of transformation management a multidimensional comprehensive change and innovation management
3. Method - product transformation approach
The developed method aims to generate new product ideas by exploiting a company’s existing technologies, competencies, and production resources while contributing to a transformation path. It focuses primarily on physical products. To achieve this, the concept of the double diamond is adapted, which provides a structured framework for innovation. This approach combines divergent thinking to explore and broaden the understanding of the problem space, followed by convergent thinking to focus on identifying actionable solutions. (Design Council, 2024) Following the idea of a two-stage process, the Product Transformation Approach (PTA) is divided into two sequential phases as shown in figure 2.
Figure 2. The four phases of the product transformation approach, based on the double diamond design approach (Design Council, 2024)
3.1. Problem definition
The problem definition step aims to deeply understand the company, its challenges, and its environment while defining transformation objectives. It consists of two phases: Discover, which broadens perspectives and explores the business model and product portfolio. Define, which structures insights into a clear problem statement for solution development.
(1) Discover phase: Analysis A thorough understanding of a company and its environment is crucial for product innovation and market success (Reference Prahalad and HamelPrahalad & Hamel, 1990). This requires analysing its products, production facilities, and assets, along with economic and political factors.
The analysis of a company involves evaluating both its current product portfolio and its assets. Company’s assets include all tangible and intangible resources that are essential or useful for product development, production, distribution and sales. The major assets within the PTA are production assets such as machinery and equipment, production facilities such as factories, workshops, and assembly lines. A comprehensive analysis of existing assets is done by inventorying and mapping of all production equipment, documenting key technical specifications as well as evaluating their role within the current production flow (Reference Azab, ElMaraghy, Nyhuis, Pachow-Frauenhofer and SchmidtAzab et al., 2013). Tangible assets are e.g. logistic networks, supporting infrastructure, warehouses and distribution hubs. Intangible assets, which are particularly relevant, include e.g. proprietary technologies, patents, digital and physical ecosystems and platforms, strategic partnerships, industry certifications and highly skilled and specialized workforce.
The core of the company analysis is on evaluating the product portfolio from an economic and a technical perspective. Economic assessment methods like the BCG Matrix, ABC Analysis, Function Analysis System Technique and Value Stream Mapping help to identify market position, profitability, and process efficiency (Reference Gandhi, Pawar and LadheGandhi et al., 2022; Jacobs, Reference Jacobs2011; Stern et al., Reference Stern and Deimler2006). Technical evaluation focuses on design, materials, functionality, modularity, and production depth (Reference Ehrlenspiel, Kiewert, Lindemann and MörtlEhrlenspiel et al., 2020). Beyond internal factors, analysing the external environment is essential. Factors such as macroeconomic trends, regulations, and shifting consumer preferences impact strategy. Tools like PESTEL Analysis and Porter’s Five Forces help systematically identify external influences (Reference NandondeNandonde, 2019; Porter, Reference Porter1998; Sabol & Šander, Reference Sabol and Šander2011; Spaniol & Rowland, Reference Spaniol and Rowland2018).
(2) Define phase: Scope In the Define phase, insights are synthesized into a clear problem statement, precisely defining the scope for solution development. Relevant products and company assets are prioritized based on their potential for innovation and market value, considering external environmental factors. Criteria for evaluating product ideas are then established, ensuring a structured transition from problem exploration to solution development.
3.2. Solution development
Within the step solution development, product ideas are developed, further refined, and evaluated. Based on the defined problem statement, the solution space is expanded during the Develop phase through a divergent ideation process based on the principles of synectics. Subsequently, in the convergence-focused Deliver phase, the ideas are synthesized and prioritized for further implementation.
(3) Develop phase: Ideation The Develop phase emphasizes structured exploration and systematic solution generation, building on the defined problem space, representing a crucial link in translating conceptual opportunities into actionable solutions. Using adapted synectics principles, it promotes divergent thinking by recombining insights from previous phases, disrupting conventional thought patterns, and fostering innovation. It connects unrelated domains to unlock new possibilities for idea creation. (Reference Ponn, Hutterer, Braun, Birkhofer and EhrlenspielPonn et al., 2024)
First, a detailed deconstruction of critical elements, including defined corporate assets, current and anticipated market trends, external influences, and the existing product portfolio is done. Existing products are meticulously analysed and broken down into their fundamental components, such as user interactions, functionalities, materials, and design characteristics. This decomposition facilitates a comprehensive exploration of their underlying principles and potential applications. Building on this foundation, an ideation process is initiated using various forms of analogies - direct, personal, symbolic, and fantasy analogies - each selected and applied based on the specific context and nature of the defined problem. By integrating elements from the company’s portfolio and applying them to novel contexts, the PTA provides a structured framework for creative exploration. This process not only generates inventive perspectives but also ensures alignment with defined transformation scope and widely recognized user-centric design principles. During the ideation process, there is no evaluation of the outcomes. Ideas are not assessed but are instead accepted as valid to avoid constraining participants’ creativity following the rules of brainstorming (Reference Al-Samarraie and HurmuzanAl-Samarraie & Hurmuzan, 2018). Between individual ideation sessions, ideas can be briefly evaluated using very simple, one-dimensional criteria to achieve an initial reduction in the number of ideas.
(4) Deliver phase: Evaluation The final phase focuses on refining, validating, and preparing promising solutions for implementation. Building on previous ideas, it ensures alignment with predefined criteria and scope through a multi-stage evaluation process. Ideas are iteratively refined, starting with simple, one-dimensional criteria and progressing to more complex assessments, systematically reducing concepts while enhancing quality. This phase bridges ideation and execution, ensuring the solutions are both innovative as well as practical, and ready to deliver value.
4. Case study
The developed PTA was applied with a leading automotive supplier which is specialized into small- and large-scale exhaust system manufacturing. The product portfolio reaches from exhaust system parts such as pipes, filter housing as well as valves to more complex products such as car individual developed exhaust systems. The company faces declining demand due to shrinking passenger car production in Europe since 2020, alongside rising BEV adoption (Statista, 2024).
This segment is now characterized by a sharp decline in projected demand to almost zero in the 2030s and diminishing profit margins due to shrinking markets and harder competition. Consequently, the company is prioritizing the development of new products to enable strategic transformation and product portfolio diversification. The workshop focused on two key objectives defined during preparatory sessions. First, generating a broad and diverse range of product ideas, particularly in growing markets to diversify the product portfolio within the automotive market as well as other industries.
Second, strong emphasis on reusing existing production assets, ensuring low investment costs and a short time span from product identification to market readiness.
The methodology was implemented during a 5-hour workshop involving 15 experts from various corporate domains such as R&D, production, strategy and business transformation. The mixed team setting facilitates a multidisciplinary perspective, broadening the spectrum of generated ideas. Furthermore, it enables a deeper and more comprehensive multidisciplinary evaluation of these ideas. The divergent ideation part was structured into two distinct phases, each focusing on a different ideation approach. First, an one hour technology push ideation was conducted, which tries to push a technology innovation to the market (Reference Isoherranen and KessIsoherranen & Kess, 2011). This involved combining potential markets with the company’s current product portfolio to identify innovation opportunities. A preliminary evaluation of the generated ideas was performed qualitatively based on their feasibility, with the ideas ranked on an ordinal scale. This enables a rapid, multidimensional evaluation of the results from each participant’s perspective, effectively integrating diverse viewpoints into a single value. The second one hour ideation includes a market pull approach, where consumer demand drives the product development to meet specific market needs (Reference Isoherranen and KessIsoherranen & Kess, 2011). Current market trends were analysed in conjunction with the company’s assets to explore innovation potential. Within the defined scope, ideas were qualitatively assessed on an ordinal scale regarding their time-to-market and associated costs, including development expenses, investments in production infrastructure, and market entry costs. The use of both technology push and market pull approaches ensured a balance between exploiting existing company’s technology and manufacturing capabilities as well as aligning proposed solutions with emerging market trends.
In the convergent phase of the workshop, a two-stage evaluation system was used. First, each team member selected the most promising ideas individually by sticker-voting, without any predefined criteria. Based on the highest number of votes, each group shortlisted five ideas. These selected ideas were then assessed further using specific dimensions, including time-to-market, costs until start of sales, corporate assets leveraged, as well as the opportunities and challenges these ideas might pose for the company. Criteria for evaluation were deliberately kept broad during the initial selection phase to allow experts to leverage their diverse backgrounds and perspectives. This approach fostered productive discussions and encouraged a multidimensional evaluation of the ideas, highlighting varies aspects of feasibility, corporate alignment, and strategic potential. Figure 3 shows an example of the synectics-based ideation cards used in the ideation phase, as well as a filled specification sheet used for evaluation, presentation, discussion and documentation.
Figure 3. Synectics-based ideation cards (left) and specification sheet with anonymized results for group evaluation (right) used in the workshop
5. Results
The workshop successfully generated a large, diverse set of innovative product ideas addressing the transformation and diversification needs of a company within a limited time of five hours. Over 400 initial ideas were created across three groups during two ideation phases, with a structured evaluation process narrowing these down to 15 final concepts as shown in table 1. These ideas spanned across various industries and applications, reflecting in both short-term feasibility and long-term transformation potential. A key feature of the selected solutions was their reliance on existing manufacturing assets, such as welding, metal forming, and advanced testing facilities. This emphasis on asset reuse ensured cost-efficiency and feasibility, aligning with the workshop scope emphasis on minimizing investment volume. Short-term solutions, such as collision protection systems, catalytic filters and pipe system for industrial applications, highlighted the potential for rapid deployment by exploiting existing company assets with projected time-to-market timelines of just 1–2 years. Several concepts targeted opportunities in emerging industries. Examples include battery disassembling as well as second-life systems driven by the shift to BEV including sustainability and circular economy. A further idea is automated guided vehicles (AGV), which require significant technological development and investment.
Table 1. Settings and results of the case study workshop
These ideas emphasized modular design and adaptability, catering to broader market trends such as BEV and sustainability. It further demonstrated the unconventional thinking of the participants, who seek to integrate their experience as users and maintainers of AGV in production into their offerings. The Development timelines for these projects ranged up to five years, reflecting the strategic balance between immediate feasibility and long-term innovation potential. An overview of the settings of the applied workshop and results is provided by table 1.
6. Discussion
The outcomes of the workshop underscore the effectiveness of a structured, interdisciplinary approach to product ideation and evaluation within the context of product transformation. The progression through two sequential divergent and convergent phases ensured a systematic exploration of opportunities while maintaining focus on actionable outcomes. By employing complementary methodologies of technology push and market pull, the workshop successfully generated a diverse portfolio of product concepts that aligned with both the company’s existing assets and the demands of evolving markets. This approach not only facilitated the reuse of production assets, thereby minimizing capital investment, but also accelerated the development of market-ready solutions. A similarity among the proposed concepts was their alignment with the company’s technical and economical capabilities, as evidenced by the reliance on established manufacturing technologies and expertise. This alignment ensured that short-term solutions, such as filters and pipes for industrial applications as well as collision protection systems, could be rapidly deployed to address immediate market opportunities. Conversely, the inclusion of long-term projects, such as AGV and second-life battery systems, demonstrated the capacity for forward-looking innovations and adaptability to industry trends. The integration of technology push and market pull methods was instrumental in driving the ideation process. The technology push approach exploited primarily internal expertise and existing production assets, while the market pull method incorporated external market trends and demands, aligning the company’s strengths and current products with emerging opportunities. This combination ensured that the generated solutions were both innovative and practically implementable. A notable feature of the workshop methodology is its integration of collaborative and competitive elements. Group-based activities encouraged knowledge sharing and interdisciplinary dialogue, while mechanisms such as sticker-based voting introduced a gamified element, fostering engagement and prioritization. The fact sheet evaluations added rigor to the process, requiring participants to articulate the strategic value, technical feasibility, and market potential of their ideas. These structured activities ensured that the final outputs were both creative and well-grounded in practical considerations. The results of the workshop illustrate its alignment with the broader objectives of fostering innovation and enabling sustainable transformation within a constrained operational context. Future applications of this approach could further explore sector-specific adaptation, ensuring that suppliers in different automotive segments optimize their transition strategies based on unique industry constraints. This approach provides a replicable model for organizations navigating market disruptions, particularly those seeking to diversify product portfolios while exploiting existing production equipment and assets.
7. Limitations & outlook
The proposed approach has notable limitations. The framework exclusively focuses on product portfolio transformation, limiting its scope in addressing broader organizational or systemic changes essential for comprehensive transformation efforts. Due to its focus on the transformation of the automotive industry, its applicability is primarily tailored to industrial sectors and mechanical/mechatronic hardware products, which limits its generalizability to other domains. The methodology is validated through a single case study conducted in a controlled workshop setting, lacking empirical testing in diverse, real-world contexts and comparative benchmarking against alternative frameworks. Simplistic evaluation criteria and potential biases in expert selection reduce the robustness of the ideation and evaluation processes. Furthermore, while the framework emphasizes short-term feasibility, it insufficiently addresses long-term sustainability and scalability.
Future research should explore the application of this transformation framework to multiple supplier segments and various industries, conducting comparative studies to evaluate industry-specific success factors as well as to assess its broader effectiveness and adaptability. A comprehensive sector-wide analysis could offer deeper insights into how various automotive suppliers can strategically adapt to the transition to BEVs and explore opportunities beyond the automotive industry. Testing the approach in further sectors such as energy, chemical industry, healthcare, or logistics could provide deeper insights into its generalizability. Additionally, applying the method to different challenges, such as digital transformation or circular economy initiatives, would enhance its robustness. A comparative benchmarking analysis against alternative innovation and transformation frameworks would also help to refine the methodology, identifying areas for improvement and optimizing its utility. These steps will contribute to establishing the method as a versatile and reliable tool for exploiting innovation and transformation.
8. Conclusion
This paper presents a structured product transformation approach to support industrial companies in exploiting existing production assets to transform and diversify product portfolios amidst market disruptions. Based on the Double Diamond design framework, the approach integrates divergent and convergent thinking phases to facilitate ideation, evaluation, and development of innovative product concepts. The PTA framework consists of two primary phases: problem definition and solution development. These phases using a structured process of understanding internal and external challenges, defining a clear product transformation scope, and generating innovative product ideas. The methodology emphasizes the exploiting of company assets, such as machinery, technologies, knowledge and workforce expertise to achieve short-term feasibility while exploring long-term innovation opportunities. A case study application within the automotive sector demonstrated the framework’s ability to produce diverse product concepts. The workshop generated over 400 initial ideas, ultimately narrowed to 15 final concepts, with a strong focus on exploiting existing assets and addressing both short-term market readiness and long-term strategic goals.
Acknowledgement
The research presented in this paper is part of the findings from the project “TuWAs - Transformations-Hub für umformtechnische Wertschöpfungsketten im Antriebsstrang.” funded by the German Federal Ministry for Economic Affairs and Climate Action (BMWK) under grant number 16THB0007D.
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