Questioning Mobility: Model Changes

A truly disruptive technology creates social friction. This occurs when technology changes daily civic life rapidly enough to the point where legislature or social norms are not flowing along with those changes. It seems apparent that this is happening with transportation and the auto industry at large.

Legacy auto groups are tied to their long-established manufacturing and supply chains and because of that, many look at changing concepts of mobility through of the lens of their traditional business model. This perspective sees it one way- more population, more industrialization, and more relative affluence simply requires more volume.

With several pockets of disruption to their industry, there is a need to re-position to embrace changes. These include: energy sources for drive-trains, the commercial viability of semi/full autonomy, and increasingly shared mobility. The only option is to adapt, but there is a risk of striking partnerships with new entrants and technologies in all the wrong ways.

There are two major components crucial to a successful and expedited shift in global mobility:

• How can legacy auto groups with conventional business operation models change to address systemic, unique challenges in different parts of the world? How do car companies become integrated with civic institutions and municipalities?

• How will legacy auto groups partner with younger technology companies in ways that introduce fundamental changes, rather than simply supplementing the traditional business model? 

During a 2016 Q&A discussion at The Economic Club in Washington D.C, Bill Ford espoused a future vision of global transportation and offered surprisingly non-traditional thoughts about these topics.  

Dismantling the traditional business models around mobility 

With auto groups making ventures into the technology space (machine-learning, autonomy, ride-hailing), their main tools of entry are leveraged capital investments and business partnerships. They also tend to look at the changing world of mobility through the lens of their conventional business models.  The sweeping industrial power they wield can be cumbersome when it comes to agile technological innovation. Those who forego conventions and take risks will set the pace for their peers, bringing in changes to almost every component of the industry from manufacturing to market.  

Traditional partnerships in this industry are designed to last long periods of time or result in a subsequent acquisition. The newer, tech-centric variety of partnerships are much different- relationships are fleeting and partners today may be adversaries tomorrow.  There is a class of technology professionals for which changing roles and alliances is expected which produces more of a mercenary-for-hire environment in tech startups or tech spin-offs today. They can be co-founders of startups, executives at legacy tech companies, or spin up their own venture capital funds. 

Ford summarized his past and present experiences with the phrase 'frenemies'.  He knows there is a need to acclimate to the complex webs of funding and alliances- making strategic connections which may not have long-term viability. He predicts new revenue streams and business models will continue to spring up in this space, and there will be massive wealth created here. The challenge for Ford, and he argues for its peers as well, is to straddle the old and new models in order to adapt with younger companies. He discussed the need to help young technology companies with navigating the bureaucracy of massive corporations, and to champion their progress for the most mutually beneficial outcome.  

He sees the new models as less capital intensive with higher margins, and less cyclical as the move is made away from selling a car into the aftermarket and forgetting about it.  The new models may move closer to a subscription based model which grants access to mobility hubs in a meshed infrastructure network of available vehicles, either self-piloted or autonomous. 

The other majors shift is outlined in this next section, but it can be applied as a template in many different business approaches to new mobility. Ford speaks about a 'cities as customers' philosophy which seems to be growing into a fundamental component to a new model for Ford in its effort to realize 'smart mobility' in its varying forms. 

Shifting legacy power from industrial might to smart solutions for communities

Ford also makes an interesting and divergent point from traditional thinking; emerging economies and GDP's do not necessarily need huge volume injections of autos in order to succeed during growth periods. He saw Ford's peers looking at sharp population growth, a new global middle class, and emerging economies as opportunities to sell more volume and felt this was the wrong way of viewing the changing world from a business perspective.

The question then became simple: what does it mean to move people, goods and even healthcare services or medicine around communities in a smarter way? 

Consider the fact that roughly 800 million people globally do not have adequate access to healthcare, and mobility plays a large role in the lack of access. How do we link the professionals and experts in city centers with those in rural communities who lack access? 

One example of addressing this problem is in a healthcare pilot program Ford is operating in India. Ford is testing their connected vehicles to be used to travel out to rural communities to visit expectant mothers, where health data can be transmitted back to hospitals in a city for evaluation and subsequent advice relayed back to field operatives. In some cases, orders are made for specific medicines and treatments to be transported as well.

Ford considers those emerging markets as staging grounds for a new approach to transportation: going directly to cities or municipalities in an initiative he coined "cities as customers". Instead of simply fulfilling massive fleet orders and churning out high volume at bulk price, Ford could take a more personalized approach- working directly with communities on problems that could be solved beyond supplying the means of transportation.

This departure from the traditional business model allows resources to be allocated for unique civic conditions through partnerships with small municipalities that trade leverage massive industrial power and bulk prices for custom solutions based on intimate understanding of local challenges. 

So whether it's mobility as a means to access work, healthcare, or food, Ford suggests the traditional model may have already peaked, and what we're seeing now is a test of how legacy auto groups are going to transition and change along with new, disruptive technology.

Ownership models, drive-train, 3D printing, and micro manufacturing capabilities are all poised to challenge the auto industry. The ability to adjust to a changing world with varying needs will lay the groundwork for effectively applying new technology to for peoples' sake, not just for technology's sake. 

The best way to realize this new model would be to adopt Bill Ford's predicted future of "cities as customers". Emerging economies have much more malleability for creating new infrastructure or upgrading/adapting existing infrastructure. In this case, infrastructure can range from:

• Energy hubs (Renewable, sustainable energy hubs that can power vehicles)

• Mobility hubs (strategically placed points where charging, service and parking/storage happens.

• Communications networks that tie everything together, and in some cases a layer of robotics or intelligent/automated systems making things run. 

It may make more long-term sense for larger, older auto groups to act as a capital pool for younger technology entrants who can fit like puzzle pieces into a new mobility infrastructure; providing veteran guidance, long-standing relationships with established business partners and access to the decision-making strata of communities they wish to build into.