REINVENTING PERSONAL MOBILITY – “The Lakes” vs. “The Valley”?

Draining the Lakes?

“The Lakes” are facing a revolution of their evolutionary business model that has worked well for them for the past 100 years. Personal vehicle demand is increasingly cannibalized by a sharing economy and attractive intermodal offerings in mega cities, subsidized by B2B business models, all of which entices customers to give up personal vehicles ownership.

But the expanded mobility value chain, the virtual business models and the enabling technologies are outside of automaker’s core competences. So the industry debate is in full swing as to where the automakers can beat “The Valley” and where it would be of mutual benefit to join forces.

As some of the innovation leaders have “skin in the game” in the connected personal mobility value chain and are of equal or larger size than automakers, a traditional supplier-buyer relationship will likely be insufficient. Winners will work closely with non-traditional partners, will embrace different innovation models and will explore new business models.

The second major battlefield is the autonomous vehicle. Closing the technology gap to enable fully autonomous vehicles is confronting the automotive industry with very similar challenges, since many mission critical technologies are from innovation leaders outside of the traditional automotive supply base.

A key question to be resolved is which technology domains are an axis for competition as opposed to where standards or cost sharing or intellectual property would create cross-industry benefits. An innovation model that has worked very well for Cisco, distinguishes four different strategies that are applied on a spectrum from core to context.

Build, Buy, Partner or Collaborate?

New technologies that are regarded core and where proprietary differentiation is necessary would need to be “Built” or internally developed. To enter new markets or enhance existing ones, a “Buy” or acquisition strategy, potentially in collaboration with industrial or venture partners, is more appropriate. To bring new solutions to new markets, a joint go-to-market “Partner” model is preferred. To test or spawn innovation and next-generation products and services in non-core domains to “Collaborate” with B2B customers or suppliers is a smart option.

For all mobility value chain partners, it boils down to what technology or cost elements of the value creation process can be controlled in the long run or should be shared for mutual advantage. Similarly, where does controlling or sharing access to customers or data turn into a sustainable single or mutual advantage for delivering value and differentiation?

Putting Together the Winning Team

As in a real race, it is less a question of building the fastest and sleekest car (“The Lakes”) or the coolest connected device to capture virtual value (“The Valley”) than who will put together the winning team across industries to deliver the superior experiences that become possible when cars connect to the Internet of Everything (IoE).

For the partners in the future personal mobility value chain it will be critical to assess each one’s how the IoE will transform their business, what the winning IoE strategy will be, what partners they need to succeed and what IT investments they need to execute their IoE strategy.