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Mobility Services, a new model for automobile companies…

What if GM, a.k.a. “General Motors” was now called “Global Mobility” or even “General Mobility”, would that change what they do? A name change alone would not change things perhaps; but if the name was changed because of a new way of thinking about the value that they could bring to the world, it might. In our consulting business, which is focused on innovation and transformation of businesses, we have a key saying.

“If you ask a different question, you will get a different answer”.

What we mean by this is that evolution happens as we continue to improve the status quo but revolution happens when we start to think about improving the outcomes of what we do in new ways. The simple example would be to consider a quote associated with Henry Ford that said “If I had asked my customers what they ‘wanted’ they would have simply said, faster horses”. His customers knew they needed something that would be faster than a horse that could transport more over longer distance and could help them be more efficient. Henry looked at the larger issues around the attributes of transportation that people desired. Further, he knew that cars could not just be toys for the wealthy but needed to impact society at all levels. He thought about the problem differently and he had different answers. It was not about the automobile, it was about building something that was cheap, reliable and usable for the common man that would improve society as a whole. It was about raising the living wage so that people could afford the technology that would make their lives better. It was about social revolution and not about transportation evolution.

Back to the original question. I am picking on GM because of their recent history and spot in the current news. They want to reinvent themselves as they emerge from their bankruptcy. They want to be more “green” and produce products that meet a current paradigm that automobiles must be the symbol for saving the world as much as they have been vilified for polluting it in the past. At the end of the day GM goes from being a manufacturer of automobiles to a manufacturer of automobiles with a conscience. Of course this is more of a marketing ploy than a real change of culture. In essence cars, individually, are not the evil polluters or consumer of global resources they are made out to be by the eco-frauds. Building hybrids vehicles, ethanol powered cars, electric battery packs all consume resources greater than any that they may save. Ethanol, as an example, consumes thousands of gallons of water to make a few gallons of ethanol and uses lots of energy from coal fired power plants to produce less energy (BTU) equivalents. Therefore running ethanol in your vehicles only really helps the corn farmers but it sounds “green”. Thus far electric and hybrids follow much the same pattern. They consume more resources than they save. Nuclear powered power plants would not only make more of these car technologies work better( think Hydrogen Fuel cells etc ), it would be a 1000 times more impactful and green than forcing car companies to meet artificial environmental standards.

What does this have to do with services? Well, what if GM did not think of themselves as an ‘Automotive Manufacturer’ but rather as a provider of ‘ Mobility Services’? Let’s look at the challenges that an automobile manufacturer faces under today’s paradigm.
• They build hard goods whose profits come from selling to dealers and not consumers. Their profit is on the sale of the manufactured goods. They have little participation in the lifetime of services after the sales. The margins are thin at best and this drives them to create products not totally in line with the best interests of the consumers and the rest of the world.
• As citizens of the world, and the ranking villains in terms of environmental impacts, they want to be a part of the solution and not the problem. They will be forced to reduced their so called “carbon footprint” (thanks AL …. )
• In the history of the automobile, there have been over 5500 brands and companies, what differentiates an auto company in a mature commodity market that will allow a GM to thrive another 100 years?

In essence if GM asked “the different question” and looked at what the world really needs against their current challenges the answer would not be the not-so “New GM”. Let’s assume for the moment that most people buy cars to get them from place to place and not as status symbols or extensions of their egos. What if the car could be provided as a service and paid for only as it is used to provide the value associated with transportation? As a consumer the costs of automobile ownership go well beyond the purchase price and cost of gasoline. If you want to lower your personal “carbon footprint” giving up direct ownership would certainly be attractive, assuming that you could still get where you needed to go when needed.

Cutting to the chase, GM could easily dominate the “cars as a service” (CAAS ) market and while they were at it, payback the government loans, make the shareholder rich and provide huge and real positive environmental impact. ( Note to GM CEO: Fritz, call me, I’ll tell you how .. ) To keep this simple, let’s think about companies like Zipcar or City Car that already allow users to share and pay for cars based on incidental use. Need a car? Just go online, find the nearest car, get an access code, drive the car as needed and park it someplace when you are done for the next person to use. You simple pay a fee for the use. You simply pay for the value that the car creates. GM, like many makers, makes cars that are controlled by computers with tons of sensors that can transmits a ton of data. GM also happens to own the ON Star satellite systems and infrastructure that can provide two way communications to their vehicles, seamlessly. GM already has the resources to make this market work better.

GM could provide a fleet of vehicles ranging from urban econo-box to interstate luxury cruisers for shared usage. From someplace in the world GM could easily locate a fleet vehicle, know its fuel state, its overall condition, its consumption rate. They can start or stop the vehicle remotely and control its actions including enforcing safe operation of the vehicle. It is possible for them to provide an ideal platform for the ZIP car market. Taking a theme from IBM’s smarter planet initiative for example, let’s apply the concept to this ‘GM cars as a service’ idea. By having two-way information exchange already built into the vehicle, GM could participate in the life time value of the asset that they now build and sell. Margins could be several hundred percent better than their current business model. A consumer could simply sign up for a service. When they need a car or truck etc, they would go online and find what they need, where they need it. They could ask for and pre-download navigation or other location aware services including concierge services. It would be possible to even coordinate ride shares. Their transportation experience could be enhanced, their costs would be less than car ownership and the planet would benefit from having a few less environmental impacts. GM would be making money like crazy. Little of this scenario requires any new technology. Tie this into the “smart grids” being built for highways, public infrastructure etc and GM could be one of the largest “green” companies of the world reducing their own carbon foot print as well as those of the consumer.

I confess to being an incurable “car guy” and I would still want to see and own some cars for reasons other than basic transportation. Even given the desire to use cars as something other than transportation, I do not have a strong desire to have to own the physical asset. There will remain a market for unique products etc. but if solving for mobility services was the question, how that would be done would be different from what “automobile manufacturers” do today.

That is my opinion, what is yours?

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