Automotive Blog

The whole is greater than the sum of its parts

The Whole Is Greater Than The Sum Of Its Parts

The whole is greater than the sum of its parts, as Aristotle once said. And the ‘whole’ in the mobility market is getting a whole lot bigger.

When we talk about the invention of the automobile, over 100 years ago, it was big, single, identifiable innovation that changed the world. By contrast, when we talk about mobility we tend to talk about a range of different ideas and technologies that are disrupting the travel and transport markets. And despite the hype, it seems hard to imagine how any of the many unrelated innovations could, in themselves, completely transform the market for personal transport. Many of the current innovations take an existing idea, and effectively expand a localised solution to a problem and transform it into a large and anonymous crowdsourcing solution. The result is something that looks large and monolithic, but in actual case may be a staging post to something very different, a new environment where such services are so interconnected and commonplace that no one gives them a second thought.

Let’s reconsider some examples by way of illustration.

Blablacar is the world’s largest peer to peer ridesharing platform, which now claims twenty million users in nineteen countries, with a valuation recently upgraded via a new round of funding to €1.4 billion (The Economist 22/10/15 A $1.6 billion French start up revs up).  That’s a big player by any standards, but it is actually just a means of organising underutilised car seats. The ride sharing service targets long distance trips, and like many peer to peer services, relies on trust ratings for riders and drivers, thereby turning any long distance driver into the neighbour who just happens to be going to the same event as you and so you share the fuel costs.

Uber is effectively upgrading the taxi industry, and although it also has seen a new round of funding raise the valuation to $50 billion (Wall Street Journal, 31/07/15; http://www.wsj.com/articles/uber-valued-at-more-than-50-billion-1438367457) is entirely reliant on one single business model, that of increasing taxi capacity and availability. Despite clashes with regulators and incumbent taxi drivers, several taxi firms in the UK are now marketing via Uber, asking customers to book with Uber, and be insured by using them. Uber works by making every taxi firm your local firm who knows you, just like the guy around the corner that for years you’d call directly to collect you from the train station, as you knew he’d be there in time and wouldn’t take you the long route.

Not all of these start-up operations are large and multinational. Kutsuplus is an on demand bus service in Helsinki, that allows users to hail a bus and create bus routes in real time. This turns every bus driver into your trusted local bus driver who when you were a child would take a small diversion to pick you up.

How will innovations such as ridesharing, connected vehicles, on demand transport evolve to create a new, interconnected world of personal mobility? It hard to imagine that individually these innovations will transform the world of personal mobility, but if we stand back and start to look at how these innovations may coexist in the future, a larger pattern begins to emerge. All of these information-based business models turn existing technologies and infrastructure into something much more effective as a whole; they achieve this by opening up unused capacities and capabilities within an existing network of small, often independent traders and so creating a larger, highly flexible but co-dependent organisation. And will these start-ups remain distinct and separate entities? How will operations such as Uber interact with blablacar and Kutsuplus in the future?

The appearance of many large start-ups in this arena may be deceptive, and it may be we are seeing the emergence of a new business model that incorporates many operators and enablers to create something much bigger than the sum of its parts. As an old English saying goes, if it looks and quacks like a duck, then it is probably a duck. However, in nature, things are often not as they appear. The Atlantic ‘Portuguese man o war’ (or Physalia physalis, to use the latin name) looks like jellyfish. But it isn’t. In fact, it isn’t even a single animal – it isn’t a single multicellular organism but is a colony of specialised “minute individuals called zooids… [and] these zooids are attached to one another and physiologically integrated to the extent that they are incapable of independent survival”. (https://en.wikipedia.org/wiki/Portuguese_man_o%27_war / Grzimek, B.; Schlager, N.; Olendorf, D. (2003). Grzimek's Animal Life Encyclopaedia. Thomson Gale).  It is possible that services such as blablacar, ridesharing, and on demand transport such as ride sharing evolve to become something bigger, integrated and utterly co-dependent? We’ll see, but mobility is indeed evolving and over the next two decades the start-ups of today may become the components of a much larger system that operates for the customer as a single system but is in fact a network of millions of small, unrelated businesses, combining the capabilities of Uber, Blablacar, Kutsuplus, and thousands of other platforms.

Is the traditional automotive distribution sector agile enough to respond and grow in response to the growing new system with which it must compete? That’s the question that the likes of Daimler’s Car2Go and BMW I venture’s Just Park (was parkatmyhouse) aim to answer, but it is not yet clear where the old giants sit in this new global network of minute operators facilitated by system ‘organisers’. It is up to the carmakers to avoid, like Gulliver, being tied down by thousands of tiny bonds when they wake to the new market evolving around them.

Image: The Times Newspaper/Stephen Frink/Corbis/ http://www.thetimes.co.uk/tto/environment/wildlife/article4532388.ece

Written by Ben Waller

Post a comment

Blog view options

Archive