How to survive as OEM in the future mobility game?



Author: Lutz Göcke

The discussion of autonomous vehicles, electric vehicles, digitalization and mobility concepts are a lot of times discussed in isolation. Whether its about the potential of technologies, emerging value propositions or new business models. But all of this is not about a single innovation. There is not the one thing that will change the mobility system. The mobility and transportation system is a socio-technical system that has emerged over decades. If you look at the main developments in the automotive system, you can see at least four main developments, that will fundamentally change user behavior, existing business models, legislation and structures in the industry. See also an article of Johann Jungwirth on the future of mobility.


The diffusion of these developments in the market is not only depending on the excellence of the underlying technology, but also on the societal, regulatory and political landscape. Furthermore, each of these developments is highly interdependent with complementary innovations. That means, that the diffusion speed and/or the direction of a development trajectory will change, depending on complementary innovations. A complementary innovation in electric cars is for sure the battery. If a radical improvement emerges in the design of batteries, it will dramatically increase the adoption of electric cars. A great progress in this domain will at the same time decrease the importance of charging infrastructure. The potential innovations that can emerge are in strong interdependence to the general development path. This is also very clear for autonomous driving. Big improvements in mapping, sensor fusion or neural networks are all developments that will fasten the diffusion of autonomous cars. But also new business models in the insurance space can have a positive impact on the adoption of autonomous driving. Having an open platform for Car-to-Car Communication will increase the adoption of autonomous cars as well. The development trajectories of the discussed models are not isolated. They are in interconnection with each other. A fully autonomous vehicle will not only change how cars are shared, but also the digital user experience within and around the vehicle. It will have a tremendous impact on A digital user experience can furthermore ease the use of electric vehicles and helps to overcome the broadly discussed barriers to adoption. At the same time, virtual reality can have a huge impact on the mobility space, as you don't necessarily have to move physically from A->B to create certain experiences.

The broad adoption of these technologic innovations, will require new business modelsto come up, as private households will unlikely increase their share of wallet for mobility. New sources of revenue will rise in the industry (e.g. in-car advertising) whereas other sources of revenue will decrease (e.g. After-Sales for electric vehicles). The effect of new business models on the diffusion of new technologies has already been shown by the example of Tesla. Tesla extended their business model to offer also remote updates, public charging and an home energy storage. This increased the attractiveness of buying an electric car. The development of new business models will be important for the new technologies to receive adoption in the market.

Like complementary innovations and business model changes, societal, political, regulatory or scientific developments can have a major impact on the paths of the innovation and the timeframe when those innovations will be adopted. They can either be an accelerating force or a decelerating force for the diffusion. Users and societies in general will have a great impact on the direction and the development speed. Over decades, we have formed our mobility behavior. Institutions that might risk their positions in the market will fight the development of the new innovation by improving todays prevailing model. Additionally hybrid versions that combine the new with the old model will emerge and build trust in new technologies in societies and enable the non-technological parts of the automotive system to adapt (e.g. regulations). Within this country specific domain it becomes clear, that the diffusion of a new mobility paradigm will occur at a different stage in different countries. This is really challenging for established players like car manufacturers, as there might be the situation to cope with two different paradigms of how to move from A->B in different countries. This situation can (on a smaller scale) even occur within the same country.

With emerging complementary innovations and societal, political, regulatory changes, the paradigm shift comes along with changes in market structures and rules of how to do business. Performance criteria for evaluating the value of a product will change tremendously. Roles and the sizes of the mobility pie for each player will change. Although all the changes have a dramatic impact for companies, those changes are so multi-faceted, that they will not occur from one day to another. All domains co-evolve through trial-and-error processes. If you exclude some domains from this evolution like politics, science or education, the new mobility paradigm will not emerge in your country. It The development of a new mobility paradigm will not take place in 2 years, it is a process that can take a decade until a new paradigm is in place.

Within my doctoral thesis on the development of business models for electric mobility in multinational corporations, I used the Multi-Level-Perspective of Professor F. Geelsfor a deeper understanding of the change from one mobility paradigm to another. The Multi-Level Perspective is very powerful, as it combines the thoughts of innovation, sociological and economic theories. Although the Multi-Level Perspective is a descriptive tool in it’s nature, the concept also provides decent actionable information. The transition from on system to another comes along with great dynamics, high uncertainty and high causal ambiguity. Transferred to the changing mobility paradigm, I see five actions, that established actors in the mobility space should focus on:

Get into a mode of Trial-and-Error!

  • You will not be able to predict the future for the next mobility paradigm.

Enable niche innovations and market fast!

  • Develop innovations that seem to be only for a niche, but that help you gain market knowledge. Although the diffusion of the new mobility paradigm will take some time. It is today, when consumers behavior and de-facto standards are shaped.

Open your innovation space for outside innovations!

  • It is not something new, that you will not be able to innovate on your own. You will have to cooperate with other players that want to shape the mobility space.

Support radical business model shifts!

  • Balance your spendings in the established business and the radically development of new business models wisely. You can either try to capture the last cent out of the old model or shape your future.

Leverage your international potential!

  • Within the paradigm shift, players that act globally in it will be the ones who build the greatest knowledge base.

Actions in those directions are essential from my understanding essential to build a prospering base for creating and capturing value in the future mobility system. I will focus upcoming articles on the before mentioned topics.

What do you think is essential for established players to succeed in a new mobility paradigm?

This post as been originally published on the 06.02.2017 on LinkedIn

Lutz GöckeComment