Is mobility about new and innovative ways to move people, goods, and services, or is it about a need for speed? For Kevin Mull, director of connected mobility solutions at Bosch, it's a little of both.
Getting to market quickly is important, and some of the biggest players in the automotive industry are developing a collaborative framework by partnering with startups or buying them outright, joining forces with competitors and engaging in partnerships with universities.
New ventures like Honda’s partnership with GM’s Cruise or Ford’s acquisition of the shuttle service Chariot are proof of the changing landscape. The success of original equipment manufacturers (OEMs) in Michigan will depend on how well they can use these various partnerships to stay ahead of innovation and bring products to market.
Of all mobility innovations—from connected vehicles to ride-sharing platforms--the most important might be the structure of the businesses themselves.
The Changing Nature of the Product
Of course, the products themselves are going to look very different. Rather than selling a car and service, OEMs will be marketing a bevy of services from software to ride-sharing platforms that may or may not include the sale of an actual vehicle.
“The way I like to think about mobility innovation is that it’s this transformation from manufactured steel to service software,” shares Ted Serbinski, managing director of mobility at the business accelerator Techstars, during a session at a TU Automotive conference in Michigan in 2018. He predicts that, “by 2030, service and technology will to drive more revenue for these OEMs than vehicle sales.”
This new model will require knowhow that lies outside the purview of traditional large automakers and part suppliers, with an emphasis on speed and niche expertise. “To me, what’s different is this need for speed,” Kevin Mull, director of connected mobility solutions at Bosch says. “One of the most effective ways to gain speed to market is to collaborate with those that have very specific expertise."
Partnerships also allow larger companies to tap into the channels these startups have created to specific markets, a factor that will also affect how fast they can deliver. Jeff Hood, a Detroit-based principal at Deloitte who specializes in cloud computing in the automotive and transportation industries, points out the level of acceleration here is dramatic. New software features for connected automobiles will be rolled out every few weeks the way cell-phone technology is, as opposed to the roughly three-year timeline it takes to bring a car to market.
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Bosch is a member of the PlanetM Landing Zone, and connects with startups at WeWork Merchant's Row in Detroit.
What successful partnerships look like
For successful partnerships between OEMs, startups and others, Mull emphasizes the common-sense factors that help people to work together. “The basic blocking and tackling doesn’t go away in this new environment,” as he puts it. But there do seem to be special concerns in how new technologies are incorporated into companies, and how startups are managed within much larger organizations.
“A lot of the companies, what they’ve done is they’ve kind of carved a mobility area within the company that’s not as burdened by the core business in terms of bureaucracy and decision making,” Hood says. These mobility departments are able to remain flexible and deliver their services more quickly than the core business.
Companies like Bosch, which has been manufacturing hardware for more than a hundred years, have developed processes and protocols to ensure quality and safety, says Mull. These standards exist for good reason, but they can become a hindrance when they are applied to different orders of technology with new partners. “Maintaining that autonomy is oftentimes the crucial thing,” he says, “because you don’t want to purchase something that’s really successful and then inadvertently destroy it by applying tons of overhead and policies and so forth. That’s a very, very delicate balance.”
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The level of mobility acceleration in the Detroit region is dramatic, according to Jeff Hood, principal at Deloitte.
In order for the partnership to be successful, Mull suggests both the startup and the larger company need to change to support the new dynamic. While the bigger company may need to make allowances for the startup, “The startup needs to bend a little bit and realize that they’re part of something bigger that has different ground rules than they’re used to.” He stresses that each new collaboration will develop its own ground rules and it’s likely that partnerships between large companies like GM and Honda will have their own issues around long entrenched practices.
In his TU Automotive talk, Ted Serbinski stressed the importance of a sense of mission for innovation. “If we really want to win in an innovation space you really need to understand why we’re doing this,” Serbinski said. “Are we doing it just because somebody else is doing it, or are we doing it for a bigger reason? And generally, that reason at the innovation stage is about the customers.” By focusing on customers, partners in any given collaboration should be able to work through differences. After all, mobility is about satisfying customers in a variety of ways rather than delivering any specific product.
This demands a level of flexibility that will force the industry to move in new directions. Companies cannot simply reiterate the work of others or hold fast to established patterns when their customers have an increasing variety of services to choose from. These options will include the four classes of vehicles outlined in a paper from Deloitte: personally-owned driver-driven, shared driver-driven, personally-owned autonomous and shared autonomous. Other services like Ford GoBike could open up options for intermodal transportation. All these will overlap and roll out in unpredictable ways. It will be up to OEMs to anticipate customer needs and preferences.
Creating the Space to Succeed
However, in order for collaboration and innovation to take place, the stage needs to be set to make it possible. Organizations like PlanetM and its Landing Zone space located at Detroit's WeWork Merchant's Row, function to bring people together in a process that Serbinski refers to as "forced serendipity." A number of different stakeholders come to this space, including representatives from government and academia, to create new partnerships and opportunities. Drawing on investment theory, Serbinski says this creates the kind of portfolio that large companies can use to diversify and find the partnerships that will be successful for them, knowing that most will fail. But even these failures will feed into the system of determining what will eventually work.
Kevin Mull stresses that it’s important for larger companies like Bosch to connect with spaces like PlanetM. “We run the risk of being intimidating to deal with just because of our size,” he says. “And we want to make sure that this community knows that we want to hear from them. I think that openness is really important.”
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The PlanetM Landing Zone.
Expect the Unexpected
Perhaps the most promising collaboration models in mobility are the least expected, like Ford’s partnership with Domino’s Pizza, a seemingly left-field development, but something that could influence delivery and distribution beyond just pizza. As Mull says, “I think these examples where there are investments going in non-traditional directions…I think those are going to be the most interesting collaborations when you end up with two really different organizations joining forces to do something really different in the market. I think they’re the hardest to find, but in the end, they will drive the most value.”
Will Detroit be able to maintain a competitive advantage in this sort of topsy-turvy landscape?
“Our competitors no longer just make cars. Companies like Google, Apple, and even Facebook are what I think about at night,” Toyota’s president Akio Toyoda recently said. But, the experience of actually having made cars could be crucially important in the mobility sector, whether customers are buying cars or some other service.
“They have the engineering talent that really understands the operating system needed to power a vehicle and keep people safe,” Jeff Hood says of Detroit OEMs. “So now you layer on top of that some of that new software and development talent as it relates to connected and automated and it becomes really powerful. I’d say, their understanding of the operating system for the vehicle is one of those differentiators.”
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Kevin Mull is director of connected mobility solutions at Bosch.