Reimagining Mobility: A CEO Guide
Mobility is about to become cheaper, more convenient, a better experience, safer, and cleaner—not 50 or even 25 years from now, but perhaps within a dozen.
This is according to Andreas Tschiesner, Senior Partner at McKinsey, who discusses with CEO Today the changing landscape of mobility in today’s business world.
Four trends – autonomous driving, connectivity, the electrification of vehicles, and shared mobility- are disrupting how we move about in ways not seen for 100 years. This ‘Second Great Inflection Point’, which no industry or executive is immune to, has the potential to be as profound as the one that put horses to pasture and revolutionised industries and societies worldwide. Many businesses that do not consider cars to be close to their core industry will find themselves confronting an increasingly far-reaching mobility ecosystem.
Glimpses of the near future
For the past century, the automotive sector has been siloed – on multiple dimensions. Fuel and energy, financial services including insurance, and maintenance are all disconnected from the automotive industry itself – yet you can’t use your car without them. What does this mean for the near future ahead?
Cars, roads and customers
A more interconnected mobility system starts with cars themselves. Electrification and vehicle autonomy are coming fast; less than 5 percent of vehicles sold in 2016 were equipped with EV power trains, but by 2030, EVs will be mainstream. Similarly, in 2016, only 1 percent of vehicles sold were equipped with even partial autonomous-driving technology. Now, eight of the ten largest OEMs plan to have highly autonomous technology ready by 2025.
We also predict disparate roads and highways will become increasingly converged into integrated networks. Examples in Singapore and Barcelona have shown that sensors can process and integrate data to rationalise parking and improve traffic flow.
Lastly, what will increasingly matter is customer experience. In a highly consumer-centric system, people can have freedom—indeed, even more freedom—without having to actually buy their own vehicles, search for parking, and pay for fuel.
It won’t be easy to gain a defensible position across the critical technologies of autonomy, connectivity, electrification, and shared mobility, as consumers will focus more on different mobility operators. While the new technologies will doubtless generate enormous value, no one can say where the economic profit will flow—and when. And in the digital age, when people pay a lot less, they may not pay at all.
All these big changes can be bumpy as effects will include where and how people live, how they consume and what life looks like. Overall, the benefits will decisively outweigh the costs. The harder question ultimately is not whether these changes will happen (they will) or when they will start (in many cases, they already have) but what the best ways to manage the transition are.
A call to action
Within a decade, these developments will start to have strategic ramifications for many companies. Some early priorities for leaders are:
1. Adjust your sideview mirrors
Clear industry borders and siloed business sectors won’t stay that way for long in the new mobility ecosystem. For leaders outside the automotive, transportation, or energy sectors, those changes can spell both threats and opportunities: new competitors who can appear from unexpected directions, but also new customers and markets.
First, figure out your role in the new mobility ecosystem. Ask yourself and your team where your business might fit in this new landscape—and who else might be entering the picture.
2. Objects are closer than they appear
It won’t be long before AVs deliver at a click, commuting patterns change, and car travel becomes ‘always on’ and ‘wired in’. To a surprising degree, we know the future; we just don’t know—and are more likely to under- than overestimate—how soon it will arrive. Take advantage. Test out pilots where you can gain knowledge in connected businesses.
3. Merge ahead
No single player will have the resources or capabilities to capture, defend, and win in manufacturing, designing, mechanical engineering, and all the other areas associated with the mobility changes. Meeting your customers’ needs will require serious collaboration. Start by identifying the “white spaces” you need to fill, the partners that can best help with those gaps, and the “gives” and “gets” genuinely required.
4. Share the road
As the second great inflection point approaches, social considerations and public–private cooperation will matter more. No single player will be able to set safety standards alone, nor can government simply dictate them without a deep understanding of player capabilities. To win in the second great inflection point, develop a well-considered perspective on present and future regulations.
When Henry Ford popularized mass production, few saw those changes approaching. Now, about 100 years later, we’re at the precipice of a second great inflection point. While much uncertainty remains, the transformation is, in many respects, already here. Those who aren’t prepared will risk failing one of the 21st century’s early tests.