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The defining technologies driving the Fourth Industrial Revolution (4IR) have the power to knock down the walls between the physical and digital realms, enabling not just innovative new products but perhaps more importantly new business models and ways of working with the potential to fundamentally change the way we move people and goods from point A to point B. Whether it’s hailing a ride today or looking ahead to autonomous vehicles (AVs) at some point in the coming decades, the ongoing transformation of how we get around perfectly encapsulates 4IR’s promise.
While these may seem like mobility success stories, the reality is that change does not come easily. Yes, digital allows us to hail a ride with a few taps, but it has not made ride hailing a profitable business at the prices that consumers have so far shown they’re willing to pay. And cutting edge technology has enabled cars to move on their own, with less input from their human drivers, but equipping vehicles with all the sensors and computers needed to accomplish that feat pushes their cost far outside what’s affordable. Of course, that’s saying nothing about the self-driving artificial intelligence (AI) itself, which no one has been able to perfect yet, either. How to make these services successful from a business perspective is a challenge that human minds, not technology, will have to solve.
And that challenge is significant indeed. The success of mobility businesses will depend on delivering a compelling customer value proposition around convenience at a price that is economically sustainable — and we aren’t there yet. As is often the case with startups and other new ventures, the first part is proving much easier than the second part. Consumers are delighted with ride hailing services at their current prices, for example, but it remains to be seen whether sentiment will shift as the major players in the space contend with shareholder pressure to turn a profit. Massive cost reductions powered by rapid and sustained improvements in technology — think Moore’s Law for mobility — will be needed if such services are to become truly pervasive. A fundamental shift in vehicle ownership models, in other words, is still far in the future and far from certain. And even when the technology, cost points and business models all align and meet broad customer expectations, it’ll take many, many years to turn over the existing vehicle fleet. The “new way” of getting around is still a long way off.
What’s more, there will inevitably be unintended side effects of this revolution in mobility that businesses will be called upon to help mitigate. Conversations about ride hailing and AVs often blithely assume that these technologies will increase safety, reduce congestion and, therefore, improve lives. In reality, that’s far from a settled question. In fact, if — as many, including ride hailing companies themselves, predict — we are headed for a future where self-driving cars enable an entirely different ownership and usage model for the automobile, the result could be a utopia of efficiency… as long as we’re willing to share our rides with strangers and to accept that while a car may be waiting for us when we leave the restaurant or cinema, it may not be ours. If we insist on maintaining private ownership of our vehicles even as they get more autonomous, a nightmare of congestion may await. (Imagine a crowded city center with countless driverless cars slowly circling in search of a place to park.)
This is why it’s appropriate both to be extremely excited about the possibilities these new ways of moving around present us and somewhat skeptical about how soon they’ll be here and what impact they may have on our lives. The companies that are pioneering this space would do well to dial back slightly on the hype and appreciate that for the general public and the industries they’re hoping to disrupt, they’re in a “show me” moment. They must show not just that the technology is revolutionary, but that the strategy is too, and that these innovative new ways of moving will make sense on a business — and human — scale.
Even companies that are well versed in disruption, those with business models that would have been impossible even 10 years ago, can struggle to rise to the challenges of our time. While many may know what mobility will look like in the future, not everyone is ready for it. Not every company is as prepared as it thinks it is for the immense responsibility that comes with collecting massive amounts of sensitive customer data, nor are they necessarily well equipped to foster the growth of its workforce into digital leaders. Building 4IR capabilities internally takes multidisciplinary teams and clear strategic thinking, while assembling the right pieces through acquisitions can prove tricky in an increasingly competitive marketplace for cutting-edge technology targets.
With the giants of the automotive industry vying with both tech stalwarts and startups to own a piece of the future of mobility, the challenges ahead are significant. Time for the winners to show us they’re prepared.