What Ford Could Learn from Facebook.

Dan Sturges and I got talking last night about what would happen if the world got very strange and Facebook raised the money to buy Ford.

It so happens that Joe had been working on a piece about this kind of idea just before he zoomed off on Tuesday on the Eurostar for a week in Bordeaux. I think it's worth sharing his insights on what Ford could learn from Facebook in their fairly raw form. We'd love to see what people think - and what they might be able to add.  So over to Joe...

----- If Ford was more like Facebook

Ford is in the midst, as Mark puts it, of a garage sale. This is perhaps understating the scale of things slightly. Last week it was Volvo going, along with Jag and Land Rover – even though Ford apparently mortgaged the Swedish company to raise some capital last year. Make no mistake, the blue oval is sailing resolutely up the creek and is only just beginning to realise the implications of having left the paddles on the shoreline. Yet, for all the talk of doom, the likelihood of Ford going to the wall is minute indeed. Ford stands for much of what is at the heart of American culture, so despite its dire losses, and miserable American product range, the company is the beneficiary of great affection – from both public and politicos alike. Should things get unthinkably bad, it is likely to receive extreme political good will, and would be the beneficiary of the ‘Chapter 11’ bankruptcy protection, which has served America’s legacy airlines so well. The incentives to rip up the rule book and start again are therefore way too small. Don’t expect any re-inventing of the wheel soon.

What if though, just for a second, we could suspend normal service and question what could happen if Ford were to really change. What if Ford could be like Facebook?

Facebook – the social networking site – has been generating huge amounts of coverage in the past few weeks, thanks initially to its launching of a new development platform, F8; and secondly because its generating 100,000 new users a day (probably more now), and 40 billion page views per month. How? Facebook is addictive – in quite an intangible way. Most people don’t get it, and don’t see the appeal if they aren’t signed up. And in the first few days of sign-up, many of them continue to question it’s raison d'etre, but within a few days, many are obsessed. Facebook allows you to find, connect, and talk to your friends and social groups. You join groups and discussions, upload photos, and can update your profile and ‘status’ – letting others know what you’re up to. On your ‘home’ page, you’re then fed a ‘mini-feed’, which covers all the updates and goings on amongst your social network since the last time you signed on. But this description doesn’t begin to communicate its appeal. If you’re not a member and don’t get it, go and sign up, invest a little time at first, and then stick with it. I guarantee you’ll be logging on every time you sit down at your laptop. But what has really sent the world facebook-crazy is the new development platform, which has led, in the past few weeks to the release, and viral growth of a plethora of applications, developed by third parties.

Paul Allen (not that one, another one) sums up what this is about with three points:

- Applications can be deeply integrated with Facebook - Distribution of the applications will occur through the network - The business opportunity Facebook is providing will give 100% of advertising revenue (for third party applications) and 100% of transaction revenue to the application developers.

Rather than keeping the platform totally closed, or at best vague (myspace) Facebook is welcoming third-party innovation, and has effectively just increased its virtual R&D budget by $250Million. The Facebook user customises his or her home page to their choosing, adding and removing application as they see fit – and has a richer experience because of it – increasing the appeal of the site. Key in all of this is ‘viral growth’. When you add an application, it automatically asks you to send an invite to add the application to your other friends, who can then invite their friends and so on. Even if you choose not to invite them, or they don’t accept your invitation, they’ll be able to see that you’ve added the app on their own home ‘wall’ and see what you’re doing with it. What the hell has all of this got to do with Ford? As of now, nothing. But sooner or later, if the car companies really want to sell to the audience they puport to be most interested in (Gen-Ys) they need to work out how to either integrate (maybe interface?) cars with these web 2.0 sites, or adapt their operations to reflect them. So here goes. Reason’s why Ford should be like Facebook:

1 – Open development. Cars spend years in design phase, cost billions to develop and tool up to make. But what companies should start to provide is a platform, which others can build off, rather than the closed shop they currently are. Allow third parties to build off your basic kit of parts and you get three things as far as I can see it:

- Customer customisation. Consumers tailor their cars to their individual needs.

- Free development. Third party developers fix your problems, and develop things you’d either never thought of, or couldn’t afford to develop.

- Free marketing and research. Allow vehicles to talk to you, and one another, and allow developers to share their customisations with their friends cars, and you start to see what trends are popular, and where. You get a free, better understanding of who your customers are and what they want, without the ‘at risk’ development you do now.

2 – Make it open, but not too open. Currently, car companies spend billions on R&D, and go to mammoth efforts to keep their new products and developments secrets until just before launch. This crescendo’s into a ‘ta-dah’ moment of unveiling new models – typically at international motorshows. But increasingly, one feels that the phrase ‘diminishing returns’ might have been invented for this process. Consumers claim that cars these days all ‘look alike’. There is little to distinguish the features of one model from another quite often, and the overall utility of the car has not actually changed for decades now. So why not conduct an open development process – and outsource your pain-points? Lock down the key ‘hard-points’ of the vehicle, and don’t let third parties tinker with them – but why not make the interior, for instance, totally modular-customisable? And the dashboard? A blank canvas onto which one adds whatever interface one chooses. Ipod, phone, satnav, home video link up to home, skype etc etc.

3 - Create a walled garden – but one which the user controls. In the blogosphere, there is a strong dislike (and there has proven to be failure) of top-down control organisations, such as AOL, who put ‘walled gardens’ around content, which they made users pay to access. What Facebook does is allow you to create walled gardens, but your own defined ones. You manage your online profile and image. You control who is your friend, what they see of your profile, and you solicit merchants, rather than them solicit to you. The walls aren’t commercial, they’re social – exactly like human to human interaction in real life. Car companies are still defining the walled garden in terms of what one can and can’t have on cars, what one can and can’t do with it. Typically, this means that one buys extra equipment in packages (want auto headlights, but not auto wipers? Tough) and ends up with unnecessary things we don’t really need. It also means that choice, and control is reduced to a level which is about as impactful as rearranging the deck-chairs on the titanic. Customers want to be able to customise their product. They want to be able to get rid of stuff they don’t want…

4 – Allow deletion, upgradability. In Facebook, you add apps, and if you decide they’re rubbish – or are superseded by a better one - you remove it. With cars, this is impossible. At present. We’re obviously dealing with mechanical and electrical systems, and real objects – so it’s arguably harder to replace and upgrade things, but it’s not impossible. If the platform, provided by the manufacturer, were very simple and basic – and had certain ‘universal’ connection points, then the would be much more scope for replacing things. There’s no reason why this couldn’t happen with the dash-board. So that one can upgrade the sat nav system continually. Nor, one might be surprised to here, might the powertrain be such a problem. GM’s albeit very complex Volt, has showcased how its onboard generator might be an ethanol ‘generator’ a diesel ‘engine’ or a hydrogen fuel-cell stack. All in the same architecture, all in the same space, with the same auxiliary connections – and transmitting power through the same drive unit.

5 – Sell differently. Two points here. Facebook is now cleverly working out what you like – especially things like Cds and DVDs, and Amazon sends a small (non-intrusive) not occasionally when you send a message, telling you they’ve got a sale on of a particular album of an artist you like for instance. Relatively clever, simple targeted marketing. But the bigger one, is that Facebook allows people to market themselves, and their applications, really quickly, virally, to a massive audience. Ford, and other car companies are for now still one of the biggest spenders in the world on traditional marketing and advertising. Using social media sites, and web 2.0 apps, as GM does with Secondlife, gets you on the radar of a whole new generation who have not yet had exposure to or developed a ‘relationship’ (which can be bad, remember) with your brand. Extrapolate this out, and you have a situation where the manufacturer (Ford) could sell their basic platform through this system, and do away with their disliked, and difficult traditional dealership network because 1) the experience is shit, 2) it’s expensive, 3) the people who do it are hated, 4) it cost the auto companies money and 5) they have no control of the franchises, and they often are responsible for brand-image damage.)

---- Tell us what you think. Oh and my grandad worked at Ford in Halewood on the Cortina line in the sixties so sentimental reflections on the car industry are welcome but should not distract from what we're trying to examine here. Posted by Mark Charmer, with most of the words by Joseph Simpson.

Comments

[Thomas Bjelkeman-Pettersson]

You know I think you are largely right. But of course, as you pointed out, you will never see Ford, or any other of the big dragons actually try something like this out. The question then is, who will?

Looking at how successful internet companies go through their development process and draw conclusions from that and then try to apply that to the car industry is bound to fail. Most platform development efforts (Flickr, Facebook etc.) fail, despite having short turn-around development programmes and lots of willing participants who try out the new stuff. Imagine trying that with with a car company...

You have to find a "mass customization" segment of the car industry to apply this to. Dell and Apple have more or less managed to build hardware on demand from a list of items which people can use. Can you do this from a list of car parts? Could Tesla do a simple build to order production line? If not Tesla, who can? Maybe Toyota can wrap their head around this.

I would be happy to buy a decent battery powered car, customizations or no customizations. Not sure if an industry which has a lock on personal transportation actually can go through the type of upset that the telecoms, phone and software industry has gone through. The percieved benefit for the end user is not big enough I think.

Anyway, great article Joe!