Relevant to today's blog on the future of the car - and the engagement of the industry with politicians. Posted by Mark
To give Joe a rest, and just because it's Christmas, Charmer really gets talking cars.
Photo: Camberwell College of Art, London, summer 2007.
18 December 2007. Amidst the lobbying at the Bali climate change summit, a spokesperson at the European Automobile Manufacturers' Association (the ACEA) explained last week to the FT that “widespread further innovations will be required across all sectors to challenge climate change and we are fully focused to contribute”. The organisation says it pours $30bn into research and development every year but claims that many innovations do not take off because politicians do not support them.
First let's shed a few tears, though not quite the ones the ACEA had in mind. $30bn is a shocking amount of money to spend without having a functioning process of political engagement in place to ensure you're developing products that stay in tune with the times. The second observation is to suspect that "widespread further innovations" is probably fairly narrowly defined, given the car industry's track record.
Over the last decade the auto sector has lifted the car bonnet and stared for a while at the engine. It's not all wasted. Improved diesels have populated Europe. Biofuels and hybrids are here or on the way, if that's your thing. Oh, and there's a GM Volt in Detroit. But ironically, unlike the CO2 backlash against air travel, a problem entirely related to propulsion technology, the environmental impact of cars is far more complex because congestion in cities and materials recycling are huge issues too. In fact, as a cradle to cradle product, the car right now is a mess.
Let's start where every industry should start. By examining its business model. MIT professor and future of work guru Tom Malone led a report in 2004 that sets out, rather usefully, what a business model is, or should be. It starts with Rappa's 2003 definition that a business model is:
"the method of doing business by which a company can sustain itself” and notes that the business model is clear about how a company generates revenues and where it is positioned in the value chain"
Most business models evolve over time while ignoring key realities which eventually come to threaten them. "Car makers" have, on the face of it, a very clear business model. They are Creators, which buy raw materials or components from suppliers and then transform or assemble them to create a product sold to buyers. They are different to Distributors (the next model), because they design the products they sell. Some car companies own that bit too and others don't. Malone and his team classify a company as a Creator even if it outsources all the physical manufacturing of its product, as long as it does substantial design of the product.
Yet whether the car company does or doesn't own the distributor model, the auto industry business model doesn't work very well. Even with the annual application of $19.8 billion in advertising in the US alone (yes really), demand for cars is much lower than supply in what is, in the developed world, a saturated market. Cars are increasingly expensive to design, with great pressure to continuously launch new product in order to maintain buyer interest and guarantee the high sales volumes required for economies of scale. At a distribution level, cars are still sold by gruesome little people who work all day in big showrooms that have very little foot-fall. People are largely motivated to purchase via the annual spending of that $19.8 billion (yes, really), applied largely to buy and fill printed space in newspapers or magazines, or via images physically displayed on outdoor space in cities or online, or through air time on radio or television.
Because of the need to maintain very high sales volumes, longevity is a confusing muddle - cars are bought based on quality, although depreciation is very fierce, particularly given the actual utility of a car is rarely impaired by product failure if maintained reasonably for the first six to ten years - certainly not like it was in, say, the 1970s. It's oversupply and intensive sales tactics that cause the depreciation. Rather like the vast property overdevelopments on the coast of Spain, where every northern European has bought their own apartment or villa, which they can't now sell because developers keep snagging buyers at the airport, the place is full of underused assets that are hard to sell on.
Job swap time?
There is another glaring failure of the industry, which gets very little attention. I have never encountered a car designer who was given the opportunity to design the space in which the car operates. Nor have I met a road planner who has had the chance to design a car. Yet cities around the world face enormous difficulties. I've recently sat in several nasty consultation meetings in London where planners are trapped between angry car drivers demanding the right to drive in cities and angry residents wanting to stop cars dominating their locality. The answers are usually in the form of an obstacle course - reducing road capacity to discourage car use, blocked streets, width restrictions and nasty big speed bumps which ironically boost sales of larger 'SUV' products which can lope more easily.
The obvious solution here is much greater collaboration between those who design towns and cities and those who design vehicles. 20mph zones, the desire of every London borough, could be implemented as special roads without speed bumps but with speed regulation technology in place in any car that wishes to use the street. Incentivised navigation can provide people with better knowledge of journey routes that combine a car hop with some other mode of transport. Indeed those firms supplying the cars could develop new services where they receive public subsidies for actually incentivising people not to drive at certain times or via certain routes, that are quicker and easier. And before anyone waves a Daily Mail reporter at me, this isn't a national disgrace overseen by snoops. It's a really neat idea that would make life easier for almost everyone.
Anyone who thinks that people are wedded to their cars and will react violently over any change just needs to remember that people can't choose what they've never been offered. It's really easy to buy a car but I can't easily let my friend borrow it. Nor can I rent a bicycle outside in my street and drop it off at the railway station (unless I live in Paris). Demands for high product quality and safety features, along with the need for those economies of scale, mean that vehicles are all designed within a consistent set of performance criteria. While that might on the surface sound good, it's actually bad. Almost any car you buy in San Francisco can easily be driven, immediately, on a road trip to Florida in outstanding comfort and safety. Yet such vehicles are usually used in urban areas to visit the supermarket, or to go and buy a coffee.
The reality is that auto firms lack the design processes and the channels to market to develop and integrate new kinds of vehicles into cities and towns. Toyota is an interesting example, given that it is normally perceived as doing everything right. As Joe recently pointed out, it keeps on showing developments of its i-series vehicle, a lightweight and very compact personal 2/3 wheeled device that would dramatically reduce vehicle space requirements and reduce energy use and emissions on journeys. But think about it for a minute and today there is (literally) no practical path by which residents of a town or city can adopt this vehicle. You'd be a freak, cast out into a crazy world where you'd put your life at risk and look a fool. Like a Segway today, the cost would be too high for the utility, which is actually very high, but different to a car.
"Selling a Yaris to a lady in her sixties, say, involves an advertising agency, a dealership and a cheese and wine launch party, complete with balloons."
While Toyota is clearly screaming that it can build these things, it has barely touched the surface in working with politicians to integrate them into the environment. It will need a whole new generation of vehicle integrators, working town by town, street by street, to help redesign the streetscape to accommodate more appropriate vehicles for each context. And they can't be sold via existing models. They need to be part of cool new mobility packages. In contrast, selling a Yaris to a lady in her sixties, say, currently involves an advertising agency, a dealership and a cheese and wine launch party, complete with balloons. Instead there can be city, town or village-level marketing of handy local services or new movement packages. It may be that IKEA incentivises visitors with a free car if you go at certain times of day to help reduce overall car ownership, while stopping its absurd policy that people must drive to the store to order home delivery items.
Same sales and marketing approach as the Yaris, but I bet the same lady was having a lot more fun IN the '60s.
In future the same lady may want a different kind of vehicle, or indeed will participate in a social network that includes rideshares from people she knows, offers the option to use a favourite car or might incentivise her to use local bus services or an electrically assisted bike. She might prefer the two/three wheeled i-Series because she can use green urban pathways that are speed regulated and much easier to navigate. She will find these allow her to park right outside her local shop, and the tiny vehicle will no longer be brow-beaten and intimidated by terse and inflexible parking meters and attendants, all determined to express their hatred for the car. She can lend it to her daughter, or her friend.
The problem is politicians don't know what to do. They don't know how to really consult at a local level - they just know how to contain the car. The best car companies have a chance to really think. But they need to think beyond the car. They need to make sense of how cities work, and don't work. As the Bali conference centre lies empty, now is the time to start building the next generation of design processes and channels to market. But telling politicians that customers don't want more environmentally-friendly vehicles is trite in an industry that spends $19.8 billion in the US (yes really) convincing people to buy what it produces today. The business model is broken.
Depending on who - and what - you read, the result of last week's events in Bali were either a monumentally historic breakthrough - because America in principal agreed that it might be time to act on climate change; or were monumentally disappointing - because there is no real road map, or widespread agreement on what agreements and targets should be made for cutting carbon emissions in the future. But as if to remind everyone that individual nations will charge ahead on their own, and that Britain intends to be right at the front of the line when it comes to cutting cabron emissions, today reports suggest that Britain will shortly unveil a plan to build enough wind turbines (7000) around the country to supply it's entire home electricity requirements by 2020.
Whether they can see it through - and in the stated timescale - remains to be seen. Particularly given Britain's convoluted planning processes, long appeal procedures, guerrilla protesters and a growing group of well meaning, but ultimately misguided protectionists intent on safeguarding the beauty and 'unspolit' nature of Britain's countryside and coastline at all costs.
What I'm interested in, and will shortly be exploring in more detail on these pages - is whether any of the spare power that these turbines will surely generate, could be used to magnify their impact, by being used to charge a network of electric, battery powered cars during low 'grid load' periods. Still, that's for another day.
But for environmentalists, and those whose focus is on blooding new, clean, technologies, this wind turbine plan can only be good news. Which might be just the tonic they're looking for in the aftermath of Bali...
More on Bali coming soon.
A week of climate change
Posted by Joseph Simpson on 17th December 2007
Interesting piece on GM's fast lane blog here with the subtitle 'the gas engine's demise has been greatly exaggerated'. Surely it's no coincidence that they've written this at a time when the energy bill is still - at the time of writing - not quite through at senate level. A lot of what Dan Hancock - Vice President, GM Global powertrain engineering - says here is actually true. Certainly the whole point about the difference between fuel economy vs. fuel efficiency is a key one, which very few people seem to understand.
But then, having spent most of the last year lobbying against the energy bill, it seems a bit disingenuous for GM then to go bragging about how great they are in this area. To a European, saying you've got "...15 models that achieve 30 or more highway miles per gallon." really doesn't sound that impressive (and yes, I fully understand the different markets and vehicle types at play here.)
Posted by Joseph Simpson on 14th December 2007.
Christmas is coming, so permit me to get all indulgent a little early, because a couple of nights ago Christmas arrived early for me in the form of Aston Martin’s new design studio opening event in Gaydon, Warwickshire. Instead of a full-on serious report, let me take you on a little journey into the supercar company’s fantasy land…
Fully functioning after its sell off from former parent Ford, last night was about Aston showing what it was capable of when left to stand on its own two feet - which in brief is building a new eco-friendly design studio in seven months flat, and dropping a whopping V12 engine into its Vantage coupe, creating the 'Vantage RS'.
Before we got inside, be-suited valet parking attendants were on hand to safely tuck away the procession of DB7s, DB9s, Vantages and even the odd Punto (guess who’s that was?!) that gently made it up the winding gravel drive. Inside, the most elegant ladies handed out tiny black cards, although sadly these only detailed the evening’s events, and not operation instructions for the James Bond-style toys that appeared in the goody bag. Crossing the bridge over the water pools outside the main building, we stood and goggled at the automotive pornography on show – Vantages, DB9s, Zagatos, DB4 – seemingly suspended above the water, and beginning to sparkle with crisp, hard middle-england frost. Inside the door, Dr. Bez (CEO of Aston) – greeted each guest in turn, before allowing them to stumble into a Bond-movie casino scene – 3 brand new DBS’s lined up in a row, and surrounded by the most exquisitely tailored men and women one will find this side of Milan. Was I dreaming? You half-expected to see Odd-job appear on the mezzanine up-high, above the icebar. But as if to remind us that this is a modern, changed Aston, and that we are firmly in 2007, Daniel Craig was ushered past into a VIP section.
By now, our bottom jaws were flapping somewhere around our ankles, but that was before we were ushered through to the design studio itself – to be fed exquisite beef and salmon canapés, washed down by lashings of Bolinger – naturally. This was all served up by waitresses who one could only assume had been picked to distract the male eyes in the room for long enough to stop them drooling on the DB9s and Vantage Roadsters that we now stood amongst, and pawed with sticky fingers.
By the time Dr. Bez delivered his speech which perhaps contained Aston Martin’s tag line of ‘power, beauty, soul’ once too often, no one really cared. We were all too enveloped in the lifestyles that Aston were helping us all too easily imagine we were really part of. That the Vantage RS concept seemed to be nothing more than a Vantage with a V12 engine and some ill-advised tuning shop-type modifications came as a mild disappoint – but that was before we were shown the ‘real’ James Bond section. In one long room sits the stuff of little (and many not so little) boy’s dreams. The record breaking ‘barrel-rolling’ DBS from Casino Royale, the (not so) ‘invisible’ Vanquish from Die Another Day, and the DB5 from Goldeneye to name a few. Much sillyness and frivolity ensued, as you might imagine.
I was going to write a serious bit here – but I’m afraid I’m still living in a fantasy land, trying to work out how I can get to play James Bond every day by getting my hands on one of these cars. As yet the best plan I’ve come up with is the proverbial bank-robbing. Suffice to say that Aston Martin’s new owners seem to have a pretty good handle on what it is that has made this - ultimately tiny – company the ‘coolest’ brand in the world for the past couple of years. If they continue to create around their products the type of ultimate-lifestyle experience we were shown last night, while continuing to build some of the prettiest, most well-detailed, and beautifully hand crafted vehicles in the world – then their future looks bright - for the time being, at least.
Images: Joseph Simpson. Via thetrickytree on flickr, where more are available - please feel free to use via creative commons license, crediting "Joseph Simpson / Movement Design Bureau" and linking to this page.
Posted by Simpson; Joseph Simpson on 13th December 2007
While the car industry sends its lobbyists to Bali to fight for lame change (more next week), there's a useful lesson in sustainable business models going on right now in France.
Paris ends 2007 with a completely new transport network that joins together many points that weren't accessible to eachother before. This network consumes negligible energy versus anything else around, produces zero emissions and is very low cost for users - even tourists can benefit from it for just 1 Euro per day ($1.50). It combines classic technology, the bicycle, with some nice digital technology, that basically makes it really easy to borrow one of over 20,000 bikes from any of at least 750 bike stations in Paris and drop it somewhere else at a different post. The system is so intuitive and so low cost that calling it bike rental is a misnomer - you simply feel like you grab a bike and then put it away at the end. You feel you borrowed and used a piece of the city. Velíb is really cool, and it has been spectacularly popular.
But where it really breaks new ground is in its business model. The system is privately funded (yes, in France) by a company best known to date for running outdoor advertising. This company, JC Decaux, has discovered that being a landlord is no longer just about owning property which you sit on and charge rent for. It's about creating 'inhabited infrastructure' which attracts people and which creates more valuable advertising propositions for those with budgets.
Albert Asséraf, director of strategy and market studies at JC Decaux is up there with the coolest men you can meet. He was kind enough to spend time with us in Paris last week. And the great thing is you sense this man has more to come:
"JC Decaux was intended as a company dedicated to advertising in the city. But based on a very simple premise - of services to citizens, financed by advertising. That's why today it's considered as a media company - because today 99 per cent of our revenues come from advertising. But, in many cases, the origin of revenues are linked to a service to people."
Here Asséraf is talking about things like bus shelters, which the company operates and which are funded by advertising. "Bus shelters are a kind of service to people - designs usually feature an ad on one side for commercial business and something on the other for cities themselves." So there are two public features - shelter and information, and one private one - advertising to those using or passing the shelter.
"But when we look at the city of tomorrow, what we understand from people is that they are expecting a city that is more sustainable, where mobility is easier and so on. So we did a 'trend-zoom' on mobility." Asséraf's team concluded that city inhabitants have two expected 'givens' for the future. The first is what he calls in French 'intermodalite' (using several modes of transport in one day) and the other is mobility itself (actually wanting to move around, not stay still). "So we met inside our company and said "what can we deliver?", to give a new service to people, mixing inter-modality and mobility - which is out of our core business."
As Bruno Marzloff at the think tank Groupe Chronos put it to us, the big opportunity is to create new flows from points along pathways, not to focus so much on the terminus at each end. Think of the opportunity as being able to drive activity through each of those little tube stations or bus stops along the way between the two big ones. An "interoperable city". Velib delivers that in an obvious way, and there are obvious advertising benefits to be gained from increasing those flows. Marzloff talks of the opportunity to reinject information into the physical network. He talks of the creation of a "Google of the CIty", where "information is half of the mobility".
JC Decaux has spent about 90 million Euros this year putting Velíb into Paris. But not taking anything away from the sophistication and quality of the Velib system, that investment is on a containable scale and nothing like the staggering investments required for massive public infrastructure projects related to trains and trams. Here is its advantage.
But it IS on a scale that the French can accept but maybe other countries might not. Asséraf stresses that JC Decaux pays for everything:
"We understood how to make it work, and our economic model is to finance the bicycles via advertising. So it costs nothing to municipalities and city halls. We invested about 90 million Euros in 2007 to launch the service, and it's all charged to JC Decaux. There's nothing to pay for anyone and the city earns money on that, because the revenue from the bicycle stations goes to the city, not us."
JC Decaux delivering the Velib demonstrates just how far you can stretch this model. It takes vision, and it's by no means the cheapest or least complex route, but it is game changing and it ups expectations for what anyone using public space can expect in return.
So where next? Well Velib evolved from Vélo'V, a smaller project in Lyon with 3000 bicycles at 300 stations that with hindsight has become the 'pilot' system. Today it means the company is for the first time evolving ways of promoting its value to consumers, not just to advertisers. That will be tough - people still equate the cost of something in a very direct way. Each culture, country, city will make assumptions about why something in the public realm either works or is cheaper than it really feels it ought to be. Most people waiting at bus stops assume they were built by the council. Trying to change that can incite the "well it should be build by the council" response. It certainly would in Britain. Life's complicated like that.
A better approach would be creating the myth that has worked so well for Google. So don't try to explain why search is free, or why Google Docs is free. Propagate it, build an eco-system around it, and make it work. Use advertising to fund it.
Am I saying JC Decaux can be the Google of the built environment? I don't know. That depends what they do next.
As we see it there are two paths Decaux can take from here. One is to just sell this piece of intellectual property it's created - a business model and a set of designs and technologies for bikes / posts. It could fund a tract of advertising to consumers, the sort we occasionally see from corporates like Accenture and Cisco, 'halo building' or doing what oil companies do and spending vast sums on double page newspaper ads talking about how we must all work together to tackle climate change. Rather than actually working together with people.
The second option is to learn from what's going on at the really dynamic end of the economy. Don Tapscott and Anthony D. Williams' work, Wikinomics, is a good primer. What we have here is a global, highly connected, extremely creative ecosystem of design and business entrepreneurs. Decaux can use that budget to engage young (and old) design and creative teams to create a long tail of concepts, integration plans and more. They can build a city-by-city network of implementation teams doing all kinds of things involving, and going beyond, bikes. That tail is capable of taking JC Decaux much further than it can travel on its own. The tail can help work out the subtleties of implementing its bike system in a complex world. But it can identify the next big thing. And the next.
We know you're out there. Because you're reading this.
We're just returned from Paris - on which more soon. But in the odd moment we had free, we got to try out the city's new shared bike network - Velib'. Run by JC Decaux, Velib' is something of a phenomenon, having become an instant hit with Parisians. We'll write a full analysis shortly but in the meantime wanted to share some of the pictures we took; a sort of photographic review if you like...
The bikes and stations are all painted in a very cool off-grey / coffee colour, which is very understated - very Parisian. But this can make the Velib' stations a little hard to find. It's interesting to muse on whether that's just a problem for us tourists, or whether the Parisian in a hurry might find this a problem too...
...and an empty one. As you'd expect, it seemed to follow that the predominant directional flow of bikes is 'in' from suburb to centre in the morning, and 'out' from centre to suburb come evening. This can lead to stations on the peripheries being deserted during the day, and ones in the centre having no free space to drop a bike off.
A red light on a bike's post at a Velib' station indicates a bike is out of order. It's interesting to see how an additional 'user code' has quickly developed, where fellow 'Velibrans' turn the seat backwards on any broken or problematic bike that they return.
Perhaps the physical (in)visibility of the stations isn't such a problem when everyone's got a mobile phone... If you can't find a free bike, or nearby station, simply get the Velib 'WAP' service on your phone in order to find the nearest one to your current location.
At the Velib' station, in order to take a bike, you either sign up - as Parisians do, getting a monthly or yearly card, which allows you to just 'swipe' bikes in and out as you please. Or as tourists like us, you register and get a day ticket...
So could Velib' paint a way forward for moving around cities in the future? Certainly it's clever, simple, and easy to understand. Most importantly it's been taken instantly to heart by the people of Paris. It works because the technology behind it is smart, up-to-date, and the system appears to be relatively well managed. What's interesting is that all of this has been achieved by an organisation who have not previously been known as transport providers or designers - in the shape of advertising group JC Decaux. The best thing about Velib' though is that it's fun - putting thrill, enjoyment and ease back into moving around the city. And in a homogeneous world, where national identities are increasingly lost, it feels terrificly French. Which I think, as so often with the country's products of past, makes Velib' a very cool thing indeed.
Images: Joseph Simpson - thetrickytree on Flickr. Photos are available to use via creative commons license - please credit "Joseph Simpson / Movement Design Bureau" and link to this page.
Posted by Joseph Simpson on 9th December 2007