Cha-Cha-Cha — The dance for supremacy in urban transport
When was the last time you went out, shake a leg? Whenever it was, it was probably too long ago. Most of us like dancing. Dancing connects people, brings joy and has always been a way of expressing feelings and moods. And I’m pretty sure if your favorite song is on air, fully turned up and nobody is watching, you are a real dance maestro.
Why do I tell you this? Bear with me for a bit, it will make sense for you in a second.
Urban mobility, understood in a broader sense than urban transport, describes all the means by which and reasons for which people move in cities. In my last article, Mobility Pac-Man, I laid out the global challenges and drivers we are facing right now, dramatically re-shaping urban mobility as a whole.
The transformation of urban transport requires dramatic changes in infrastructural conditions, such as the availability and attractiveness of non-polluting shared transport modes. Such change will also be the result of billions of individual decisions, taken in the context of highly varying levels of choice, about where to travel and how. Cities have to be re-engineered.
Let’s dance
While engineers are looking for solutions, traditional and siloed engineering is unlikely to deliver the required level of change. We need radical approaches to engineering that challenge our assumptions of what can be achieved. Tools have to be re-thought.
Researchers from UCL have looked into this and had a, let’s call it different approach: In their quest to transform the city of London and consider social, environmental and health factors, they brought together urban engineers and dancers.
“The value of all this for engineering is currently hypothetical. But what if transport engineers were to improvise design solutions and get instant feedback about how they would work from their own embodied experience? What if they could model designs at full scale in the way choreographers experiment with groups of dancers? What if they designed for emotional as well as functional effects?”
“We need new approaches in order to help engineers create the radical changes needed to make it healthier, more enjoyable, and less environmentally damaging to move around cities.“
„[elements of dance practics] have been demonstrated as having potential for introducing new ways of working into the engineering of urban mobility: applying dance-based concepts as metaphors, analogies, or sets of analytical tools for describing and assessing the objects of engineering (relationships between the built environment and cultures of mobility).”
An interesting approach. I wonder when we’ll see folks dancing through the streets in fancy London Soho, to get to their fancy co-working spaces with their fancy-looking to-go-coffee-mugs, wearing their fancy AirPods, acting fancy busy.
The Mobility-Pac-Man, or where we are right now: City transportation is transforming, with new players from several industries joining the field and trying or succeeding to become the one-stop-shop for transportation. Incumbents are often too slow and lack the necessary expertise to adapt to changing customer needs. Therefore, they are falling behind in competition with young, agile and customer-centric companies.We learned why this is happening and where the bottlenecks are to take the lead again for cities and authorities. There is no aligned and clear vision of how their mobility systems should look like and public authorities are often not capable of foreseeing trends and are too static to react properly.
In this article, I want to lay out what cities have to do to get back into the driver’s seat. For this, we have to talk about the mobility Cha-Cha-Cha — the dance for supremacy in urban transport. Dancing this dance means understanding three things: Changes, challenges and chances in urban transportation. After doing so, urban transport providers can dance away happily ever after.
I’ll walk you through these three parts in the following.
CHAnges, CHAllenges and CHAnces.
1. Changes
Servitization. The term came back to life when the first Software-as-a-Service (SaaS) solutions entered the market, making “as-a-Service” the new go-to-guy among business models. However, the “as-a-Service” model can actually be traced back to the 1960s when Rolls-Royce introduced its “power by the hour” concept, selling customers fully guaranteed hours of aero-engine usage instead of just selling the unit. While Rolls-Royce’s model was nothing other than renting a turbine to their customers however, keeping maintenance, after-sales, insurances etc. in-house. A smart move, as services make for a significant part of overall revenue, with margins to die for. This lowered the entry barriers for new customers unable to afford outright buying units for their jets or entire fleets and , thereby enabling success stories like EasyJet, Ryanair and other low-cost carriers. Similar moves include Adobe shifting to monthly fees for their Creative Suite, but also the Office365 package — both lowering entry barriers, but both also creating recurring revenue instead of one-time payments for the companies.
Behavior and expectations. Servitization induces changes in customer demand and, consequentially, in customer behavior and expectations: Personalized products, tailored solutions, easy-to-use and fancy-looking UI, an adventurous UX They expect seamless journeys. One app — not twenty. And finally, customers want to be entertained, “act” more environmentally friendly and be safe during their commute. Today’s customers have money, and they are willing to spend it for high-quality services, but there is one thing, they are surely not: Loyal.
Open markets, endless money. We saw a total of $254bn VC money invested globally in 2018, $33.5bn in mobility tech. These numbers are most likely going to be surpassed in 2019. Crunchbase projected $220bn of VC spend already by the end of Q3 2019 (see Q1, Q2). Investors are still betting big on game changing companies disrupting the transportation industry, changing how people move. And it seems like it’s working.
Brands. Big tech companies, the usual suspects, are shifting into businesses they haven’t entered before to become the “Netflix”, “Amazon” or the “Google”, yes Google, of transportation. They all use different strategies, be it investments (GV, Capital G, Alexa Fund), building products in-house (Waymo) or forging exclusive partnerships. This global approach certainly burns a lot of cash, but it might have a massive impact in the long-term. What sets them apart are their global brands and presence. They can leverage these vast customer bases from search engines, social networks, smart home applications or entertainment when trying to additionally implement an integrated transport agent. If they succeed, they will be incredibly powerful — and nearly untouchable, even more so than they already are today.
This combined means a tremendous change when it comes to customer acquisition in B2C markets, where sharing economy and collaborative consumption is on the rise and coupled with platform giants can disrupt industries and change metrics fundamentally.
What does that mean for our MaaS-Cha-Cha-Cha?
When looking into the field of MaaS, we made out three different layers, each occupied by different players. Instead of operating physical transportation assets, they solely focus on software. Keep in mind that public transport operators are not, should not, and most probably will never be, software companies.
Challenges
Needs. Public authorities and private companies have different objectives and different strategies on how to get into the leader role. One of the biggest challenges to accomplish will be to make both sides coexist — while keeping power and control in the hands of the officials. Authorities’ main goals are to promote sustainable travel modes, reduce the car modal share and make traffic move smoothly, while private players are looking for big cash, no matter what. We saw where that approach went: Bike graveyards, congestion caused by ride-hailing companies and scooters all over the place.
Balance. Cities globally grew cautious upon witnessing their U.S. counterparts being overrun and completely losing control. Especially European cities, as careful as they might be, reconsidered license distribution, policy reforms and the handover of city infrastructure (sidewalks, streets) to growth-greedy, ruthless companies flush with cash. Authorities are helpless when it comes to new mobility offerings. They are clearly well-received by customers, proven by the steep adoption rates. On the other hand, they bring existing infrastructure to its limits. How to deal with this?
Scaling. Implementing an intermodal mobility platform in a city might be challenging. Aligning the different existing players already in the market will be key. What about expansion? To unlock the full potential behind intermodal platforms, travelers should be able to use one service along the entire travel journey, even across cities or countries, even when traveling to other cities or even countries. Global private operators have significant advantages here.
Innovation. The traditional approach to alleviating problems in transportation was adding roads and transit lines. That approach will not cut it any longer and can be questioned from an environmental, public health, and funding perspective. There are limits to infrastructure, and cities are in dire need of new mobility solutions. There are models out there fighting congestion or air pollution or would allow faster travels if integrated — all in theory. But when it comes to new modes, the majority of cities ceded control by either giving private players unlimited access and allowing them to compete with traditional modes of transportation or blocking and restricting innovation. There is a general consensus among cities recognizing the potential of new mobility technology to generate tremendous value at a lower cost than the required investments in traditional infrastructure. However, they still struggle to unlock this potential.
Chances
The driver’s seat. Cities need to regain control and assume a more active role in the mobility revolution. Without proactive moves, private players could cause more trouble than they will bring benefits in the long-term. This way, communities will end up dominated by new mobility operators with a transport system tailored to their needs, leaving cities’ interests out of the equation. It is therefore imperative for public authorities to be proactive, aiming at balancing their goals and needs against the needs of private players.
Layer 4. One way this state of equilibrium could be achieved is by introducing an additional layer to the picture of MaaS I painted earlier — Layer 4. This extra layer is crucial to enable a fully integrated mobility platform, the end goal of private companies active in the space, but also a desirable result for public efforts in transportation
To reach this level, MaaS orchestrators must set incentives to encourage commuters to use sustainable modes of transport. These orchestrators are in the unique position to influence behavior by adapting offerings in particular ways, reacting promptly to a changing environment, adjusting pricing or incentives given the circumstances (traveling at off-peak hours, for instance, at a discounted price / using car sharing for reduced terms at hours where public transport is not available).
Public authorities have access to a toolset reserved exclusively to cities: an extensive, centralized transportat system, up-and-running and a gold mine for insights from data analytics; taxes and fees to, e.g., put heavier burdens on private car ownership; and a vast set of incentives to nudge citizens into certain behavior. However, the current system works totally contrary to incentivizing a future-proof transport system. Questioning the current setup and making more active use of this potentially effective toolset is an essential prerequisite for a sustainable MaaS system to work.
Who will ascend to the fully integrated level of MaaS is unclear. What is clear is that to achieve it, cities and private mobility operators have to work hand-in-hand. The MaaS transportation system has to be implemented superordinately as part of a solution encompassing the entire mobility value chain, including infrastructure, from public authorities to private operators. No one will be able to win alone; It takes two to Tango.
You, dear cities, need to get back in the driver’s seat. Take action. You decide where to go.
Up next
In the final chapter The holy grail — The winner won’t take it all, I’ll deal with the MaaS framework in detail, define roles and stakeholders, elaborate on public-private partnerships and talk about concrete steps towards an integrated MaaS solution.
