The transport sector has a tradition of slow, incremental innovations, linear thinking and major and long-term investments in costly infrastructure. While trying to overcome these issues and cope with mounting performance pressure on the system, the industry has largely forgotten the users. Incumbents have shown a sustained focus on cost reduction, efficiency, and increased service levels. Instead of building digital business models from the ground up, digital channels are added to physical business models. But the transport industry is undergoing a major shift. Digitization and information enablement are rapidly breaking down the old foundations for success and creating new opportunities at the same time. All industry players need to fundamentally change perspective to stay relevant and to capture the potential of connecting to the crowd. And the crowd goes well beyond your current customer base…
A scattered landscape
If we nowadays look at the future of mobility we see a complex of disrupting developments, emerging technologies, new service providers and struggling incumbents that all try to somehow engage in the battle for the customer. Apart from a bunch of new startups like Qixxit, GoEuro, Moovel, Touch&Travel, and Flinc, which present their offerings from an end-user perspective, most incumbents focus on their own business, whether it is insurance, selling cars, providing power grids for electric vehicles, or apps for navigating from A to Z by one single mode. This creates a scattered landscape of offerings for the end user – anything but a true customer-centric approach. The accelerating speed of digitization does not only enable end-users to make more informed decisions about how to travel. It likewise provides them with new options like staying where they are and using advanced methods to still attend (e.g. Beam robots), or crafting their own solutions through the ever growing digital network they build. In the worst case the tendency of incumbents on cost reduction and efficiency will make it even more difficult to understand how an outsider could win your client by focusing on new value drivers.
Developing an outside-in vision to broaden the perspective
The most common challenge across all industries in identifying how the future will evolve is not the extrapolation of our current assumptions. It is to try to take an outside-in approach in envisioning our future. Think about the possibilities of driverless cars, also known as autonomous vehicles (AVs) ‑ a key innovation area for the automotive industry. Right now this is mainly seen as a solution for practical problems like congestion, safety, and parking. May this amazing technological advancement serve a higher purpose, so new value spaces can be explored? Will automated driving result in a substantial reduction of cars, with autonomous valet parking and car sharing becoming the norm? Or are we becoming so used to instant services that we need even more cars to fulfill our demand? What is the impact on real estate, how does it relate to the concept of proximity? What does it all mean for how value is created, who the customers are and the type of role to be played in the new mobility ecosystem? Is creating value predominantly reserved for selling assets to individuals or is the fact that all major car manufacturers are investing millions into Uber, Lyft and Didi a sign that the current customer base will only share data and preferences and clients are consolidated in large mobility service providers? These are big questions and there are no easy answers. And with an ever faster changing environment, less predictability and lots of new opportunities we need to embrace uncertainty, failure and learning rather than pursuing long-term planning and static strategies.
One of the key questions is: “Are you bold enough to craft and provide new solutions that will eat your current business, but fully fulfill the end-users’ changing needs?” At Deloitte Center for the Edge, we think you need to, and that change is an imperative. But before that, any player in this field needs to develop a deep understanding of the drivers behind new technological advances, the subsequent new business models that arise and putting all this into context. In this article we will show three perspectives to a user-centric journey of the future.
We can simply start by looking at the various stakeholder groups through three different lenses: (1) the industry perspective, (2) the governmental perspective and (3) the user’s perspective.
The industry perspective: new ways of creating and capturing value
Within the broader range of industry participants, OEMs, service providers, telecommunication companies, insurance companies and the tightly connected academia and research institutes, we see everything in the physical world becoming information enabled. We see a slowly emerging shift in which information-only products and services overtake the traditional physical-only products. The result is a decline in marginal costs: as connecting with new users and providing them with new services through advanced digital channels becomes free of charge, the domain shows shifting problem and value spaces. In addition we see globalization causing the erosion of barriers to entry, learning and commercialization. Traditional business models based on scarcity and proprietary knowledge stocks are thus under pressure. Laying off people and subsequent cost reduction programs only increase the mounting performance pressure and companies only work harder for even lesser returns. Nevertheless, there is huge upside potential in this shift in where and how value is created. Incumbents will be able to create an information value layer on top of their more physical product layer. This has great learning potential on how new digital channels can be exploited and at the same time requires their approach to be fully user-centric, with feedback loops to empower the crowd and create inclusiveness.
The public sector perspective: challenge institutional governance
The public sector authorities should be the first to take a user-centric perspective. Institutional governance often limits public authorities to do this though. Every modality has its own directorate, policy priorities and societal contracts. Investments are likely to be based on long‑term contracts and have a dominantly physical character. This will not change and governments can use their public role to engage the crowd on crafting information-enabled services by maximizing the potential of mobilizing platforms. These platforms are characterized by the ability to challenge a large crowd in designing new solutions and match this with parties that can actually develop and commercialize these desired solutions. Public authorities can facilitate this, only fund solutions that are desired and requested, and make data available to providers on how travel behavior is altering over time to constantly learn faster and improve the services provided to the end-user.
The end-user perspective: monetizing digital channels
The end-user is becoming more and more critical and demands more personalized and customized services. Especially in the hospitality domain (e.g. travel sites) or retail (e.g. e-commerce) we are used to profiled suggestions, pre-set filters and so on. Digitization shows an explosion of the web based services domain, a more democratized landscape where ever increasing amounts of new profiles enter the market place and enhance demonetization directly linked to business models that focus on extreme numbers of users before looking at how to capture the value from this crowd. It means end-users become passive, will easily be coaxed into switching providers, and will constantly look for better deals. One of the reasons very few digital service providers can keep a loyal crowd is their lack of understanding about how to constantly create new incentives so they will stay on the platform, learn, and ‑ most importantly – feel awarded and inclusive. For mobility service providers and auto retailers alike, knowing their customers and letting them know they do is most critical, even if they merely provide single-problem solutions.
Digitization and information enablement, driven by exponential growth of computational power, provides everyone with relatively cheap access to resources, knowledge, markets and fast learning. This enablement at the end-user level can also be monetized and accessed by including end-users in the creation and evolution of new products and services. Anyone using this digitization as just another way of selling the same products over a digital counter misses the opportunity but – more importantly – lacks the understanding of the fundamentals of digitization, disruption, democratization and demonetization.
 See also: MITSloan, The dark side of digital strategy, interview with John Hagel, chairman Deloitte Center for the Edge
 based on Salim Ismail’s notions in Exponential organizations and Singularity University
This article is the first in a series of two from Deloitte Center for the Edge.
The Deloitte Center for the Edge (C4E) helps senior executives make sense of and profit from emerging opportunities on the edge of business and technology.
Anchored in Silicon Valley and with Centers in Europe and Australia, we help you to transform your business by identifying, unlocking and creating value from your hidden innovation potential. We aim high, want to outperform on every metric and thereby create an impact that matters by truly and fundamentally transforming het way corporations operate on the edge of their business. We use an outside-in vision, that give guidance to future growth and build that new business with you, leveraging our network of partners, digital tools and platforms and most important passionate people with founder’s spirit.
Maarten Oonk, Director New Business for Romania and EMEA at Deloitte Center for the Edge, is an expert on transformation, disruption and exponential technologies. At Deloitte’s Center for the Edge, he helps senior executives to make sense of and profit from emerging opportunities on the edge of business and technology. His passion is fuelled especially in areas like Additive Manufacturing, Artificial Intelligence and Autonomous driving. Prior to Deloitte, Maarten worked for over 7 years for TNO, a renowned R&D and technology institute. At TNO, he led the industry team on Transport & Logistics. He was also chairman of various international working groups on vehicle automation, delegate for the European Commission on international harmonisation and R&D for transport. In addition, Maarten has 10 years of international business development experience in electronics, mobility and supply chain management. He has a master’s degree in Industrial Engineering & Management from Twente University.MOonk@deloitte.nl