To Drive Or To Be Driven?

Autonomous driving is a disruptive innovation with huge implications for different industries

Today already, autonomous driving is technically possible and will soon become part of everyday life. In conurbation areas in particular, this technology brings new mobility possibilities and could for the first time even solve the famous ‘last-mile problem’. IAV not only has its own experience with highly automated driving but has also developed a method for analyzing the influence of potentially disruptive innovations such as autonomous driving on the business model of various industries.

Mobility is a basic human need – but its meaning has changed dramatically in time. Today, constant global population growth and increasing urbanization have shifted attention to resources and efficiency management as well as to the individualization and flexibilization of the journey.

”Every day, mobility gets more connected and mobility chains get more flexible, with mobility services becoming the revenue drivers of the future“, says René Althans, who deals with strategy development in IAV's Cockpit & Interior division leadership team. ”Another mega trend is the way the world is becoming increasingly automated. Completely autonomous driving as a future technology for the coming years has the potential of addressing all these topics. Mobility as we know it today will be turned completely on its head.“ His dissertation at Berlin University of Technology entitled “Autonomous Driving as Disruptive Innovation“ was awarded the Hermann Appel Prize for ”Future Mobility“ in November 2015.

Transport right to the front door

One major finding is that autonomous driving opens up completely new possibilities for urban and suburban mobility solutions, particularly with the possibility of separating the vehicle from the driver in future. Together with drastic cut-backs in operating costs, this would also reduce issues with space availability and emission problems in cities. ”Swarm intelligence and autonomous car-sharing could permit more efficient use of the roads and also bring about clear reductions in the number of traffic accidents“, says Althans. ”Furthermore, for the first time we have the possibility of completely solving the lastmile problem. In the past, taxis were the only means of public transport that brought passengers to their door. In future, this could also be done by smaller driverless buses with just six to eight passengers for far greater flexibility in service.“

The new mobility services also raise the question of owning or just using? Although experts presume that many people will continue to want to have their own car in future, possibly with an autopilot as a premium feature, commuters in overcrowded city centers will probably prefer to make greater use of the new services made possible by autonomous driving. The new technology would also permit a complete overhaul of traffic systems at trade shows, airports or on company premises. ”It's not that the car will lose significance. Instead, it will become part of a far broader mobility spectrum“, says Althans.

New possibilities for value creation

For the mobility industry, this means completely new possibilities for value creation which will also attract new players, such as the IT world. They can provide new services such as trip dispatching or transport solutions where the costs are paid by a provider at the destination (for example when going to a restaurant). The examples show that autonomous driving has the potential of turning existing business models on their heads. In fact, Althans' analysis reveals this to be a typical disruptive innovation, which needs to fulfill eight criteria. The innovation has to offer an alternative value proposition, facilitate new products and services, open up access to new final customers, establish new market segments, modify entire value creation networks and introduce new players onto the scene. At the same time, the initial phase of a disruptive innovation usually only entails limited performance, frequently with clearly smaller margins than established technology. ”Autonomous driving reveals numerous cases that fulfill all eight criteria“, summarizes Althans.

But exactly how does autonomous driving impact on the business models of various sectors? This is being examined by a concept developed by IAV together with its consulting subsidiary Consulting4Drive (C4D) for evaluating the impact of disruptive technologies. ”As a result, we are in a position to support our customers not just in analyzing their future key competences“, says Althans, ”but also in solving and implementing viable vehicle and business model architectures.“