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The long haul - how to win the race for the future of urban mobility

06-03-2020Strategy

As rapid urbanization creates a demand for better urban mobility, efforts to provide people with the services they need are hampered by the last two decades of mobility providers trying to build their own ecosystems.

A new approach is sorely needed.

Gianni Cardone

Design Director

Urban mobility is a patchwork

Urban mobility in today’s rapidly growing cities is a complex phenomenon. People and goods move within an intricate network, served by mobility providers with different services and transportation methods. In an effort to meet evolving user needs in a changing environment, the amount and breadth of mobility services offered in cities have changed in profound ways and grown considerably over the last twenty years. One of the main driving forces has been the desire by established mobility providers to extend their offering with services that complement their traditional core offering. Often they’ve done this by trying to create their own proprietary ecosystems with the aim of extracting maximum value from their company assets in a digital economy. They were not looking at the bigger picture.

This approach has failed to integrate services into an efficient urban mobility ecosystem.

The end result is a rich variety of mobility services that are, as a whole, poorly integrated into the urban context and hard to manage. In other words, they fail to meet user expectations and are often prohibitively costly to maintain. Bottlenecks in providing users with the services they really need include the number of players in a particular market, the complexity of technically integrating their services and difficulties in finding business models that offer benefits for all service providers.

A changing role for traditional mobility players

The market is currently quite turbulent. Car sharing provider ShareNow was recently in the headlines with their decision to step back from a number of markets, including the potentially lucrative and important United States. The less-regulated American market with its constant inflow of competition in the form of mobility startups and high costs of maintaining car fleets in major cities proved untenable in the long run.

The inability of ShareNow to break into the US market should not make us question whether the transformation of urban mobility is proceeding as quickly as expected. The important questions are related to roles in the interaction between different service providers: Who is the orchestrator? Who are the players? These questions have yet to be answered and the playing field is still open to a degree, but for how long? Traditional car companies have experienced difficulties in finding their roles in the new ecosystem. They’ve also had a hard time extracting value from the data they’ve collected over the preceding years and decades.

So what’s happening with ShareNow should not be seen as an indication of a retreat from the new urban mobility market or the sharing economy - it’s a welcome change in how to approach providing urban mobility and the role carmakers are best suited to play. Investment in technologies like “digital key” speaks of trust in the continued growth of the sharing economy and a desire to integrate the car into a larger mobility ecosystem. This also signals a willingness to step back from the idea of owning the mobility ecosystems as orchestrators and, instead, becoming important players. This role still offers them an opportunity to make the most out of assets like sensors, collected mobility data and the car as a device for additional service opportunities.

If companies that have dominated the personal mobility field for a hundred years are starting to find their footing as players in the urban mobility ecosystem, who will be the owner? The answer is: we don’t know. And while that is an interesting and provocative question to ask, it’s not the most important one we are currently facing.

Look at the big picture

The question we need to focus on is what the success criteria are for an urban mobility ecosystem. As we’ve seen, attempts by a wide variety of mobility providers - ranging from carmakers to startups to public transportation companies - to build their own ecosystems to make the most out of their assets were not particularly successful. The fundamental problem with the approach was to look at it from the perspective of assets like data or equipment, instead of approaching it from the user needs perspective.

Customers love convenience. They want an integrated mobility offering that is easy to access, use and pay for.

The only way to provide the level of service and convenience customers want is to focus on user needs and work together with other players in urban mobility. No one can do it by focusing on their assets and no one can do it alone.

An efficient and integrated ecosystem offers numerous benefits for players as well as orchestrators. Players gain access to a wide range of users for their services, with reduced investment and risk. Ecosystem owners potentially have more revenue generation opportunities and they definitely wield more strategic power, but they also face higher costs and risks in ecosystem maintenance.

The future urban mobility ecosystem we build through cooperation will be one that delivers real value to customers.

You don’t have to own the game to win the race.

You would like to dig deeper and learn more about the interplay of data and innovation? Continue to read on our mobility page.

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