When Ford Motor Company announced it was making Jim Hackett its new CEO, a lot of automotive dots were connected, including turning vehicles into massive data gathering and analysis engines.
While the physical end game is completely autonomous vehicles and frictionless man-machine interfaces, the opportunity is not so much the sale of the physical vehicle itself, but instead to analyze driver behavior along with physical and mental health, and selling services on top of that information.
The totally connected vehicle will turn into a two-way conduit, with user data going upstream for analysis, and context-aware paid-for features and services flowing downstream.
Of course, this is an extrapolation on a frequently overlooked aspect of Hackett’s appointment to CEO. All reports point to his turnaround role at Steelcase, which he took over in the mid-1990s, but it’s critical in this context to note that he has been leading Ford’s new subsidiary, Ford Smart Mobility LLC, since March of 2016. In that role he owned the mandate of designing, building, growing and investing in what is still an emerging mobility experience.
There’s no doubting that Ford was already immersed in connectivity, given the success of Ford SYNC, and it has developed a slew of apps for its vehicles that make the smartphone part of the experience, including voice-control of a mobile phone’s application.
While it had already invested heavily in smarter vehicles at the time Ford Smart Mobility was launched, it’s out going CEO Mark Fields since predicted that fully autonomous vehicles will be on the road by 2021. The timeline is optimistic, but the underlying point is true: we’re heading quickly in that direction. At a time when Ford, as a company, has been doing relatively poorly, now is good time to make a clear shift in emphasis.
This timing is classic management advice: never waste a good downturn. Instead, use it to make sweeping changes that were already necessary but can now be included as part of the new direction. In some cases, like automotive, it’s a chance to completely rethink what the company is all about. For now, Ford is adamant that it’s still in automotive manufacturing and is adding mobile services to its roster as Hackett moves in.
That may be true, but from another perspective, fewer automobile manufacturers are distinguishable by their vehicles. A certain “sameness” has developed with many recognizing that users like a style or set of features at a cost, and it’s not a huge barrier to entry for automobile suppliers to provide those features. Just ask Hyundai. Ford has strength in trucks, for sure, but across the industry, margins are thinning.
The IoT gives auto makers have two ways to thicken those margins again. The first is to do what Ford has explicitly said it will do: provide more user services, which keeps customers tied to the vehicles while opening up new routes to revenue. The second path, and this is more implicit than explicit, is to analyze all user behavior, driving habits, locations driven and the state of the driver. This data provides not just information that can help improve services and feed into the design of autonomous vehicles. Ford is already working with IBM on this kind of platform to help vehicles make smart decisions. The data can also be sold to, or used by, its partners.
How the selling or marketing of that data is implemented could raise privacy concerns; it’s a matter of how much privacy users are willing to give up for the services rendered. That said, it’s already been shown that users are quite happy to lower privacy walls for free services. The question now is to what degree vehicles will transition to being more about services and data, than about road-hugging performance and good looks.
IoT solution providers have a critical role to play here, from ensuring security of the provided services to enabling connected sensors inside and outside the vehicle, and connecting vehicles to other vehicles (V2V) and to infrastructure (V2I).
Intel CEO Brian Krzanich turned heads when he declared Intel to be a “data company.” It’s not a big stretch to see automobile companies doing likewise. At some point, the value of the vehicle will be tied to the data and services it can provide, rather than the cost of making it, or the insignia it happens to carry. Like with all of IoT, it’s all about the data. With vehicles, the data is all about us.