Monday, October 03, 2016

Automobiles demonstrate the path to seamless experience

In an earlier post on the Ecosystems 4 Innovating site I suggested that innovators must understand the expectations of customers.  As such that's not new or especially insightful.  Innovators are supposed to find new and unmet customer needs, and solve them for customers in ways that benefit the customer and create value for the innovator.

What's important about this idea is that innovators must begin to understand the maturity and expectations of their customers.  Henry Ford could offer an exceptionally basic black Model T Ford because there were no other options.  He was fulfilling the most basic sets of needs for his customer - efficient transportation.  When people didn't have cars, they didn't care much about the color or other features.  As other automobile manufacturers entered the market, they realized that the basic needs were met, and began to add features, colors, options and eventually a family of models and styles.  We can look back over 100 years ago and realize that customer expectations and needs morph as basic needs are satisfied.  Ford was overtaken by Billy Durant, who created a range of options and models.  Durant recognized that many consumers wanted more than basic transportation, so he solved those needs.

Over the years, automobile manufacturers created a wide range of different types of cars - convertibles, trucks, vans, SUVs, etc to meet the expanding needs of consumers.  Other factors became important - safety, as seat belts became an option, and then a requirement.  Or gas mileage, as the oil embargo of the 1970s forced customers to care about gas mileage. Or quality, as the Japanese manufacturers demonstrated a much higher quality vehicle in the 80s and 90s.  Today, we have very different expectations about our cars.  They are more customized to our needs, offer a wider range of choice and are more reliable, dependable and predictable than ever before.  What they don't yet do is meet expectations for seamless experiences.

As consumers move from basic product needs to elaborate product needs, they take another step up the needs hierarchy and shift from product needs to service and experience needs. GM, Ford and others are waking up to this now, and in fact have done some service and experience innovating before.  For years GM has made more money from financing and leasing cars than from building and selling cars.  Financing was one of the first and most logical steps the auto manufacturers addressed as the tangible products matured.  Strangely, they haven't gone much further.  Today we see the inklings of the next steps - lifetime maintenance, so the customer doesn't have to worry about servicing the vehicle. Why should a consumer care when the oil is changed?  Why don't the experts at the dealership do that for them? And we can go much further.

A truly seamless experience for a car owner would be to consolidate all of the aspects of car ownership, car financing, car maintenance, even car insurance, into one seamless experience. Why bother to shop for maintenance or insurance?  Why can't the dealers (or another firm) offer these features, along with roadside assistance?  What about parking for city dwellers?  A seamless experience would mean the car finds its own parking nearby.  Eventually, a seamless experience will be a car on demand, ready to take you to where you need to go.  Fractional ownership, billed by the mile or the hour, transportation as a service, with different vehicles available depending on your needs.

A truly seamless experience is increasingly what customers expect and what innovators need to strive for.  Providing a discrete product into a customer's life and asking them to integrate it with their other products and services simply frustrates the consumer, who expects more from product and service developers.  Apple and others have taught them the power of seamless experiences, and they've grown to expect the ability to "plug n play" anywhere and everywhere.  The companies that understand this desire and have the ability to "build, catalyze or join" ecosystems (to quote Stephen Elop) that provide these seamless experiences will be the winners.

Tesla could lead the way to this nirvana of seamless experiences.  Already they are changing the dynamic between company and owner, removing or at least attempting to remove the dealer.  As they experiment with autonomous vehicles one can imagine a day when your car picks you up, takes you to work and then goes for maintenance.  Or perhaps goes to serve someone else as part of fractional ownership, staying productive while you are at work, rather than parked and unused in the company parking garage.  Innovators who aren't tied to the past concepts of product-driven innovation, who understand the consumers' expectations for service and experience, will radically alter the nature of competition, and will do it by innovating services and experiences, leveraging ecosystems.
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posted by Jeffrey Phillips at 6:38 AM


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