We met with Huschke Diekmann of GE to talk about the new trends he foresees in transportation, what is driving change, and what it means to be an innovator and to exert influence in a connected world.
Challenges and drivers of change in the transportation industry
One of the key drivers for the transportation industry will be the change in status symbols among the younger user groups. If you look at research reports they all say the same thing: the next generation, at least in Europe, has started to choose status symbols other than a car. The first items they purchase when they start earning their own money are technology gadgets, trips to exotic destinations or nicer apartments in the city. They are not buying cars anymore in the numbers they used to, and even the driver’s license is not as important as it used to be in the past.
I also predict increased transportation costs, leading us to new definitions of the idea of ownership. I think the time of owning a car that I can drive wherever I want or of going to a ticket machine to buy a ticket to go from here to there, is disappearing. Instead, I see a network model arising, similar to using a mobile phone on a carrier network. Whenever I need mobility, I will just say I need to go from Frankfurt to Berlin and then I will be able to choose between a selection of routes: the quickest, the cheapest, the most eco-friendly or the most effective for my needs. I don’t have to use “my” car, instead I will use “a” car. I will not care about which airline brand I fly, or even have to own my bicycle to be “mobile”. I will just access the existing network and I will be connected wherever I am. With our smartphones we already have the mobility of communications, even globally. This is the mobility of mobility.
At the same time, I think our personal mobility needs will actually decrease. Already we don’t need to travel to the store as often, because we can shop online and have our purchases brought directly to us. Of course, while that leads to a decrease in personal mobility needs, the logistics needs for moving goods increases, especially when we consider common behaviors like having three pairs of shoes delivered, and shipping two pairs back. Videoconferencing (and soon, hologram technology) allows us to connect virtually with coworkers as well as friends and family. This further decreases our need for personal mobility, but simultaneously increases our reliance on the internet.
For companies in the industry on the other hand, the influence from Asia is becoming increasingly apparent. Chinese companies have an intense interest in European companies and their products, and this is a trend that will continue and grow. We have seen a Chinese company buy Volvo, which clearly was a strategic decision. In the rail industry you see more acquisitions of European companies by Chinese corporations, as well as an increased demand for European parts from Asian transportation producers.
The difference in market size when comparing Asia and Europe is important here, whether we are talking about cars, trains, ships or airplanes. Let me illustrate this with an example from the rail industry. In a given timeframe, the leading Chinese rail companies might ask their European suppliers to supply parts for 1,000 or 2,000 trains, while the leading Western rail companies might have a demand for the same parts for about 50 trains. This completely different level of scale quite naturally allows Asian players to influence global industry behavior and standards.
Rising mobility costs
I predict increased transportation costs
I believe that the higher costs that we will experience in relation to mobility are not only due to the costs of producing and maintaining vehicles and the required transportation infrastructure, but we also have to factor in the hidden costs to the economy of higher traffic congestion. A transportation system that is operating ineffectively is a real financial burden for society. We already see executives in some megacities commuting, and traveling from meeting to meeting, by helicopter.
For now, most people still have positive perceptions of travel and mobility, but that could change. People want to go from A to B, and their primary focus is on what they want to achieve or what they expect to get from the trip. But we already see the shift in perception happening. People are starting to think in negative terms, about how they can avoid delays, how they can avoid stress, how they can avoid costs. There is also increasing awareness of things like the impact of traffic jams on CO2 emissions, or the environmental impact when areas inside and outside of cities start being used for transportation infrastructure.
All this results in direct and indirect costs that will cause a rethinking of mobility. Because I have the steering wheel in my hand I have the perception of control. But actually, I’m stuck in a traffic jam. I’m not as independent as I think. The average traffic speed during rush hour in many of the biggest cities of the world is somewhere between 5 and 10 km/h — we can walk faster.
Moving towards networked mobility
There are encouraging trends in all of this, such as crowd-enabled mobility based on responsible citizenship, digital information and connected data.
The same type of algorithm that is used to predict epidemics based on user search terms can be used to analyze searches for driving directions. Personally, I use a traffic app called “Waze” (of course there are many available) instead of a conventional navigation system. It provides a linkage to a community of drivers and it let’s me know in real time what the traffic will be like before I even start. Then, when I’m on the road, I feed my driving progress back into the community to help others make their decisions. In a connected world, I’ll always be faster if I’m connected, and this is my deliberate decision.
Another example comes from car rental and carsharing companies. They are easily able to gather detailed information about the plans and behaviors of their customers — who wants to travel where, when, in what kind of vehicle, and sometimes even why. The information I supply as a user allows me to influence my experience and the personalized offers I receive.
What I want to illustrate is that a trend is becoming apparent in the daily lives of people: mobility is becoming crowd-enabled, where the emphasis is on improving the user experience for each individual through their active participation in the community. That improvement is the best motivation for sharing personal information, and is the necessary foundation for an effective network. In that way, I, as a participant, can maintain a high degree of influence within the connected community.
In the center is always transparent information and interconnection, and providing each participant access to as much valuable data as possible. Meaning: data that is relevant, that can be analyzed and is independent of medium. What just a few years ago I could only get on my desktop, and yesterday on my smartphone, I can now access through wearable technology like watches or glasses, and soon with implanted technology. It’s not about the medium anymore, it’s about the information. I’m convinced that a key requirement for a sustainable future for companies is based on giving customers access to their personal information, and enabling them to influence how that information is used.
Data protection and innovation
All of this means that for individuals, the “in or out” decision will become even more important. Do I opt in and connect, or do I opt out and stay disconnected? Depending on historical, social or cultural parameters we have different situations around the world. We know that if you ask a New Yorker about data recording and ask the same question in Berlin, you will get very different answers. But the desire to influence is a key aspect everywhere.
As we see in current discussions about driverless vehicle systems, we will always want a fallback option for the pilot or the driver, a human, with the right to act autonomously.
Take a modern jet engine as an example of what is already possible. It is equipped with more than twenty sensors that deliver streaming data for improved performance and improved maintenance. Ideally, you learn about a problem before it occurs. How great would it be to get an alert from your car about a future technical problem and a suggestion to visit your mechanic. You could make your decision before you’re waiting for the tow truck on the side of the road. Similarly, look for example at diesel locomotives. They deliver performance data to an information center. The information allows us to come up with a proactive service plan saving a lot of effort and cost by avoiding locomotives being inactive.
Mobility and Energy
The mobility of mobility
The examples show how the mobility network relies on the internet as the information network. I’d like to highlight another network: energy. The shift towards electric vehicles only increases the importance of being able to influence how I generate, store, and consume energy. What we will see is a “network of networks” between the mobility network, the internet, and the energy network.
I predict the energy industry will be facing major disruption because we want to be able to directly influence the networks we participate in. Power outages already cause serious delays and costs for companies and individuals in many parts of the world today. I think that one trend we will see in the future is smaller, renewable power generators and storage facilities that are in, or connected to, factories and our own homes.
E-mobility solutions are related to the idea of how to store energy in your own four walls, because you want to decide for yourself when to generate power, when to store it, and when to use it. Having this kind of influence and the chance to act autonomously is a key driver. Google was very clever in purchasing Nest, not only to enable measurability, but also the ability to steer the flow of power into and out of every connected house, device, e-car, etc. This change towards autonomy from the grid is not only driven by cost considerations, but also by the desire we have to be the owner of our power, to be able to decide for ourselves.
Information and innovation
Everyone will be an innovator as part of a well-connected system
I’m sure that we will move towards a more connected structure of corporate entities, public bodies, and individuals, with a high level of direct influence on processes around us.
In the old days, maybe a company was made aware of a certain customer need and based on that, developed a product. In our industry that could sometimes take a few years. By that time, the customer would often say that it no longer met his needs, so the final product was obsolete before it was even introduced into the market. Today you are better connected with your customers and you know much more about their needs and objectives. You can come closer to providing the exact products or services needed, based on a huge data set provided and made accessible by all participants.
For individuals, the days are gone when you didn’t know which data your car’s system had collected about you. And car builders will have to offer you access to your data if they want to keep you loyal to their brand, their cars, accessories and services. It’s a matter of transparency and influence.
For GE, the approach to development and production has fundamentally changed due to these realities, with frequent prototyping and active participation from customers. Participation can fuel the innovative dynamic that is vital not only to companies but also to people as individuals. In fact, innovation is so important that I am a strong believer that companies shouldn’t even have a separate innovation organization. That just allows everyone else to relax and think: “Those guys over there are taking care of innovation”. But it is everyone’s responsibility. Everyone is an innovator. And everyone will be an innovator as part of a well-connected system that promotes and rewards his individual influence. Of course, “well-connected” means the internet stays on!