Connected car: new model building by Google

This is incredible to see how Google progressed within 1 year about their program “Google self-driving car project”. This is now not anymore, a concept with technical tests using a Toyota cars, as it was last year, with Prius or Lexus RX; this is not anymore a technical solution with engineers embedded in these cars, checking the issues of the software developed.

This concept allows Google to propose a completely automatized car without any steering wheel nor any pedals of acceleration or brake nor any engineer embedded in the car.

A new model of usage born

These cars will not be sold by Google; the cost of cars remains too expensive from now; some rumors speaks about a price of 1 million of dollars for the first Google cars, if we integrate manufacturing costs and R&D costs included; and the running costs of these cars is unknown for the moment; for sure, limited people could buy these cars if they would be allowed to buy them.

These cars will be firstly rented by Google to replace your car to go to supermarket, to go to airport or to go some meetings in your town.  This model reinvent the usage of transports.

On one side, this car can be compared to a public transport, completely optimized: the car is able to take you everywhere; and you can go everywhere; this car is a two places car, it doesn’t take a lot of place in the road circulation and you don’t need to park them; the car is able to know the traffic jam and optimize the way to go to the destination.

On the other side, this car can manage all small “travel” corresponding to 80% if car usages. This is a complete revolution for the car manufacturers in the next 10 years; in this case, people will not buy anymore a car; what is the interest if you can “call” a car when you need it?

Of course, it means that there will be enough “automatized” cars available in one place as big towns. This is also a complete revolution for taxi or public transports: this automatized transport can be very competitive in the next 10 years and completely change the model of transports in big town.

Continuous disruptive model as Business model

This revolution is exiting because Google, a “big” company with 50000 employees and 60 billions of turnover, is able to make some disruptive innovations on many different sectors every year!

Generally, companies are able to make one disruptive innovation every 10 years; and when it is more, a big risk of failure of the company can be predicted. In the case of Google, it seems not; their Business model seems to be constructed on their capacity to continuously be able to build some disruptive concepts with a lot of synergies with existing profitable activities they also manage.

A lesson to be learn by many worldwide companies if they would continue to exist in the next decades.

Amazon Innovates With Its Business Model, Not Drones

Amazon CEO Jeff Bezos created quite the stir when he announced plans for drone package delivery on 60 Minutes. However, as exciting as commercial applications for drone technology might be, the true innovation lies in Amazon once again reinventing its business model and finding new ways to create value, conduct business and get paid for it.

The essence of business model innovation (BMI) is not a new concept. Indeed, creating disruptive new business models is at the heart of many entrepreneurial start-ups. However, in most large companies and corporations, business models take a back seat to brands. BMI should command more attention as business models, above products, services or brands, are the basis of competitive advantage in the 21st Century.

The implications to this are significant. Over time, the companies that fail to reinvent their business models to challenge outmoded assumptions about their businesses, renew their customer value propositions and change the competitive dynamics of their industries in their favor can quickly become vulnerable to commoditization, obsolescence or business failure.

The trends towards business model-driven strategy are encouraging. According to the Economist, over 50 percent of executives believe that business model innovation will be even more important than product or service innovation. Yet, the American Management Association determined that no more than 10 percent of innovation investment at global companies is focused on developing new business models.

Finding the business model sweet spot can help companies generate both incremental growth from optimizing existing businesses and transformational growth from generating entirely new sources of revenue and value creation. Rather than simply figuring out more efficient ways to operate in existing markets, the components of business models can, individually or collectively, be reinvented to create entirely new markets, new opportunities and structural competitive advantages.

Amazon’s business model innovation certainly allows it to deliver a diverse portfolio of customer value propositions that serves as its main competitive advantage. Culturally, a continuous focus on business model innovation keeps the company connected to its entrepreneurial roots — an advantage that should be coveted by even the largest of companies.

At the end of the day, “It’s all about customers.” As Amazon demonstrates, even when customers have many choices, with business model innovation, it is possible for revenue and growth opportunities to flow from the basic way a business is put together — even without the use of drones.

Shifting to a more efficient business model

It is really simple to think in terms of innovation as a “closed” activity where the company owns the information by different means. Research is performed, new ideas come up, and new businesses are developed. This linear analysis however is missing several advantages than can be obtained by shifting the process to an open innovation model. Some of those advantages are:

• More amount of ideas: it sounds obvious, but it’s necessary to comment that the more people involved in the innovation process, the more ideas one can get to select from
• Wider reach: it’s related with the previous advantage. When more people and with more different backgrounds are implicated, ideas tend to be more diverse and rich. Having people with backgrounds in art or architecture, for designing computers, for example, can be necessary, and provide with experience that computer designers may not have.
• More focused target: Involving customers, final users, and suppliers, will ensure that targets are reached. Their opinion is of great importance. Many ideas are developed, and then rejected because of final user tastes, or supplier’s impossibility of achieving expected results. Having them making suggestions in the beginning of the process will ensure that ideas that are being developed are on the right track.
• Resources efficiency: the amount of infrastructure necessary in a “closed innovation” business model to achieve the same results as an open innovation one is prohibitive. Companies can’t afford that amount of money. If they want those results, they should use an open model.

But, which are the steps to follow? It’s rather simple to think about them but not executing:

1. Change the mind model of people in the company. This is the most difficult part, and yet, the most necessary.
2. Select your partners. Thinking wider is better in this stage. Who can bring more ideas? Making a diagram on how the business model is, can be good for leaving no one behind.
3. Make the rules: make a contract setting what can and can’t be done. Is necessary to reduce risks.
4. Execute the process. Work platforms are necessary. Think on their impact in the process.
5. Monitor and improve. As in every process, things can (and must) be improved.

Who is doing this now? What are their results?

Media related companies, such as movie making, or advertising, and fashion, have been doing it for a while, but also Oil&Gas companies and Automotive companies, specially in relation with their suppliers, or B2B customers.

Results are cheaper and more focused ideas. For example, wider approaches lead to the use of medicine images technology for oil fields exploration.

Why now?

People can access internet from anywhere in the world. Right now, companies can take profit from the ideas that a potential customer comes out while travelling in the metro.

To wrap up, open your mind, open your company process to the rest of the world, and the results you will find, are greater than you can imagine.

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