The web economy will chopshop the car industry

A few news stories make it clear that the venerable automobile industry is going to wind up sliced, diced, and consumed by the new economics and technologies of the web, and in short order.
Ford has announced that it’s working with Amazon to integrate the Alexa virtual assistant service that runs on the Echo smart speaker and Fire TV devices, so that we can turn the on the lights in our homes with a voice command from the car, or start the car as we walk out the back door in the kitchen.
Ford is also integrating with Wink, the smart home hub company formerly an arm of Quirky purchased by Flextronics when Quirky filed for bankruptcy in 2015.
I get an odd pleasure thinking of an automobile as an extension of the smart home, like a thermostat or washing machine. But that’s one of the trends we are witnessing. And the relationship between Amazon and Ford — or any other permutation of the formula <Internet Giant> + <Automobile Manufacturer> — is deeply imbalanced because of the relative velocity of the two players. So we can imagine that the destabilizing impact of this relationship will shake the Automobile Manufacturer into its constituents, and anywhere that the Internet Giant is strong will be taken over by them.
In this case, imagine a few years down the line when a car is even more of a hardware commodity than it is now, and where you will select the ‘carware’ based on how well it integrates with your ‘homeware’. Say I am a big fan — and buyer of — Amazon’s smart home products, and not invested in Apple, Google and Microsoft alternatives. Amazon provides my critical UX, stores all my data, and the various devices integrate ‘seamlessly’ and complement each other well. So I may choose a Ford the way that people choose a Mac, Dell, or Microsoft tablet today, first choosing the OS and then the device.
Here’s a scenario that Ford provided to Geekwire as an example of the interaction through Alexa:

Owner: “Alexa, ask my Ford for my scheduled car start time.”
Alexa: “Here is the list of your current go times. You have a start time set for Monday at 7 a.m., with a cabin temperature set to 85 degrees Fahrenheit. Tuesday at 5:45 a.m., with a cabin temperature set to 75 degrees Fahrenheit.”
Owner: “Alexa, ask my Ford for my car’s driving range.”
Alexa: “You have an available range of 56 miles.”

In that scenario, Ford’s investment in proprietary on-board communications technology will turn out to be something like the Palm OS: a dead end in smart device operating systems. I will think of the Ford as another Alexa device, like my Fire TV Stick or Echo. I won’t care who manufactured the device. In fact, it could be branded Amazon, and built in Shenzhen by jobbers following an Amazon (or Apple, Microsoft, or Google) design.
However, the smart home-centric model isn’t the only model we are seeing at work. Consider the news from General Motors which is investing $500 million in Lyft, the Uber competitor. GM announced last year that it plans to deploy a ‘fleet’ of autonomous Chevy Volts by the end of this year, so it has seen the decline in car ownership accelerating in the future, and want’s to get ahead of it.
Millennials are much less car oriented than earlier generations, and the cost savings of car ‘sharing’ — or fractional availability, are huge: connect the dots, and you see imminent revolution in carland.
Cars spend 95% of their lives parked. Leaving aside the ecological and city planning aspects of that waste, the cost equation of fractional car availability — or sharing — will trend toward very low car ownership when all falls out. If GM wants to have a dominant role in the future economics of cars, they need to broaden their economic participation because there will be much fewer car purchases, and more miles on the meter per car.
They are hoping to become Lyft, or Uber, or the like, while operating as a car manufacturer in the meantime. Good luck. That’s the kind of self-renewing straddle that incumbents find so hard to accomplish. Will they be willing to accept Amazon-sized minuscule profits and plow profits back into disrupting their markets faster than others — like Amazon, Apple, Google, and Microsoft — will be doing?
It’s an easier bet to say that Uber — and maybe Lyft, although they are facing strong headwinds — might start building their own cars, and get out ahead of the auto companies, just like Amazon, Apple, Google, and Microsoft will. The brand value will come from those defining the most unique aspects of the product, and that won’t be automotive: it will be the user experience. You might choose a future Uber over a Lyft because it integrates better with your smart phone, not because of the seats or steering.

Platforms and crowdsourcing: The office of the 21st century

“Disruption” is one of the most overhyped concepts of the last ten years. A Google Trend search for “disruptive innovation” shows a steeply rising graph, and you can hardly open a professional news website without reading stories about whole sectors being disrupted. Given that “business as usual” is apparently undergoing a profound transformation, how this will impact the people doing the actual work in our economy? One logical consequence is that the way people work and earn money will also radically change. How this will be different is a direct result of the new dominant organization model that is currently emerging.

What do YouTube, Airbnb, and bitcoin have in common that distinguishes them from CNN, Hilton Hotels, and the average bank? The answer is that the former are all platforms. We are witnessing the death of the decades-old industrial organization model, which is being replaced by the organization model of the 21st century: the platform.

What makes a platform a platform? Patrick Savalle’s 2008 book TeamPark: From Crowd to Community lays out the parameters of the platform organization model. It describes how a platform organization provides an infrastructure for crowds of people to create value through an organic rather than a mechanical bureaucratic process. Communication on a platform follows the biological principle of “stigmergy,” which is how ants manage to perform complex tasks without central command and control.

Typically, a platform organizational model has these three features:

Crowdsourcing of resources: Whether it’s a room on Airbnb or knowledge on Wikipedia, the value on a platform is created by mobilizing resources that aren’t necessarily owned or controlled by the organization itself. A major advantage of the platform is that it doesn’t have to invest in all of these resources. Its reason for existence is simply to create synergies between them.

Asynchronous communication: Millions of people simultaneously drive their cars on the road every day without linear planning and direct communication between them. In much the same way, large groups of people can also perform complex tasks on a platform together without having to coordinate their communication in real-time, or even having to meet. For example, Github is home to millions of software repositories, which are often produced by open source developers.

Self-organization: As the behavior on the platform is organic instead of pre-planned, it might create never imagined results. Who could have imagined the incredible diversity in the iTunes App Store, for example?

The direct consequence for the future of work is that the 21st-century office is the platform, without physical boundaries that bind people and teams unilaterally to one location or project. Online platforms are where people will go to add value, and get paid for it. Millions of people are already collaborating productively every day on social networks, forums, Q&As, wikis and other collaboration platforms. This is why mainstream corporations are now heavily investing in “social” intranets, which are essentially platforms to utilize these powerful tools for the internal organization. But companies are generally trying to fit these social technologies into traditional industrial processes and procedures, creating a strict line between inside and outside. Obviously, this is not going to work. 

It’s necessary for businesses to completely rethink their processes and how they reward people, which also means that they should stop rewarding based on linear metrics such as time and predefined and assigned tasks. On a platform, everyone is rewarded based on the actual value they produce. A beautiful example of this is GiffGaff, a U.K.-based telecom operator that pays its customers for running its customer support platform. The company also crowdsources sales from its customers and offers financial rewards for referrals.

The crowdsourcing of labor through platforms is still in its infancy and is not yet at the heart of organizational planning. It is, however, gaining considerable mainstream traction in diverse areas ranging from software development to open innovation, from help desks to content creation. Companies like Google and Samsung are paying serious money to freelancers and to their own internal developers to contribute on the Github platform to open source software projects like Linux. A corporate giant like Unilever uses oDesk to facilitate its flexible workforce policy. London’s top university, Imperial College, uses its community of students and alumni to crowdsource research for corporate clients, and distributes the fees among the contributors using Mobbr’s crowd payment functionality (disclosure: I work for Mobbr).

One of the corporate frontrunners in crowdsourcing labor is General Electric. It has partnered with Quirky to crowdsource product innovation. It uses the data scientist community Kaggle to crowdsource algorithms for air travel flight paths and uses GrabCad to crowdsource engineering solutions. FirstBuild, through its partnership with crowd-based car manufacturer Local Motors, takes crowdsourcing a step further. It uses a crowd of professionals and enthusiasts to ideate, design, prototype, refine, build and commercialize home appliances.

FirstBuild itself is merely the platform that facilitates the entire flow of value. It offers proof that crowdsourcing is not something that is only done online — and shows that it may well be the template for the future of work in the 21st century.

Ernesto Spruyt is chief of growth at Mobbr, the world’s first crowd payments platform for the collaborative economy that makes crowdsourcing online work rewarding for everyone. Prior to joining Mobbr, Ernesto founded Larive Russia, a market entry consultancy based in Moscow, and ran several projects in the Dutch startup scene.

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