Henry Ford famously said “Any customer can have a car painted any color that he wants, so long as it is black.” Of course, Ford used the standardization of the automobile to drive a revolution in the automotive industry. In this age of a wide variety of styles of cars and even more elaborate interiors planned for autonomous vehicles, what is the relevance of a quote from the 1900s? Stay tuned.
Before shared cloud services such as Amazon AMZN AWS, everyone owned their own computers and the burden of capital management, maintenance, and scaling was left to the owner. With “computing as a service” infrastructure, cloud service providers are able to provide an infrastructure which can be shared by a large number of users. To enable this process, Amazon has built a whole host of capabilities which are dependent on a high level view of a server called a virtual machine. With this concept, cloud providers can automatically configure real machines to build large populations of virtual machines and connect them to customers.
The technology developed to effectively provide a utility level model for computing is non-trivial. It involves seamlessly providing an ability to provision a virtual machine, providing dynamic access to all of its required resources, taking care of important issues such as security and maintenance, personalizing the machine based on known user characteristics and seamlessly cleaning up such that another virtual machine can use the same physical resources. Finally, in order to make it cost effective, cloud providers have to efficiently manage the whole network through concepts of load management, dynamic pricing, and use of highly automated infrastructure capabilities.
Interestingly, this concept is not limited to the virtual world of computers. Hotel brands such as Hilton have a similar model with the concept of a virtual hotel stay. Rooms are provisioned, dynamic access is provided, security as well as maintenance happens automatically (from the point-of-view of the customer), luxury brands provide customer level personalization and there are automated services for cleanup. On the whole, it is remarkably similar. Undoubtedly, Covid-19 will force a much more emphasis on the quality of the cleanup stage, but the high level processes already exist. Also, in both the Amazon AWS and Hilton examples, the critical infrastructure processes are significantly aided by standardization of the fundamental container.
Now.. let’s examine these similar ideas in transportation.
Before shared transportation services such as Uber, everyone owned their own automobiles. Given the fact that the average utilization of an automobile is less than 5%, this is not a terribly efficient financial structure, and mobility-as-a-service companies such as Uber are able to tap a massively underutilized asset base.
However, Uber’s version of the virtual trip stops largely at provisioning. The remainder of the value stack is somewhat handled through ratings, but there are no guarantees provided to the customer. Also, fleet management is managed through a process of price signaling as opposed to direct management. Of course, the primary reason for this difference is the split in ownership between the mobility-as-a-service application and the owner/operator of the automobile. Autonomous Vehicles offer the potential to build out the whole value statement for ride-hailing companies. Public transportation, the other shared services model, does not even have the notion of provisioning, but relies on “best-efforts” in terms of providing these transportation services.
Will these models be viable in the age of Covid-19 ?
Ignited by Covid-19, transportation could benefit from a deeper thought process around the concept of a virtual trip. In this model, mobility-as-a-service providers such as uber or public transportation would explicitly build capabilities which supported a similar sensibility as AWS or Hospitality. What would that mean ?
- Provisioning: From a customer point-of-view, it would be very useful to provide certainty around provisioning for their transportation trip. This exists for ride-sharing to some degree (though explicit time-based reservations are not always available), but is not available for public transportation.
- Dynamic Access and Personalization: From a customer point-of-view, there may be special needs which are specific to the customer such as disability or heavy baggage or carrying a bicycle. It should be possible to account for these in the trip planning process when provisioning resources ?
- Maintenance and Security: Today, for ride-sharing, maintenance and security are handled by the driver. Is this sufficient ?
- Cleanup: Finally, after the trip, an explicit process of cleanup seems to be necessary. For both ride-sharing and public transportation, some concept of an automated cleanup (self cleaning oven style) seems necessary in the Covid-19 era.
- All of the operations should be possible at the individual trip level.
All of this brings us back to Henry Ford. To make all of this work at scale, some sort of standardization around individual mobility container is likely required. With that standard container, a large set of automated services in the model of an Amazon AWS can be unleashed, and this is likely to enable the next revolution in transportation.