There is a book called “The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail” by Clayton M. Christensen, published in 1997. It describes the challenge successful companies face when they ignore or underinvest in doing new things. And what happens when companies keep doing this mistake for long enough. We have seen it a lot even during the last 20 years. You can take Kodak as an example. Company which used to be the best of the best in the world of photography and completely lost everything when digital formats took over the show. Another good example is Nokia. They dominated the market of so-called “smartphones” up until the iPhone moment and after that were completely crushed by their new competitor. And so on and so far, I’m pretty sure you can name suitable examples yourself easily.

Why would a big company miss an opportunity and lose to some unknown and underfunded challenger coming at it out of the blue? Well, usually management says that all these new shiny things are targeting a market which is way too small for them. Or that this new product is insufficiently profitable. And it is... true, actually. At least, in the beginning. The problem is that by thinking this way companies are risking long-term failure. In other words, by doing everything “right” at any given point of time one can still fail long term because of over-fitting for a certain environment and its constraints.

I personally think that the name "Innovator's Dilemma" is not correct. What book actually describes are challenges with regards to innovation itself - that’s right. And the subject of this problem is a successful company struggling to adapt to a new reality. But such companies are rarely the ones doing innovation. That privilege and duty usually belongs to smaller and less resourceful counterparties. So, actual “innovators” have another puzzle to solve. It was best described by Henry Ford in his very well known quote: “If I had asked people what they wanted, they would have said faster horses”.

Imagine, that your task is to convince the general audience to buy the very first car. Surprisingly, you end up competing with a horse. The entire market demand is about faster horses, stronger horses, more beautiful horses, horses with better stamina and so on. Basically, everybody needs better horses in any way. Your clients want that. Entire infrastructure of the world is shaped around that. Your product is constantly compared with horses and added to the list of horses available, even though it is not a horse and, perhaps, a bit more expensive than a horse. And your investors are rightfully asking about your total addressable market, which is tiny in the beginning if you compare it to horses. So, as an innovator, you have to make a choice or strike a balance between past and future. Imagine how much inner resources and self-confidence it takes! You need money to keep doing things you do, but you refuse to sell what everybody is asking about. Crazy, isn't it?

That is the real innovator’s dilemma, in my opinion. Do you want to be successful by doing conventional things or do you want to risk it all and to shoot for what you believe is the right thing to do? It doesn't take a lot of courage to sacrifice some of your profits in exchange for R-n-D to solve innovation dilemma. But it does take quite some guts to put all your chips on the table when you actually have very little of them as an innovator.

Because of those challenges, sometimes the market is just stuck extorting ROI from existing technologies which are long outdated. If you think about it, production companies are not really incentivized to move forward to the new generation of things before they sell what’s in their stock already. Even if technically they could make a better product already it doesn’t mean they want to do that. That’s why nobody on the market could built an iPhone before 2007, even though some companies were in a far better position to make it happen faster than Apple. 

My impression is that the mobility industry, especially car production, is stuck within innovation dilemma. As we discussed previously, vehicles on the road are 2-4 generations behind what's actually possible and needed. But not because they have to be. No, there is no problem with tech. We are just... well... stuck. And I’m not talking about self-driving cars here. Forget it. Nothing crazy. Most of the things we actually need for fleets are very-very basic but somehow not possible for the majority of the vehicles without retrofit solutions with installation of additional hardware. While some car makers claim that their cars are “fully connected”, that’s mostly just not true. 

In order to be precise and fair, let’s spend some time and define what our expectations for a modern vehicle could be, should we?

It all starts from a basic telemetry. Any large fleet manager is interested in very straightforward numbers, such as total mileage of my vehicles, charging status, charging history, current battery or fuel levels, tire pressure, liquids status, hardware and software errors, maintenance warnings and so on. Most of the time we need the data to arrive in more or less real time or maybe once every 10-30 seconds. Getting it in the background, in a form of passive telemetry, is fine. In some cases though, - such as start of a ride, end of a ride, beginning of worker’s shift, - I would like to be able to fetch the latest data, because I want to know, for example, that the vehicle is locked and charging. 

Can you do it for your cars without additional hardware? Nope, not today.

Next thing. I would like to know where my vehicles are and where they are headed. Obviously, GPS satellites were launched years ago. All car makers are actually forced to have necessary hardware installed on-board of every vehicle produced. But there is a difference between having the hardware and permanent access to the data this hardware generates. There is a gap between being able to find out where a specific vehicle is right now and being able to monitor the entire fleet constantly. I want to continuously receive updates about my vehicles, so I can do better planning or define geo-fences to prevent theft. And I can’t.

Somebody may raise privacy concerns here, and that is an absolutely correct thing to ask about. But there are so many legit cases, where sharing vehicles location actually makes a lot of sense. And it is being done right now but by using other means of communication. For example, I used to work for a large ride hailing company. When you order a taxi in the app, some free driver accepts a job offer and, as a result, you see car's position on the map. But this location is provided by the driver's personal phone, not the vehicle itself. In this scenario companies use Android and iOS to compensate for the function which should be easily available from the vehicle. 

Same limitation is true for public transport - you need to install additional hardware there. Same is correct for service and emergency vehicles. And delivery. And so on. In the logistics industry access to vehicle’s GPS data could allow additional driving safety controls and better capacity planning at fulfillment centers. Companies could launch geo-bound business processes using this data and save tons of CO2 by simply analyzing their fleet usage patterns and utilization. Nothing of this is, sadly, possible without adapting external devices at the moment.

In order to share a car between multiple drivers, the system has to control the vehicle's central lock remotely. That's a basic requirement. If your car producer has an OEM application, - and most of them somehow do nowadays, - you as a person can control your own vehicle remotely for years already. But when it comes to the scale of fleets that solution won’t work. First of all, I don’t want to share the same account between all of my drivers. Second, even if I can give limited access via the OEM app, I don’t want to have multiple applications installed: one for VW in my fleet, one for BMW, one for Tesla and so on. Third, remote access should be available for my customer support and back office people so they can assist my drivers when the help is needed. That's the basic level of sharing - remote, online. Mostly not available out of the box.

In theory, we can assume that our rides always start and end in the location with perfect Internet connection. But in reality that’s not always the case. Often vehicles are taken and left on a parking spot located multiple levels underground. In order to support such places, we need a little more advanced capability - offline virtual keys. My driver’s app should be able to fetch keys in advance and then open and close the car without any connection available for both phone and car. Sounds challenging, but actual technology to implement that is available and widely used for years. Matter of fact, it is applied every time when you pay from your bank account using the NFC chip in your phone, for example. It is safe. It is reliable. It is known. And it is not possible to use for almost any car. Producers keep raising legal concerns and technical excuses, but it escapes any rationally thinking human how it could be possible that technology reliable enough to purchase a car is not trustworthy to open the very same car. Meanwhile, because of this limitation, the most widespread retrofitting solution on the market assumes taking the physical key and putting it in a box where this key can be physically or electronically controlled.

Speaking about keys. Another step in implementing shared access is making the process actually completely keyless. Because managing physical keys is hard. It is costly. It is not convenient. They are getting lost all the time. They are getting damaged all the time. They are getting stolen all the time. Obviously, leaving keys in the car or in the box somewhere around the car is not particularly safe either. I don’t want the key for my shared vehicles. For many modern cars there is no actual key even! It is a keyfob or just an RFID card. So, ideally, the key should be completely removed from the picture. But it is still there and still required in many cases. Missing physical keys sometimes can prevent a driver from locking the vehicle or charging it. Even if access was previously given using remote lock control or offline virtual key. That is another example of an obsolete attribute staying around. Again, if I really want I can easily use my phone as a key for my own personal car, but that somehow can not be done for corporate fleets where it is needed the most.

In the last couple of years we actually noticed some efforts from car makers to implement at least some bits and pieces of telemetry, monitoring and access control. But they do it in their own way. Instead of rethinking existing hardware and software solutions, frequently a new system node is being added to a car. This sub-system is responsible for collecting and transferring data or even dealing with a central lock. But, because it is built on top of existing platforms without changing and adapting it too hard, everything works in parallel with the main car operating system. As a result, this device is able, for example, to lock and unlock the car, but the immobilizer kicks in when it happens. Or if something prevents the car from being physically locked (e.g. open trunk or window) there is no way to get any feedback about this malfunction. 

It is clear that true and complete sharing is only possible if the car operates as one whole smart system well connected into the infrastructure around. Our final goal can not be achieved by adding something on top and by the way. Really smart car should be smart to its core. 

When I’m getting into a shared vehicle I don’t want to drive another person’s car. I want to drive a car configured for me personally. Therefore, it should be possible to control mirrors, seats, heating, sound level, Bluetooth devices, acceleration and braking, and even AC based on who is the next driver of the car. 

As a professional, I’m driving not for the sake of driving, but only to achieve something valuable for the business. I'm going somewhere to do something. So, I want the destination of my next meeting to be preset for me in navigation of the vehicle. And as a fleet manager, I want my system to be able to plan and control the charging process of the car in a reasonable way taking into account information about upcoming trips. 

Can you do that with your corporate vehicles right now? No.

That is all cute. But I’m just a fleet manager! Remember? I’m buying what is available on the market. And, surprisingly, I can not purchase what’s not available. Makes sense? So, what do you want me to do, my dear?

Well, I have good news. Not all car makers are born equal. Some are doing a good job of actually making their vehicles smart, shareable and connected. One specific example is Tesla. I’m not living on the moon, sadly, so I have to acknowledge that for your specific organization this option at the time may be a bit more controversial and less conventional than others. 

But:

At the end of the day, we need to remember: average car leasing is 3-5 years long. A lot of things may come and go meanwhile. We should be working with what’s best for the job.

Just to be clear, I’m not saying that all of you should start buying Tesla tomorrow. You and your companies may have other preferences and constraints. So, it is up to you and only you to decide. We all may like or dislike Tesla. But we have to admit that their team has given us good proof of what’s possible. We can say for sure, that there is nothing preventing car makers from building fully connected cars. Now. It doesn’t require an impossible amount of resources, there are no hidden caveats or barriers impossible to jump over. If that is not done by now the only reason is team's inability to make it happen. Not the environment, economics or physics. It is a question of proper motivation, will power and rightfully aligned incentives in the industry.

And, please, do not underestimate your power. You're paying for the party to roar. Did you know that the majority of the cars in the EU are purchased by corporate fleets or other non-private buyers? Let this fact sink a bit and take comfortable position in your brain. Taking it into account, does it make sense that from a functional point of view vehicles are shaped and designed to fit an individual's needs? You're right. It doesn't.  

Looking into the past, you can notice that a lot of amazing services rely on underlying platform capabilities. For example, Netflix and Amazon would not be possible without predictable and fast  foundations provided by national post. They didn’t have to build predictable and well oiled logistical chains themselves from scratch. Capital expenses would kill them otherwise. In the same way, Uber and Airbnb could only work once fast mobile Internet along with iOS and Android based phones made their way to big cities. And the same is unavoidably true for cars. Modern vehicles will eventually become platforms new mobility services will be built upon. 

And, as usual, the future is here. It just is not evenly distributed. So, the question of the day is who is going to enjoy building and using a new generation of services? Is it going to be you? Or you'll keep struggling with hardware installations, keys, poor data and other limitations, so only the next generation of leasing providers, fleet managers and drivers will see the future? In other words, I'm asking here how are you going to solve your own innovation dilemma? You have all the power to drive our industry forward. Today.

So, it is up to you to decide what do you choose between a horse and a car.