A New Enterprise Approach: Megacity Mobility [M2

]
David Berdish Sustainable Business Strategies, Ford Motor Company Prince of Wales Business and Poverty Programme November 13-16, 2006

Agenda
• • • • Background: Sustainable Business Strategies Emerging 21st Century Megatrends A New Enterprise Approach: M2 Work Plan and Scope

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Sustainable Business Strategies in perspective
• Key activities 2000 to date:
– Stakeholder Engagement – insight into changing societal expectations and innovative community initiatives – Disclosure – award winning Sustainability Reports – Sustainability Risk & Issues – learning and management of emerging issues notably climate change and human rights

• Focus progressively shifting from risk management to longer term opportunities of sustainable mobility
– Unifies wide ranging initiatives – Responds to 21st century mega-trends – Identifies new forms of added value and innovative business models for FMC

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Unifying wide ranging initiatives

SMG Technologies

Piquette Project

CO2 roadmap National Dialogue

Human Rights

SBS
Environmental Management Reporting

Carbon Offset Green Bonds

NGO Engagement

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2006 Strategic Review
• SBS identified external threats and opportunities relevant to Ford’s business, based on both internal and external research and the results of the SLC Learning Summit in May – these observations, and our responses, were presented to Automotive Strategy as input to the 2007 Strategic Plan

• •

Climate change and associated regulation will lead to new vehicle standards and increased costs Increasing resource costs, and urbanization and congestion – particularly in growing megacities – will cause customers to change purchasing behavior and explore other means of transportation Shifting demographics and social inequality will lead to increasingly diverse and fragmented markets

Addressing these issues can create vast new opportunities for the company
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21st Century - Megacities
• 2015 = 33 megacities (27 in developing world): a major shift of population from rural to urban areas • 39 of the 50 most populated cities will NOT be in the United States, Western Europe or Japan (a major shift in per capita income) • 2025 = 5 billion in cities • 2050 = 450 megacities mostly in Emerging Economies (vs. two in 1950) • Two thirds of world population in cities: ‘social disintegration and horrific urban poverty’

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Ford should respond to these factors
• Megatrends are resulting in megacities with inevitable shifts in customer base and market needs • Present Ford business model will have to adapt to meet radical new market requirements • Affordable & city-effective transportation solutions will require non-traditional models to deliver megacity mobility • No competitor is yet leading the way in meeting/shaping the market needs resulting from these fundamental shifts • Ford has a real opportunity to establish competitive advantage if it can develop the solution sets that meet the new demographic and economic dynamics
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Meeting the needs in Mexico City
• 18 million people with a per capita income of $15,000 • One of the largest, busiest and cheapest bus systems in the world • Ozone exceeding WHO limits 300+ days per year • Over one million with permanent breathing problems

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Meeting the needs in Dhaka
• 13 million people with a per capita income of $2801 • 90% of schoolchildren with lead levels which impair developmental and learning abilities • The largest number of rickshaws (400,000) in the world

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Meeting the needs in Bangalore
• 6.7 million people with a per capita income of $842 • 1.4 million food ration card holders, 25% live in slums • 300,000 IT employees travel 20km in 2 hours

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New Mobility Defined
• SBS partnered with U-M to explore sustainable mobility solutions as a result of Mobility 2030 and Changing Drivers:

• Shifting our core competency (Building Vehicles  Building Ideas  Building Integration) will allow us to:
– Enter new, untapped, profitable markets – Achieve progress toward sustainability-related goals (GHG emissions reductions, etc.) – Minimize threats from new, low-cost manufacturers in the traditional market

– New Mobility demands a highly-accessible, seamlessly integrated, multi-modal transportation system – Meets individual transport needs while minimizing its negative human and ecological impacts – Highlighted Ford’s potential role as a mobility integrator

• Can we come up with transportation solutions that are lower costs to the customer than a low cost car sale? • How will the new solutions provide revenue and growth opportunity for Ford and its partners?

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A New Enterprise Approach: M2
• Creates new opportunities as a result of rapidly shifting demographics that will create huge new markets with the majority living in cities (and the needs of all levels of the economic pyramid) • Creates prototype “products and services” based on the mega-city needs and Ford's ability to deliver (skills, technology, patent portfolio)

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A New Enterprise Approach: M2
• Faced with increased competition from lowcost auto manufacturers, stricter regulation and policy standards, and immediate and pronounced climate change effects from high-impact individualized transportation, Ford has the ability to generate profits and alleviate poor conditions through new mobility solutions Recall Ford’s beginnings: at the turn of the previous century, Ford created a middle class in the United States by offering affordable options to the poor Ford can create new and different products, not stripped down or inferior ones, that fulfill identified needs Ford can rethink the problem:
– What do people need, and why? – Do they desire a product, or does the inherent benefit take the form of the service that the product provides? – What does the revenue stream look like (not a car or part sale)? – How can Ford catalyze economic, environmental and social development through innovative mobility options?
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• •

A New Enterprise Approach: M2
• Megacity Mobility is a vision for next-generation transportation • It is a highly-accessible, seamlessly integrated, multi-modal system that meets individual transport needs while minimizing its impact on ecological systems • Megacity Mobility includes personal and commercial vehicles, public transportation, other transport products and services • Value-add for current systems
– – – – Smart Integrated Clean Efficient

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Megacity Mobility: Portfolio of Solutions
Leverage capabilities to design new technologies and success
Vehicle & Infrastructure Design • Advanced power trains • Vehicle materials • Vehicles for seniors • Vehicles for congested cities • Vehicle alternatives in megacities

“Market of the Majority” Transportation Services • Planning & integration • Car sharing • Village car • Fleet services • Goods movement • Turnkey solutions Transportation Equipment • Transportation for seniors • Interactive kiosks Urban to rural / rural to urban transport • End user equipment (readers/writers) • • Remote medical transportation access • Safety systems ITS • Navigation systems • Space & route optimization • Ticketing & routing information • Electronic payment systems Business Services • Transit payment accounts • Project financing & venture capital • Mobility marketing services • Outdoor and in-vehicle advertising • Loyalty programs

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Work Plan and Scope
• Increased research on Mega-Cities and building Subject Matter Expertise, including “research library”, including:
– – – – – – – – Detroit Bangalore Istanbul Shanghai, Beijing, Chongqing, Jangling Hermosillo, Mexico City Bahia, Sao Paulo Cape Town, Johannesburg Hanoi

• Increased understanding of the needs of Mega-Cities’ citizens while we continue to leverage:
– – – – Sustainability reporting Engagement Human Rights Leadership Build Subject Matter Expertise in the Base of the Pyramid Protocol

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Work Plan and Scope
• Development of new economic “systems” in MegaCities, including a business planning approach for:
– Customers/Markets
• Citizens • Community • Mega-City Attributes • New Mobility Portfolio

– Solutions

– Stakeholders – Investors

• Partners

– Vehicle Design – Transportation Infrastructure – Technology and Logistics

• Local Governments • Local NGOs • World Bank and International Finance Corporation • Social Venture Capitalists

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