One of the largest automakers on the planet, Ford plans to remain relevant in the digital age by transitioning from a product brand to a product and services brand.
American car ownership is down, particularly among the millennials whose spending power is in the trillions. That wouldn’t bode well for Ford, the second-largest automaker in the country and the fifth in the world, except that Ford doesn’t considers mobility, not cars, to be its primary business.
Cars are a big part of it, of course. But Rich Strader, director of emerging at IT at Ford, points out that nobody buys a car because they need a vehicle.
“Consumers don’t buy products; they solve problems. Nobody’s problem is that they need a car. The basic need is go get from Point A to Point B,” says Strader. “We need to evolve from being a product-driven company to more of a product- and service-based company.”
Emerging opportunities
There are a lot of factors in the decline in car ownership. They’re expensive, and as more millennials gravitate toward cities and become more environmentally-minded, owning a vehicle just doesn’t seem necessary. But none of those things will change people’s need to get somewhere else, and Strader has a few ideas to that end.
One is a shuttle service that’s like a combination of Uber and the city bus. If a user downloads the app, they can summon a shuttle full of other people headed in the same general direction. The other passengers would make it cheaper than Uber, and it’d result in fewer cars on the road – less traffic and less emissions – while still solving the user’s primary problem.
“If someone can’t walk very long or if it’s raining, they’re not going to want to walk four blocks to the bus. As things expand, it’s going (Read more...) be a more viable option because there won’t be another option,” says Strader, who notes that Uber is at the mercy of the cities it serves. Uber was banned from three German cities in November, for example, while its future is questionable in Montreal and Philadelphia.
Executing something like this comes with its challenges, a big one being timing. Not going to market at exactly the right time can mean the end of a product, service or brand before it’s even begun. Still, Strader thinks it’s key to expand into what he calls “mobility services” in order to remain competitive in the future.
“There’s a risk that a vehicle will become commoditized like a phone is commoditized,” he says. “Have you heard anyone talk about Zune lately? The difference was in the ecosystem. Zune does exactly what an iPod does, but it didn’t have iTunes or the always-on connection to customers that Apple has. Apple evolved its product to take advantage of the ecosystem and evolved the ecosystem to take advantage of the product.”
Core business
That’s not to say Ford will move away from cars as a product. It continues to innovate in that space, making cars smarter like all relevant automakers.
Strader’s favorite smart feature is the vehicular infotainment system that allows drivers to control their phones, music and navigation systems with their voice, hopefully decreasing the number of accidents caused by people looking at their phones.
To evolve the product side, Strader thinks it’s crucial to really know customers, an area Ford is focused – a Ford Focus, if you will – on improving. The average customer spends 900 hours in the car each year, but only four hours interacting with the brand – and that includes the initial purchase at the dealership.
“That’s 896 hours we’re not finding out if you like the experience, if it’s average or if it’s awful,” says Strader. “We don’t know what you use the car for: hauling big loads, dropping kids off at soccer practice, using self park. We’re not getting feedback because we’re not in your lives.”
Customer experience encircles the infinity symbol that represents Ford’s mission. One on side is what exists – Ford’s core product and heritage as a brand – and on the other, what’s emerging, which refers to the services Ford can provide.
Ford aspires to not only live in the middle of that infinity sign, taking some inspiration from the company whose stick prices recently became the most profitable in the world.
“What is Google going to do next? Whatever they figure out they can do next,” says Strader. “We think you have to be engaging upfront in experience to figure it out; nobody has the answer.”
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