Linking the transport backbone to the future of urban mobility

5 Jun 2017

Marko Javornik, VP and GM of mobility and travel at Comtrade Digital Services. Image: Comtrade

Marko Javornik, VP and GM of mobility and travel at Comtrade Digital Services, discusses new business models in the urban transport ecosystem.

Urban areas are changing and so are the means of transportation within the cities. The model of the clear dominance of private cars in cities is simply not sustainable and not up to date any more. We can no longer deny the changes in the urban mobility ecosystem.

There are many initiatives and projects evolving across the globe that aim to revolutionise and improve the modern mobility and transportation system. Those projects are all approaching the gaps in the current ecosystem from different angles, but the greater purpose of all is to bridge the gap between private car ownership and scheduled public transportation.

Future Human

And, while the approaches couldn’t be more diverse, this niche market is already generating an accumulated value of more than $100bn, showing the tremendous market potential of mobility-as-a-service (MaaS). But, for now, there is no consolidated approach to create a holistic and connected MaaS network.

However, this much can be said: even in a disrupted mobility ecosystem, public transportation and cars will be the backbone of transportation, just as they are today. Only with the help of modern technologies can the utilisation be dramatically increased – and the mobility experience for users accelerated – by linking this backbone with new mobility options, enabling them to use the appropriate vehicle mix for every single one of their journeys.

But in what form will this mobility service disruption come? Nobody has the right answer to these questions yet. All we can see for now is the cause of changes in the form of pollution, shortage of space, high costs or congestion, as well as the things that will facilitate those changes, such as digital technologies, servitisation and new business models. While MaaS can help solve many of the current major issues, and the broader vision is spreading among the population, the real implementation is highly complex and uncertain.

It has become clear that one of the major challenges – if not the major challenge – on the way to the broad adoption of mobility services, is a wide choice and development of new business models that fit the new digital economy and facilitate a seamlessly connected ecosystem.

There are several theories about how business models should evolve and how a market with new business models could be structured, but there is no clear answer to it, which is why this question is the subject of numerous studies at the moment.

Open API platforms

One of the ideas is to build all services on digital platforms and connect them into an open API economy, facilitating data exchange and thereby fostering growth and improvement of the system. There are already many examples for successful platform-based businesses, including Alibaba, Airbnb and Uber.

The platform enables businesses to unlock new sources of value creation and supply. They move from the successful just-in-time to not-even-mine principles. They use data-driven tools to create community feedback loops and utilise the asset of their constantly growing communities, enabling them to create value from the user base. With instant community feedback, platform businesses can quickly react to changes and always ensure they fulfil their users’ wishes and give them the power to actively contribute to the shaping of the platform.

Diversifying the fleet

Other theories group all available modes of transportation and vehicle types into a hierarchy as market segmentation, to ensure an appropriate division of the market value among all involved parties. Thereby, it needs to be taken into consideration that we will have a more diversified vehicle fleet in the future, including so-called light electric vehicles to carry one or two people across short distances, last-mile vehicles (such as Segways or electric scooters), autonomous minibuses and more.

All these options provide the opportunity to personalise each user’s journey fully, something that has not been possible until now. All of these service providers and vehicle manufacturers want to ensure their place in the future market framework without harming the core business of the established mobility players.

The future of urban mobility

Mobility services generally have high power to disrupt the urban mobility market because they focus on the single most important thing: transporting the user from A to B with only the tap of a finger and at a low cost.

Mobility and car ownership has long exceeded the original purpose of moving people from one point to another. It has evolved into a luxury market by continuous improvement of the offered vehicles, automatically focusing on the most demanding and sophisticated customer group, while leaving aside the people who just want to get easy transportation without having high requirements of the vehicle itself, as long as it fulfils its purpose.

This exact development was already described by Clayton M Christensen in The Innovator’s Dilemma. This market position is the exact set-up for newcomers to get back to the roots and purpose of urban mobility, and give people access to easy mobility on demand, without the hassle of owning and paying for a vehicle.

Most urban citizens are currently underserved in terms of easily accessible on-demand mobility – and this is where mobility services come into the game. But as nobody has the exact answers to the how and when yet, it will remain interesting.

By Marko Javornik

Marko Javornik is a software technology expert, specialising in digital transformation and the future of mobility. In his current role, he is vice-president and general manager in charge of mobility and travel at Comtrade Digital Services. He will act as a mentor at the upcoming Comtrade Business Hackathon, which will take place in Berlin from 9 to 11 June, tackling the biggest questions regarding the future of MaaS.