Driverless Car (Part 5): Many Disruptions Loom

<p>The Google car is nothing more than a mashup of widely available innovations. Similarly bold killer apps will upend every information-intensive industry.</p>

<p>But doing away with the need for horses did much more than mean it was good to be Henry Ford and no longer so good to be a horse breeder. The &ldquo;horseless carriage&rdquo; had far-reaching effects that not only redefined the transportation network but also provided the basis for the modern economy and even changed how we live, by making suburbs possible.</p> <p>The &ldquo;driverless car&rdquo; will likewise change dynamics in the economy and in our personal lives in ways that are hard to predict at this remove. (The device will also get a real name, focused on what it is or does, not on what it lacks.)</p> <p>Just in industries directly related to autos, trillions of dollars change hands each year&mdash;flowing to and from auto insurers, auto financiers, service and repair shops, rental agencies, taxi operators, fleet managers, oil companies, transportation and logistics companies, emergency rooms, health insurers, medical practices, personal-injury lawyers, government taxing authorities, road-construction companies, parking-lot operators&nbsp;and on and on and on. Driverless cars will inevitably reduce the need for a lot of that spending&nbsp;and throw much of the rest up for grabs.</p> <p>But&nbsp;if history is any guide, people in these downstream industries feel that it will be decades (at least) before change is pervasive, and therefore decades before they have to worry about their own industry&rsquo;s collision with the disruptive change. Until then, the reasoning goes, companies in industries peripheral to car-making can simply watch as automakers battle among themselves and with Google.</p> <p>This is a dangerous point of view. It is the main failing that this series has tried to address.</p> <p>The raw technology is more developed and improving faster than most observers realize. And several scenarios could dramatically accelerate commercialization and adoption.</p> <p>In addition, the calculation that disruption will not happen until driverless cars are prevalent could be faulty. A modest number of intelligent cars can change the whole dynamic, long before widespread adoption of driverless cars.</p> <p>So, it is important for market leaders in downstream industries to get into the game, rather than be spectators.</p> <p>Even beyond the world of autos, the Google driverless car should be a wake-up call about the pace of disruptive technological change that looms for every industry. Or, taking an optimistic perspective, the driverless car demonstrates the kind of game-changing killer apps that are now possible in almost any industry.</p> <p>While the Google car feels like it comes straight from some science fiction movie, it is nothing more than a mashup of widely available technological innovation&mdash;combining mobile devices, ubiquitous cameras and sensors, social media, the &ldquo;cloud&rdquo; and &ldquo;big data&rdquo; analytical tools. Similarly bold mashups can upend any information-intensive industry.</p> <p>Mary Meeker, the noted venture capitalist and industry analyst, contends that technological forces are <a href="">putting more than $36 trillion of stock-market value up for &ldquo;reimagination&rdquo; in the near future</a>. That $36 trillion is the total market valuation of public companies in the 10 industries that are most vulnerable to change over the next few years&mdash;financials, consumer staples, information technology, energy, consumer discretionary, health care, industrials, materials, telecom and utilities. Companies will either do the reimagining and lay claim to the markets of the future or be reimagined out of existence.</p> <p>No history of success will protect incumbents if they put themselves on the wrong side of innovation. Borders, Circuit City, Blockbuster and many more went from thriving business to out of business in almost no time. Think of how recently Nokia and Blackberry were on top of the world and how they&rsquo;re now irrelevant. And change is still accelerating. The near future will be even more brutal and more lethal, with faster cycle times, than the recent past has been.</p> <p>As I have suggested in my analysis of Google and of Big Auto, the solution for incumbents and new entrants alike is to follow the innovation roadmap that Google demonstrates: Think Big, Start Small and Learn Fast.</p> <p><strong>Thinking big</strong> means innovators must consider the full range of possible futures. Like Google, they should dare to dream big, focusing on the &ldquo;killer apps,&rdquo; new products that can rewrite the rules of an organization or industry, rather than just looking for incrementally faster, better or cheaper products (as Big Auto is currently doing).</p> <p><strong>Starting small</strong> means that, rather than jumping on the bandwagon for one potentially big idea, companies must investigate multiple potential ideas and break them down into smaller pieces for testing. Like Google, successful innovators defer important decisions and keep their options open until they have real data, rather than make decisions early, based on intuition and experience. In addition, successful innovators take the time to make sure that everyone&mdash;the executive team, employees, partners, any agents and maybe even customers&mdash;are working in unison, rather than having people pay lip service to a vision while actually working at cross purposes.</p> <p><strong>Learning fast</strong> means taking a scientific approach to innovation. Successful innovators conduct extensive prototyping before they even get to the pilot phase&mdash;let alone the big rollout&mdash;so they can gather comprehensive information about their attempts at innovation and quickly analyze both what&rsquo;s working and what isn&rsquo;t. The successes also develop the institutional discipline to set aside or alter projects as soon as it&rsquo;s clear that they&rsquo;re not working.</p> <p><strong><em>Series Conclusion</em></strong></p> <p>Think back to the transition from horses to cars and note that cars were initially called &ldquo;horseless carriages.&rdquo; Cars were defined by what they didn&rsquo;t have, just as the &ldquo;driverless car&rdquo; is being defined by what is being removed from the equation.</p>

Chunka Mui

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Chunka Mui

Chunka Mui is the co-author of the best-selling Unleashing the Killer App: Digital Strategies for Market Dominance, which in 2005 the Wall Street Journal named one of the five best books on business and the Internet. He also cowrote Billion Dollar Lessons: What You Can Learn from the Most Inexcusable Business Failures of the Last 25 Years and A Brief History of a Perfect Future: Inventing the World We Can Proudly Leave Our Kids by 2050.



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