On January 11th at the North American International Auto Show in Detroit, Mark Fields, the CEO of Ford Motor Company, declared that he no longer sees its future as just an auto company, but as an auto and mobility company. And with this, he announced the upcoming launch in April of FordPass, Ford’s new digital and physical marketplace platform inspired by the company’s desire to create true authentic long-term relationships with its customers and continue to improve its products and services.
When I listened to Mark Fields discuss how FordPass was inspired by the company’s desire to emulate the successful customer-centric strategy of companies like Apple, Nike, Nespresso, IKEA, and Disney, I couldn’t help but smile. As you may or may not know, I launched Brady Capital Research six years ago to focus on companies making a positive difference in the world and the foundation of my UBER-nomics thesis is based on the two years of research I did into how customer advocacy would drive abundance of demand as influence becomes democratized in the new Social Era.
Interestingly, Ford’s announcement came only weeks after General Motors (GM), announced it would be making a $500 million strategic investment in Lyft and only a week prior to GM’s acquisition of recently shuttered car-sharing platform Sidecar. Back on November 16th, when I wrote the article “A Wake-Up Call for CEOs from Amazon, LinkedIn, and Expedia” discussing how those three tech companies had made recent strategic moves into the Sharing/On-Demand Economy, I never imagined that they would be joined so quickly by century-old Industrial Age stalwarts like GM and Ford. This is making me even more confident in my prediction that over the next decade, we will see the leading companies from every industry sector embrace some form of UBER-nomics as they seek to shift their business model from scarcity to abundance.
The analyst in me is curious to watch Ford’s transformation from an auto company into an auto and mobility company. For example, last year in the US alone, Ford sold 2.6 million vehicles at an average sales price of $35,000, generating $91.6 billion of revenue, which based on its 10.2% operating margin, yielded $9.3 billion of pre-tax income. So I am guessing that Ford is not going to want to sacrifice this product cash-cow anytime soon. But regardless, I commend Mark Fields and his team for being proactive in addressing the recent convergence of structural shifts in the following three forces:
- Technological: FordPass is a digital platform that leverages recent advances in technology such as smartphones, mobile apps, cashless payment systems, and online marketplaces
- Economical: FordPass recognizes that Millennials value access over ownership
- Societal: FordPass embodies Ford’s new accessibility-focused social mission “to rethink the way you move”
As I proposed in my November 30th article “The UBER-ized Consumer: A Company’s Worst Nightmare?”, Airbnb and Uber are subconsciously raising our consumer mindset and expectations by meeting functional, emotional, and psychological needs and desires we didn’t even know we had. And through FordPass, Ford is looking to meet the evolving needs and desires of the UBER-ized Consumer by advancing its consumer value proposition in terms of:
- Functional: FordPass offers superior convenience as you can use the mobile app to remotely start your car, connect 24/7 with a live personal mobility assistant through FordGuides, and locate and pay for parking through FordPay
- Emotional: FordPass will help Ford strengthen the emotional connection its customers have with the Ford brand through FordGuide and FordHubs, its new retail storefront innovation hubs
- Psychological: FordPass will help Ford create a psychological attachment with its customers and create a movement through its new accessibility-focused social mission “to rethink the way you move”
Under the new laws of UBER-nomics, the following economic forces will act as growth catalysts for Ford:
- Long Tail of Supply – although Ford is not building its own long tail of supply, it is accessing a long tail of inventory through a number of different initiatives:
- Ford is accessing the long tail of vehicles left at airports by travelers through partnering with FlightCar, a Personal Asset Sharing company founded in early 2012 with a sustainability-based social mission “to reduce the number of parked cars sitting idle at airports by connecting them with travelers that need cars”
- Ford is looking to build a long tail comprised of its own fleet of shuttle vans through its “Dynamic Shuttle Service” which it is currently beta-testing with its employees
- Ford is looking to build a long tail of its own vehicles for share through a shared leasing program which it is currently pilot testing in Austin
- Blue Ocean of Demand – Ford is looking to expand its Total Addressable Market beyond its existing customer base by tapping into a new pool of former and non-Ford owners looking to access its complimentary innovative FordPass services as well as Millennials that are seeking access to vehicles rather than ownership
At the recent Urban Land Institute conference in Paris, Mark Gilbreath, the founder of LiquidSpace (a Corporate Asset Sharing company), gave a fascinating presentation in which he concluded by proposing the radical concept that we are seeing the inevitable move to the era of Peak Car, which will be followed by the era of Peak Office. And just like his company has created a new legal framework to enable landlords and tenants to unbundle the traditional long-term office lease, I wonder how long it will be before we see companies like Ford unbundle their vehicle lease into a similar standardized license. If like myself, you have had the unfortunate experience of having gone through the incredibly stressful and huge financial burden of trying to exit out of the ironclad vehicle lease agreement, I’m guessing you would also welcome a more innovative and flexible alternative.
Back in 2001, when I attended the North American International Auto Show as an Associate Analyst working on Deutsche Bank’s Global Auto Team in New York City, I never imagined that fifteen years later, Ford would announce it no longer saw its future as just an auto company. I can’t help but think about what this means for the future of other companies. Last week I had the opportunity to present my UBER-nomics thesis via a video Skype call to Professor Gregory Kivenzor’s MBA class at the University of Connecticut School of Business. It was fun to share my ideas and it motivates me even further to finish writing my book. The book, currently titled “UBER-nomics: The Blue Alpha”, is a radical business strategy book based on the six years of research I have done into the new field I call abundance economics. As Mark Fields and his team at Ford has discovered, business transformation starts with questioning the status quo and becoming a “rebel with a cause”.