Industrial Internet’s Impact – Drunk driving, Vanishing regional airlines & Shared cars

Soon we could be living in a world where "drinking and driving” is legalized and there will be no fatalities because of one’s impaired senses – because of connected and autonomous cars are ubiquitous, and humans won’t be driving.  There will be no need for feeder airlines, as you will be able to hop into a car and get self-driven to a major airport 3-4 hours away, while you are working or sleeping ( you can do it today too but you have to pay the taxi driver).  If one cannot drive a car, then why would even own one? Possibly this could enable the rise of shared economy, the zip car generation will put tremendous pressure on the Fords and Toyotas of the world... imagine their output falling to 10% of what it is today!

 It is no news that Industrial Internet will unleash the next industrial revolution – bigger than any we have seen or read about.  We set out to predict the future of our world using the Industrial Internet lens, and we did this with about 50 very engaging MBAs students from the Kellogg School of Management.  Using the Industrial Internet Impact Framework, we speculated, predicted and tried to paint the picture of what our world could be once connected cars became reality (which is not too far).  Below we present a summary of what the impact could be. With the advent of industrial internet, one needs to avoid falling into the trap of “incremental visioning” and predicting the future based on today’s paradigms. Just consider the impact of AirBnB and Uber, and before that, Amazon, as their success usurped entire internet industry ecosystems – think of the events put in motion and the sheer size of the gas companies once the first car rolled off Ford’s assembly line!

(A caveat – below is meant to be a provocative discourse around the potential impacts of the Industrial Internet in the context of connected cars, and brainstorming plausible scenarios that can transpire, as opposed to a concrete view around what that future will be.)

For the purpose of this discussion a connected car and autonomous driving car are synonymous.  We believe that the final horizon of the Industrial Internet will be defined by machine learning and autonomous machines.

Our focus in this discussion was centered on the disruption that Industrial Internet will create, we focused on the unintended impacts and business model implications more than other elements of the impact framework.

1. Economics
Short term impact:  Connected cars will enable manufacturers to track their products better in the field enabling them to provide preventive maintenance, leading to productivity gains across the value chain.  If we look at the insurance industry it could benefit from creating “segment of one”, as they learn about individual’s accurate risk profile.

Long term impact:  Cars are one of the most underutilized capital assets –we have to pay for them to just sit and do nothing for more than 22 hours in a day.  A shared economy could take place, ZipCars could become the norm.  What would happen to the auto industry?  Could this do the same to Auto industry what cloud did to the corporate data centers?  A big social benefit of self-driving cars is far fewer accident-related deaths, as human error is the biggest reason for traffic fatalities. Additional benefits will include greater productivity and far less energy consumption (for example, cars no longer drive around to find parking spots).

 Unintended impact:  In our view this is the most important aspect of Industrial Internet or for that matter any industrial revolution, below we present some of the possible unintended consequences:

• If one does not have to drive and get tired of driving, could it possibly lead to increased road travel?
• The shared economy will lead to reduced cars on the road and efficient use of parking spaces leading to use of real estate for more productive purposes, on the other hand parking companies will find themselves challenged with revenues dropping significantly
• Gas stations too, could soon become a “relic of the past”
• Self-driving cars could possibly replace air travel, especially feeder and regional flights, this could even create the scenario where cars come with beds
• Connected cars become one of the primary platforms for delivering entertainment and news
• Self-driving trucks could eliminate the need for commercial truck drivers

 2. Business Models

• Auto manufacturers’ primary business model could get cannibalized with demand falling by 90%
• Parking business could get cannibalized with no only 10% cars to park, or the self-driving shared cars become like planes (they need to stay in air most of the time than on ground) stay on roads more than parking garages
• Reduced demand for transit hotels used by travelers as they can sleep while the car drives itself
• Short haul flights and feeder airlines get decimated
• Car dealership will be transformed – a very different structure could arise, change in labor pool and expertise will be needed – they may not be selling cars but just servicing them and encroaching into the rental car’s business space
• Cost of trucking would decrease significantly, as no drivers will need to be paid
• Autonomous cars will impact the nature of the insurance model (with shared car services like rental companies), shifting from personal insurance to product insurance. With far fewer accidents, the trial / injury lawyer business model may (thankfully) also shrink significantly!
• Consumption of energy drinks may go down, a lot of people believe that energy drinks keep them awake while driving

3. Cultural Interactions

• People will stop learning how to drive, this will be a significant shift. Driving is not just a chore but a part of our society, movies, books – it will go from the norm to history and then to mythology
• “Drinking and driving” will no longer be dangerous or illegal … watch out breath inhaler companies – there will be no need for your products! It may also impact the revenue generated by police departments from traffic tickets
• Could possibly lead to increased alcohol consumption – one of the most consumed items by air travelers is alcohol, so the possibility is not far fetched
• There will be no age limit to drive – ah, no baby sitter needed to drop the kids to day care centers!
• Our street design will be very different, the new raw materials will also include sensors, computers, and fiber / cables etc. along with tar and concrete – the new suppliers could include Cisco, Intel, Microsoft, Verizon to name a few
• Self-driving cars could result in improved rider health as they won’t suffer higher blood pressure from traffic irritants. Smart streets and cars can manage traffic like any production assembly line

Social Impact

• Efficient crashing - Intelligent cars can decide how and where to crash in case a crash has to happen (crash into a tree vs. a car full of people or an empty house vs house with people) – but one can easily imagine moral dilemmas that could be difficult for “thinking machines” to solve
• Reduced car related crimes / thefts

About the authors:
Bharat Kapoor:  I am a management consultant (principal) at A.T. Kearney, focusing on Industrial Internet and the Internet of Things. I conduct "Predicting the Future through the Industrial Internet Lens" workshops to help encourage the dialog on how Industrial Internet will impact our world—commerce, business models, social and cultural interactions. Be a part of the discussions on IIoT—join the LinkedIn group“Industrial Internet / Internet of Things - A Lens to Predicting the Future.”

Shamik Lala:  I am a management consultant (principal) at A.T. Kearney.  I specialize in Financial and Insurance Industry.  I believe Internet of Things will have a significant impact on our world and my specialty area.

 Acknowledgement:
We want thank each one of the participants in the workshop for sharing their visions and predictions with us. It was a wonderful learning experience for us too. A big thank you to Kellogg Consulting Club for hosting us and Sid Bhatia for making this happen and his editorial support.