How Autonomous Vehicles Will transform Industries and Strategy

How Autonomous Vehicles Will transform Industries and Strategy

07/2018-6417

This case was written by Guoli Chen, Associate Professor of Strategy at INSEAD, and Michael Olenick, Institute Executive Fellow, Blue Ocean Strategy Institute, under the supervision of W. Chan Kim and Renee Mauborgne, Professors at INSEAD. It is intended to be used as a basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation.

Additional material about INSEAD case studies (e.g., videos, spreadsheets, links) can be accessed at cases.insead.edu.

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This document is authorized for use only by Yijia Zhang in ENTR 2301 Ruth 2 taught by Ruth Raubitschek, Northeastern University from Jan 2019 to Jul 2019.

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Feb. 25, 1957 Life Magazine Advertisement. Caption: “One day your car may speed along an electric highway, its speed and steering automatically controlled by electronic devices… Travel will be more enjoyable. Highways will be made safe – by electricity! No traffic jams … no collisions … no driver fatigue.”

… I can remember when there wasn’t an automobile in the world with brains enough to find its own way home. I chauffeured dead lumps of machines that needed a man’s hand at the controls every minute. Every year machines like that used to kill tens of thousands of people.

The automatics fixed that. A positronic brain can react much faster than a human one, of course, and it paid people to keep hands off the controls. You got in, punched your destination and let it go on its way.

We take it for granted now, but I remember when the first laws came out forcing the old machines off the highways and limiting travel to automatics. Lord, what a fuss. They called it everything from communism to fascism, but it emptied the highways and stopped the killing, and still more people get around more easily the new way.

Of course, the automatics were ten to a hundred times as expensive as the hand-driven ones, and there weren’t many that could afford a private vehicle. The industry

For the exclusive use of Y. Zhang, 2019.

This document is authorized for use only by Yijia Zhang in ENTR 2301 Ruth 2 taught by Ruth Raubitschek, Northeastern University from Jan 2019 to Jul 2019.

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specialized in turning out omnibus-automatics. You could always call a company and have one stop at your door in a matter of minutes and take you where you wanted to go. Usually, you had to drive with others who were going your way, but what’s wrong with that?

“Sally” by Isaac Asimov, 1953

Self-driving cars, also known as autonomous vehicles (AV), are rapidly accelerating from science fiction to showroom fact. Every major auto manufacturer, auto parts maker, and several large technology companies are racing to commercialize AV technology.

In 2001, the US Congress mandated that one third of all military air and ground vehicles drive unmanned by 2015.1 The Congressional mandate was for “unmanned, remotely-controlled enabling technologies” – remote-controlled cars – but the military wanted vehicles that required no driver at all. Initial progress was slow. Vehicles produced by traditional military contractors never exceeded 10mph (16kph) and required multiple human interventions every kilometre.

Frustrated by the lack of progress, the US Defense Advanced Research Projects Agency (DARPA), the organization that created the internet, announced the DARPA Grand Challenge, a series of robot-car races. In 2004, DARPA challenged robot builders to a 142 mile (228.5 km) race with no driver and a $1 million prize. Fifteen teams qualified and Carnegie Mellon University’s robot travelled the furthest, 7.32 miles (11.78 km). Nobody won. Undeterred, DARPA announced another race for 2005: 132-miles (212k m) with a $2 million prize. Nearly 200 teams applied and, after qualifying obstacle courses, 43 remained. More tests whittled that to 20 teams and five robots finished.2 Stanford won, completing the race in just under seven hours; Carnegie-Mellon came second. In 2007, DARPA issued an “urban challenge” for cars to navigate a mock city, with prize money of $2 million, $1 million, and $500,000 (for first, second, and third place).3 Six teams finished. Carnegie Mellon won, Stanford came in second and Virginia Tech third.

Google co-founders Sergey Brin and Larry Page attended the 2005 race, in disguise, then hired Stanford team lead Sebastian Thrun to continue developing the technology.4 By 2007, Thrun’s car, built in cooperation with Stanford, finished second in the Urban Challenge, after Carnegie Mellon. By 2010 Google had created a research lab, “Google X”, with self-driving cars as the first project.

While the army was interested in ambush-proof resupply missions, civilian scientists focused on reducing accidents and increased productivity. In 2015 (the last year for which data is available), there were 35,092 traffic fatalities in the US, 1.1 fatality for every 100 million miles driven. That

1 https://www.gpo.gov/fdsys/pkg/PLAW-106publ398/html/PLAW-106publ398.htm 2 Stanford won. Carnegie-Mellon fielded two autonomous vehicles that finished in second and third place. The

Gray Insurance Company of New Orleans, LA, created a car that finished fourth, and a group of defense contractors led by Oshkosh Truck Corporation, finished fifth.

3 DARPA provided $1,000,000 of pre-race funding to each of 11 teams considered most like to build a viable autonomous vehicle.

4 Google never indicated if the firm initially intended to build a self-driving car or wanted Thrun for his talent as a technology visionary with strong engineering skills.

For the exclusive use of Y. Zhang, 2019.

This document is authorized for use only by Yijia Zhang in ENTR 2301 Ruth 2 taught by Ruth Raubitschek, Northeastern University from Jan 2019 to Jul 2019.

https://www.gpo.gov/fdsys/pkg/PLAW-106publ398/html/PLAW-106publ398.htm
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was a vast improvement on 1921, when there were 24.09 fatalities for every 100 million miles driven. The figure declined almost every year thanks to improved safety technology.

Autonomous vehicles are a natural evolution. Experts believe vehicles will inevitably evolve to be autonomous, connected, and primarily driven by electricity rather than internal combustion engines.

“There are so many negatives to owning and operating a car: having to drive it, having to park it, having to fuel it, having to shop for it,” said University of Michigan Professor Larry Burns, former Chief Technology Officer of GM and a consultant with Waymo (Google’s self-driving car spinoff) since 2010. “What we’re really doing is moving a person from one point to another. But actually the automobile is a lot more than that. It’s about having freedom to go where you want, when you want, and who you want to travel with. It became clear to me there’s this convergence of connected, driverless, shared, tailor-designed electrically-driven vehicles. The innovators’ business model was converging with technology and design that is dramatically better at significantly lower cost.”

Autonomous driving, more than any factor, will change the entire driving experience.

“In the historical ecosystem of roadway transportation, a company like General Motors would spend a half billion dollars to develop a new Malibu,” said Professor Burns, who emphasizes the division between “making things and making value”. “They’ll do that over a three-year development period then they’ll put that Malibu on the market and sell it through dealers for 6-10 years and Exon-Mobile will sell gasoline and Allstate will insure it and GMAC will finance it and somebody else will do the service. Now what we’re seeing are these different models where we’re selling miles, trips, and experiences. It’s a whole different business model. You make money off of every mile sold rather than one time on every car.”

Besides lower cost, self-driving cars are safer and change the entire driving experience. “Imagine that you subscribe to Mercedes for a one-year period and have exclusive use of a Mercedes,” said Professor Burns. “You have a condominium and your exclusive-use vehicle will show up at the front door of your condominium and then will go park itself; it’s smart enough to do that on its own. It won’t need to be charged or it’s gas tank topped-off: Mercedes has your back by – when you’re not using your vehicle – making sure that your vehicle’s being fuelled, washed, and maintained. Then Amazon wants to deliver you a package and your vehicle is parked in some area near where you work one day. Amazon can deliver that in your secured vehicle. Now you have an interplay between package delivery. Another thing that may happen that day is you need to pick up your dry cleaning. You’re at work so you dispatch your little robot exclusive-use vehicle to the dry cleaners to pick-up your dry cleaning. On the way to pick you up (at work), it stops to get a take- home meal. Now your trip home doesn’t include picking up dinner and dry-cleaning. Your trip home is going home. This car, this machine, has been your servant during the day.”

Except for interior comfort, self-driving cars are likely to be a largely undifferentiated commodity. What happens when “The Ultimate Driving Machine,” BMW’s tagline, ultimately drives itself and does so like every other car? “The ultimate driving machine in a traffic jam is like any other car,” answered BMW’s Andreas Klugescheid, Head of Steering Governmental and External Affairs and

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This document is authorized for use only by Yijia Zhang in ENTR 2301 Ruth 2 taught by Ruth Raubitschek, Northeastern University from Jan 2019 to Jul 2019.

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Sustainability Communications, when asked that question. “I would claim the majority of my driving would be ideal for autonomous driving but there are times I still love to drive.” Klugescheid highlights that automotive technology is continually changing and that self-driving technology is one of many changes. “In the last 100 years the car always had fuel in the tank and a combustion engine under the hood. In 5-10 years they won’t. So there’s clearly change.”

Prof. Burns summarizes the challenge succinctly: “What I’d set out to do if I were BMW is make a machine where you feel better when you get out of it than you felt when you got into it. Maybe you feel better because you had productive time. Maybe you feel better because you were able to spend some time with your kid. Maybe you feel better because you took a nap. Maybe you feel better because you were able to just sit and relax. The benefit of the vehicle isn’t about 0-60 (how fast a car can accelerate); it’s about acceleration that’s not even perceived. It’s about cornering in a way where you would never get carsick. It’s about being able to stretch out and be comfortable. It’s about lighting and sound and quietness and all of those things are so important to this new riding experience.”

But it remains unclear how automobile manufacturers might meaningfully differentiate their offerings. Acceleration? – irrelevant. Handling? – many won’t have a steering wheel. Safety? – they will never crash unless a traditional car runs into them, and even then will be more likely to avoid reckless drivers than human-driven cars could. Customers can own one, summon one from a taxi service like Uber or Lyft, or from fleets owned by auto manufacturers.

Let’s review a list of high-end and mass market automaker taglines:

BMW “The Ultimate Driving Machine” Mercedes “Unlike Any Other” Lexus “The Passionate Pursuit of Perfection” Audi “Advancement Through Technology” Chevrolet (GM) “Find New Roads” Toyota “Let’s Go Places” Honda “Start Something Special” Ford “Go Further”

One area virtually all experts agree upon is that fewer overall units will be produced and sold because AV’s encourage sharing. A privately-owned AV can service an entire family, dropping spouses off at different offices and driving children around. Shared AV’s fulfil the same function and, as computer algorithms match people going in the same direction, might do so in comparable commute times as privately-owned vehicles. The most optimistic estimate for the auto industry, by far, is from McKinsey, which predicts that vastly increased auto sales in developing countries will offset declining sales in developed countries, leading to a flat market. Barclay’s estimates a 40% decline in units produced and sold before the market stabilizes. Prof. Burns and other experts predict the decline in vehicle sales will be closer to 75%.

For the exclusive use of Y. Zhang, 2019.

This document is authorized for use only by Yijia Zhang in ENTR 2301 Ruth 2 taught by Ruth Raubitschek, Northeastern University from Jan 2019 to Jul 2019.

Copyright © INSEAD 5

Traditional Two-Car Family Family Shared Self-Driving Car (FAV)

Source: Barclays Research

Self-Driving Taxi (SAV) Self-Driving Shared Ride Taxi (PSAV)

Source: Barclays Research

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This document is authorized for use only by Yijia Zhang in ENTR 2301 Ruth 2 taught by Ruth Raubitschek, Northeastern University from Jan 2019 to Jul 2019.

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Questions to discuss

• What do you think about the trend towards autonomous vehicles (AV)? Is it decisive and irreversible? Why or why not?

• Choose an industry you understand and explain how autonomous vehicles might impact that industry. Think about a “to-be” new opportunity autonomous vehicles enable and briefly explain your idea using Kim & Mauborgne’s Eliminate-Reduce-Raise-Create Grid.

• Use autonomous vehicles to discuss the industry evolution, the roles of different players, and the shift of the profit pool.

• Is autonomous driving technology a blue ocean opportunity? Why or why not?

• What, if anything, is the difference between technology innovation and value innovation?

For the exclusive use of Y. Zhang, 2019.

This document is authorized for use only by Yijia Zhang in ENTR 2301 Ruth 2 taught by Ruth Raubitschek, Northeastern University from Jan 2019 to Jul 2019.

… I can remember when there wasn’t an automobile in the world with brains enough to find its own way home. I chauffeured dead lumps of machines that needed a man’s hand at the controls every minute. Every year machines like that used to kill tens of t…
The automatics fixed that. A positronic brain can react much faster than a human one, of course, and it paid people to keep hands off the controls. You got in, punched your destination and let it go on its way.
We take it for granted now, but I remember when the first laws came out forcing the old machines off the highways and limiting travel to automatics. Lord, what a fuss. They called it everything from communism to fascism, but it emptied the highways an…
Of course, the automatics were ten to a hundred times as expensive as the hand-driven ones, and there weren’t many that could afford a private vehicle. The industry specialized in turning out omnibus-automatics. You could always call a company and hav…
“Sally” by Isaac Asimov, 1953
Questions to discuss

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Computer Science homework Assignment

Computer Science homework Assignment

 Do not go to some website and copy and paste this assignment or worse the paper itself, there is one paper out on the web that has been presented to me as original no less than eight times in the past year and half. I have seen them all, and recognize them. Plagiarism is not worth the effort. Even if you try to disguise it by changing a few words, it really doesn’t work. I can see patterns that most students don’t realize. 🙂 Homework helper and other such sites are rip offs, avoid the temptation, even if other professors may have let these slide, trust me, I am not worth the gamble. 😉

 No, you can’t use the SEC420 paper, or SEC402 paper or any other paper from any other course you took. Most have been submitted to SafeAssign or Turnitin and will show up when you submit as having been submitted and graded. One cannot use a paper that has been graded for credit in one course for submission for another.

This is are the teachers note, so please be wary on the contents you write and make sure things are cited and plagiarism free. This guy means business.

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Market Environment And Research

Market Environment And Research

create an organizational profile for a company’s marketing environment and a short analysis of the value of secondary sources. There is no page limit for this assessment.

Understanding and tracking the marketing environment is a critical marketing function, focusing on the customer as the center of the organization’s attention. The organization can, and usually does, adjust its products, pricing, promotion, and place (distribution) to meet customer needs and to react to external forces.

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Case Study Related To Hacking

Case Study Related To Hacking

THIS IS NOT A BUSY WORK ASSIGNMENT, it is a serious assignment meant to help you prepare for the term paper in week 9. A senior paper cannot be well researched and written in a weekend. I grade and provide feedback at the senior level, and having a strong foundation which you then take weeks to develop a solid research foundation and an outline leading to strong conclusions and takeaway begins here. So take some time, think the proposal through, then present it. It is not an essay, the proposal does not need documentation, as it is your words explaining what you are going to do, and why, and what you expect to learn and takeaway. It is not an history paper or background paper, but uses some background to lay out the basics.

Develop a case study related to hacking. Have an original post of no less than three to five paragraphs, and yes it can be more if you wish. In addition to your proposal, offer advice of a paragraph or two to at least two other students. This is the proposal for your term paper due in week 9. Papers should not be written in a one week or weekend, but should take some time to research, consider, and then draft. Once drafted, ideally, one sleeps on the paper, so one can proof and revise one last time before submitting the final draft. I expect a 400 level paper in week 9, so give some thought to your case study and provide me a short synopsis of what you hope to look at, why, and what you hope to learn or accomplish.

Research the web and find an appropriate incident related to either a successful or failed penetration testing effort, or a successful or unsuccessful hacking attempt against an organization, business or government facility. For the discussion lay out the basic details of the case, why you chose this case, and speculate on what specific lessons you learned from the case, as well as possible recommendations for future situations. This proposal should be no less than three or four paragraphs. (For those taking SEC420 concurrent with SEC435 this must be a different case study.)

I will repost the assignment nine requirements in the week five weekly update announcement.

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REI Case Study – Research

REI Case Study – Research

Print
REI Case Study – Research Guide
This research guide can be used as a starting point for investigating REI’s marketing practices.

Explore the Recreational Equipment Incorporated (REI) Web site for an overview of the company philosophy, products, and services. Check out the content of the About REI section of the Web site. Note: The following company background information was formerly presented on the Web site.

REI’s thriving spirit was born in the 1930s when Pacific Northwest mountaineer Lloyd Anderson began his search for an ice axe. Lloyd wanted a reliable tool at a reasonable price but had no success in finding one locally. He eventually found a high-quality model in an Austrian alpine gear catalog for a mere $3.50, shipping included. Word about his find quickly spread among Seattle’s climbing community, which led Lloyd and his wife, Mary, to convene with 21 fellow climbers to establish an outdoor gear co-op in 1938 (REI, 2007).

You might find it interesting to compare this historical outline with the content currently featured on the About REI page.

In this course, you will also be required to use secondary research resources. Explore and review the marketing research resources of the organizations below:

National Sporting Goods Association.
Sports and Fitness Industry Association.
Use the Internet Archive tool, the WayBack Machine, to search for REI.com and you will find historical versions of REI Web site pages. Select a few pages and compare REI’s former prices and product offerings with the current online catalog.

Secondary research resources can also be found through organizations affiliated with REI. Entre Prises USA, Inc., the organization that built the first climbing wall in the REI flagship store, provided the following secondary research information about REI:

“REI opened the doors to its flagship store in Seattle, in 1996.
This large retail store is located adjacent to Interstate 5 in downtown Seattle.
Up to 250,000 people drive by the store every day. It was important to REI to capture their attention.
REI looked to Entre Prises to build a 65 ft. freestanding structure that would be the central focus of the store.
After ten months of construction, 4 miles of rebar, and 120 tons of concrete, the ICON for REI was sculpted. REI has received unparalleled media response from the climbing wall. People wait hours to climb the Entre Prises Pinnacle and in the first year over 10,000 people climbed it, and the interest continues to grow!” (Entre Prises USA, Inc., 2007).
References
Entre Prises USA, Inc. (n.d.). REI flagship store: Entre prises creates a masterpiece! Retrieved from http://www.epusa.com/featured_project.php?otype=i&id=13

Entre Prises USA, Inc. (2013). Entre Prises: Climbing walls. Retrieved from http://www.epusa.com

Internet Archive. (2013). Wayback machine. Retrieved from http://archive.org/web/web.php

National Sporting Goods Association. (2013). NSGA. Retrieved from http://www.nsga.org/i4a/pages/index.cfm?pageid=1

REI, Inc. (2007). The REI story. Retrieved from http://www.rei.com/jobs/story.jsp

REI. (2013). Retrieved from http://www.rei.com

Sports and Fitness Industry Association. (2013). SFIA. Retrieved from http://www.sfia.org

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Develop an organizational profile for a company’s marketing environment

Develop an organizational profile for a company’s marketing environment

And a short analysis of the value of secondary sources. There is no page limit for this assessment.

Understanding and tracking the marketing environment is a critical marketing function, focusing on the customer as the center of the organization’s attention. The organization can, and usually does, adjust its products, pricing, promotion, and place (distribution) to meet customer needs and to react to external forces.

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Diversion for mental health offenders Description Essay question: With reference to relevant evidence and psychological literature critically discuss whether offenders with mental health problems should be ‘diverted’ away from the Criminal Justice System. Please check document ‘essay instructions’ for more information’. Word Count: 1,500 but can go above or below […]

 

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