June 6, 2020

Mobility Analytics: “Show Me the Money”

Traffic is a disaster … not only on the 10 or 210 to Claremont or the 405 or 110 in Los Angeles. Traffic is bad everywhere … that much we know from our own experience … and traffic experts like TomTom back it up with data: Traffic has been spreading like a disease globally (TomTom ranking, link). And it has been getting worse: Again, we know this from our own experience and the numbers are there to back it up, too: Commute times are up, speeds are down… people have to circle to find parking more and more. Urban areas are full.

How do you create a win-win situation? Reduce urban traffic … as well as its jams, pollution, noise and accidents? All this must be done while still creating opportunities for the automotive industry to expand because we all benefit from the employment and wealth it generates.

“Money for nothing” with better asset utilization
There is one obvious step: Use what is already in place, but better. Increase utilization of existing assets such as roads, parking, and vehicles. How can we increase utilization? No rocket science here either, we all know how to choose between product variants. We prefer value: more utility, higher quality, and we want it all at a low price. While individual preferences vary, we typically will not pay for something voluntarily if it leaves us worse off. So, for any asset utilization to work it would have to deliver real benefits for endusers, either in the form of higher utility or lower cost. You would think that the cost element should be a no brainer since key assets are already paid for.

Coordination failure: Technology and politics
So, what’s the problem, why hasn’t anything happened? Economists call this coordination failure. It can occur on many levels: Technology, strategy, and regulation, for example. From the perspective of technology, an existing asset has to be made compatible with a modified use case: You trying to plug in your US charger into a European power outlet … it won’t work, it’s not compatible. In terms of strategy, it can be seen as something straight from game theory, such as the famous prisoners’ dilemma in which two individuals acting in their own self-interests do not produce the optimal outcome: Why share my data with a competitor even if the joint data pool will yield far better analytics insights. Nash won the 1994 Nobel prize for his game theory tool (link), known as the Nash equilibrium, which is used to analyze and solve such competitive situations, specifically non-cooperative games, from corporate rivalries to legislative decision-making. So far, technological problems seem to have prevented real strategy or policy decision-making – why discuss strategy if the technology was not ready anyway?

Can last mile transportation and its data be a game changer?
In 2020, however, new technology has arrived: New last mile transportation alternatives, such as electric scooters, have established themselves in many urban areas. They offer different transportation options and … more data. Data has proven to be a critical missing link in tying up older elements and developing a new service offering with them. This has been demonstrated by ride-hailing startups, such as Uber and Lyft, which have used data to reuse existing assets, such as your smartphone and another person’s car, to orchestrate a compelling transportation offer. So, in light of the situation concerning new last mile transportation and the data it generates, we have to ask: Is the technology ready? Can new last mile data be leveraged to create a mobility offer that is compelling in terms of user value? That is competitively priced but faster and more comfortable? Let’s find out about it.

Read about the first results: Schlueter Langdon, C. 2020. Quantifying intermodal mobility: A parsimonious model and simulation. Working Paper (WP_DCL-Drucker-CGU_2020-06), Drucker Customer Lab, Drucker School of Management, Claremont Graduate University, Claremont, CA