If I were CEO of a Big-Three Car Company

Fast Company, April 2009, published 25 Ways to Jump-Start the Auto Industry. Here is what I sent them, found alongside the other ways.

"Let's assume the bailout solves the immediate cash crisis. Now what? First, I'm going to ask Congress to raise the price of gasoline. I need to be assured that there will be enough demand out there to merit an investment in more fuel-efficient cars. If our gas prices are in line with those of other countries we like to sell cars to (perhaps starting in 2011 when my new cars will be coming off the line), I'll be confident that consumers will embrace these new cars.

Next, I'm going to start experimenting with new product and service models. We recently passed the tipping point of 50% of the world's population living in urban areas. 'One adult, one car' doesn't work in congested and parking-scarce urban environments. Let's expand beyond manufacturing and selling cars to selling transportation as a service.

I'd take 10% of my current R&D budget and put it into a venture fund. I'd finance startups, experimenting in areas where I lack core competency: truly alternative vehicles; services that relate to car maintenance and in-car experience; services that conceive of the car as one node in the larger transportation network; and ideas that leverage my cars and my consumers as a means of collecting data or marketing other in-car services. This is a smart use of my money because I would be investing alongside others instead of financing all the R&D in-house. In the process, I'd gain firsthand insight into a whole realm of business models that might be my future.

Third, I'd definitely stop fiddling with closed, proprietary wireless technology inside my cars and immediately introduce a generic wireless platform into every new car. A standard feature of this platform is the ability for owners to access critical car information remotely. I'd send owners text and email updates telling them about their fuel and battery levels, when it's time to change the oil, and when the car received an unusual bump while parked. This would tie car owners to my company, provide dealers an ongoing revenue stream for maintenance and repair, and give me insight into exactly how consumers use (and abuse) my vehicles. I'd also develop a device that could be easily installed into cars already on the road so I'd have more owners participating.

This wireless platform lets me farm for ideas. As an open system, it would attract the minds, money, and efforts of thousands of innovators to think up desirable applications that a person with a screen in a car might find useful. This platform would be like my PC: Car owners could download any apps they find useful. I'd let the loser applications or those with no revenue model muddle along, and I'd buy up the winners.

By mitigating our investment risk and placing lots of low-cost and low-risk bets, we'd bring the Big Three into the future."

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The Anatomy of Sharing

I just wrote a new talk to be given in full form in Seattle in the middle of March, that I previewed in a 6 minute 40 second version (Pecha Kucha) last week here in Boston (wish that had been taped!). It really held people's attention. This structure does a nice job clarifying where sharing has come from, its current technology-enabled potential, and how and where 2.0 is game changing. Here are the cliff notes (anecdotes, jokes, and facial expressions excluded).

Types of sharing:

Simple sharing (personal): My stuff shared with my immediate trusted friends typically unplanned and so by luck. Think food, books, the spare bed, the car.



Simple sharing (corporate): Company’s stuff, shared with usually anybody who is willing to pay for it. Company distributes its resources across a geography (or it might be virtual). Think hotels (formalized bed sharing), public libraries (books), cars (of course). I was struck by the fact that when looked at in this light, Zipcar wasn’t that innovative. On the other hand, I guess I’ll take credit for the fact that no one had previously thought you could easily (and profitably) share cars. Technology was required for that breakthrough.


Upsides: Pay for only what you use. Distributed locations expand access. No responsibility when not yours. Users might come up with interesting innovations if owner is open to it.

Downsides to this kind of sharing: company has to place the assets in the right place (see poor green guy in bottom left whose need is unmet?) and the assets need to be adequately used to merit their existence (lots of red dots with no takers, unfilled hotels and resorts).

Collaborative and Distributed Sharing (personal): Our (those who choose to participate) stuff shared with just about anyone. Think Flickr, Facebook, GoLoco, couchsurfing (and lots and lots of others).


There are some distinctive aspects of 2.0: Messier and less predictable sharing. Requires much less “stuff” than if everyone had to own their own (this applies to corporate sharing as well). Lower threshold to reap benefits since all the assets are “excess capacity.” This reduced ROI demand has some important implications: the sharing can succeed in more ecosystems, a faster uptake (both supply and demand)is possible since threshold to participation has been lowered. Where there are intangible (non-monetary) benefits to be had, these are likely to be captured, valued, and enjoyed, again because of lower investment to participate.

Can we have the “collaborative and distributed sharing (corporate)”? I believe we can, which is what I was arguing for in my blog on Cooperative Capitalism.

A critical piece to the anatomy of sharing is to think about not only the assets (and where there is excess capacity), and the demand for them, but also about the platform itself, that enables this participation. In the olden days, these transactions were difficult and so sharing didn’t happen. In these new technology-facilitated days, beautiful platforms make for very “greasy” platforms – easy and quick participation.

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Why a Road User Tax is Fabulous for the Economy

The National Infrastructure Financing Commission just released its report today (OK, I know that sounds boring, but it is an important report for transportation people, and for people who use transportation), recommending that we move from the gas tax to a "vehicle-miles-traveled" tax.

You could read the report, or read my vastly more entertaining and much much shorter post on this topic at the Huffington Post here.

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Which DOT programs should be axed?

I am also blogging at National Journal, where the most recent question was which DOT programs should be axed. I played nicely. My response is here.

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Where Do Cars Belong in 21st C America?

Right now the transportation world seems polarized into two camps. Depending on where you live, what your past is, and who your patrons are, the vast majority of experts seem to place themselves into one of the two sides. And it does feel like a polarity. Trying to avoid characterizing these as 1 vs 2, A vs B, loaded names vs loaded labels – how about columns? Darn, there is still left to right. It seems impossible to be balanced.


Because of America’s past -- cheap fuel; government spending priorities (the interstate highway system and federal funding for highways) and tax incentives (home mortgage interest deductions fueling sprawl); lots of land; and lack of foresight about adverse effects (in addition to climate change, see below) – we find ourselves today with this reality:

Ninety-two percent of American households have access to a car and 87% of trips are taken by car.

The benefits of cars: fastest, most convenient, cheapest and often only alternative to get from A to B for the current built environment in the US.

The costs of cars:
- high cost of participation in the system (middle income Americans spend about 22% of their annual incomes on cars and the lowest 20 percent income bracket spend 42 %);
- escalating number of hours, number of affected roads, and parking lots classified as congested;
- 46k traffic deaths and much larger number of injuries,
- high rates of asthma, obesity, and other adverse health affects;
- loss of farmlands, wetlands, water resources and other negative land use impacts;
- 50% of the population unable to participate directly because they do not have a license or own a car;
- 20% of CO2 emissions.

As we move toward the future, in which we are both an active player – infrastructure can be destiny – and passive recipient of unfolding demographics, we can make some confidant predictions about some aspects of 2025. And 2025 is where we will fully feel the results of decisions made over the next four years around government infrastructure spending priorities, tax incentives, and regulations.

In 2025:

• 80% of our population will live in metro-areas
• 18.1% will be older than 65 (up from 12.4% in 2000)
• Fossil fuels will be more expensive (increased world demand & reduced supply)
• Carbon taxes (whatever form they take) will shape energy demand & type

If we turn this into Tom-Friedman-speak, and try to describe America in 2025, it will be urban, older, fossil-fuel efficient. Therefore, the bulk of our transportation investment dollars should go to meet the needs and desires of this population shape.

Urban means less car dependent because there is no space on the roads or in parking garages to accommodate the 1 driver to 1.1 cars ratio we find in America today. We see this reality in the more free-flowing cities of New York City (50% car ownership) and Boston (75% car ownership) and its opposite in the most congestion cities like Atlanta.

Older means less car dependent if we don’t want to spend increasing portions of local budgets on transporting the aging around to meet their routine food, medical, and social needs.

Fossil-fuel efficient means that yes, all motorized transport will prefer fuel efficient and alternative fuel sources.

But government and planners cannot forget or neglect significant minority groups, poorly defined here as “non-urban,” nor dismiss the occasional need of even the most committed urban environmentalists for a car sometimes. So, we shouldn’t be talking in terms of being pro-car or anti-car, or thinking about solutions that will only work in rural America, or only work in urban America (hmm, I feel like I’m echoing a certain President).

But we do need to move from our increasingly broken status quo that is almost entirely car-dependent to one that reduces both the burdens of today’s car-dependent costs (remember that list above) and looks ahead to meet the needs of our future. Moving this country and the world toward cleaner transportation fuel and better vehicles is absolutely critical, but low carbon cars alone will not solve today’s problems nor meet tomorrow’s needs. President Obama, legislators across the US and around the world, I repeat: low carbon cars alone will not solve today’s problems nor meet tomorrow’s needs. For that, we need to improve the balance, and enable more Americans to lead car-independent routine lives. Not no cars and highways, just fewer and better ones.

Sources
http://www.bts.gov/publications/highlights_of_the_2001_national_household_travel_survey/html/executive_summary.html
http://www.apta.com/research/info/online/aging.cfm
http://www.census.gov/population/www/projections/usinterimproj/
www.bls.gov/cex/csxann02.pdf

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What Chicago can't do

Chicago, striving to become a “green” city, has just made it very difficult to deliver green transportation options. By selling off -- I mean “leasing” – every single one of its 36,000 parking meters for some fast cash, Chicago can no longer do what other forward-thinking cities have done.

While it might be buried in the fine print of hundreds of pages of the lease contact, it would appear that for the next 75 years, the city cannot remove metered parking to:

• Create dedicated bus lanes (see New York City plans), or trolley lines (Charlotte NC).
• Allocate spaces for car sharing vehicles (see Washington DC and Boston) or bicycle parking (see Portland, Oregon, New York City plans, Paris)
• Create bike lanes (Paris, Portland, New York)
• Make pedestrian-only retail districts

Here is what the deal means for parkers (My comments are in italics):

• Quadrupling of meter costs in two-thirds of the city's meters over the next five years, from 25 cents/hour to $2/hour by 2013.

• Meter rates in the downtown Loop will rise from $3/hour to $6.50/hour over that same time period. Parking meters are generally underpriced across the country so I agree that these likely should be raised.

• Future rate increases (in years 5 through 75) will need to be approved by the city. It would seem that the city alderman needed to hide behind this lease, in order to get these first price increases done. What is the likelihood that they will be able to approve price increases in those later years when they aren’t shielded by the big bolus of cash upfront? nor get a piece of the increased revenue stream?

Here is how the city intends to spend the $1.16b it will receive in cash for the deal:

• $325m to balance the budget over the next 4 years ($50m 2009; $100m 2010)
• $324m for budget “stabilization” for budget gaps. These two added together mean that $649m of the money will be spent almost immediately, leaving the remaining 70 years of this lease without any benefit to the residents of Chicago.

• $400m will be put into a long-term account generating $20m in revenues annually, to “cover” the usual amount of revenues generated by the parking meters. Do we really believe that $20m/year will equal the expected annual revenue from parking meters 15 years from now? How about 30, 45, or 75 years from now?

• $100m in human infrastructure. Not clear what this is. Note that none of the money raised from this parking sale went toward improving transportation infrastructure in the city.

There are several things that really bother me about these deals:

1. Can’t we produce politicians or a public that can accept rises in parking rates without having to hide behind a privatization deal? In both cases there is an increase in fees, but in the privatization deals we lose flexibility over the asset and the management fee that goes to the private sector company, a much worse deal for citizens.

2. Assuming the city is desperate for an upfront lump of cash, isn’t it common for banks to loan money on the back of a guaranteed future revenue stream that is collateralized by an asset? Why the 75 year leases? It just doesn’t seem right to mortgage future generations for our quick fix today – politically easier yes, but not right.

3. And most egregious, is the loss of network control and flexibility over the asset. This parking deal has effectively locked up street use for the entire city of Chicago for the next 75 years! Forget about closing some streets to traffic (as has been done in cities the world over). Forget about changing the use of specific streets and traffic flows (just this last year New York city has changed city streets to accommodate bicycles, pedestrians, chairs and tables, dedicated bus lanes; in Washington DC they have changed some parking spaces into shared car parking; in Portland, Oregon, bicycle parking is substituted for some previously metered spaces). All of these options will be closed for the city of Chicago. And closed for 75 years.

Sources:
http://www.bondbuyer.com/article.html?id=200812021PTMA2E7
http://ohmygov.com/blogs/general_news/archive/2008/12/24/chicago-sells-right-to-city-parking-meters-for-1-2-billion.aspx

Some quotes:

"I wish we had other options at our disposal to help balance this budget without entering this 75-year concession agreement with one of our most valuable public assets, but we're in the situation we're in, with not many options" Alderman Brendan Reilly told the Tribune.

Alderman Richard Mell described the deal as being a "once-in-a-lifetime shot to grab this pool of money.

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Advice for Cities & Towns on Green Transport

I sometimes get asked for the quick hits that a local government can undertake that is within their jurisdiction. Here is what I send them:

1. Parking maximums for buildings (all kinds) rather than parking minimums. If the developer is ready to build without parking, their ear is closest to the market, let them do so. This will reduce the cost of housing by as much as 25%, increasing affordable housing within the city. Every parking space built is a magnet for a car, which will then be driving on city streets, increasing our congestion problems. Yes, I know all about residents desire to protect the existing free on-street parking for themselves. See number 2 below.

2. Make residential parking permit rates much higher, and consider monthly fees rather than annual ones. This will make more parking available for those residents that need to park, by getting off the road cars that are rarely used (this is why we need this to happen monthly, so there is incentive to get rid of your car quickly when you no longer use it often.) In northern climates, it is easy to see the enormous number of vehicles that are little used by walking down a street one week after a snowfall and seeing the number of cars that haven't moved in a week.

3. Charge residents for curb cuts just like on-street parking. Their individual curb cut is removing a space available for others on the street. Curb cuts shouldn't be free for residents or businesses.

4. Give a rebate to residents who don't own cars -- they cost the city less money! less demand for ploughing, road maintenance, police and traffic enforcement, reduced emissions, etc.

5. Do bicycle traffic education for every middle school student (and in driver's ed).

6. Offer $200 rebate to kids on their 16th birthday, good only toward a bike purchase (and registration with the local police).

7. Improve bike and pedestrian connections everywhere. Start with routes to school, around the public library, and convenience/food stores.

8. Paint bicycle lanes on as many oversized roads as you can simply by giving the minimum width to cars (usually 10 ft) and allocate remaining space to bikes. Stop your lines short of the intersections and just do the straight-aways. This lets you get 80% of the job done quickly and cheaply, without fiddling with the complex part.

9. Require that businesses that offer parking to employees to "register their commutes" so that there is a database for potential commute ridematching. You can't require agreeing to share a ride, but you can require registration.

10. Consider building municipal parking lots, and make parking in those lots cheaper for residents than on-street parking permits. [This makes parking less convenient, and people will be more likely to leave their house to bike, walk, or T for short errands rather than hop in their car.]

11. Remove on-street parking for every space created in municipal lots. Do better things with those spaces -- bus priority lanes, bike lanes, wider sidewalks.

12. Consider making play streets in some neighborhoods, by closing them to through traffic with wooden barriers (that are signed with relevant times) during afterschool hours. In New York City I saw this in practice with neighbors opening and closing the street.

13. Consider closing scenic roadways on Sundays when there is reduced traffic (and alternate routes) and making them accessible only to people and non-motorized vehicles.

Thirteen is purportedly an unlucky number. Please add your low cost ideas to the comments.

Robin

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