Ford Embraces Silicon Valley

November 14, 2016

Walking into Ford’s Research and Innovation Center in Palo Alto feels like any other Silicon Valley workspace—engineers on their laptops at the center of an open office set-up, surrounded by meeting rooms and white boards. Until, you step into the labs.
A car geek’s dream, the labs have it all—a simulation room to experiment on new technologies, such as vehicle and traffic sign recognition for self-driving vehicles; a garage that houses cars with their insides turned out; and a secretive infotainment lab where Ford is innovating ways to connect the car with the rest of our lives.
The Center was started last January and aims to accelerate Ford’s development of technologies and experiments in connectivity, mobility, autonomous vehicles, customer experience, and big data.
What started with a small team of 10 employees is now at 150+ employees (and growing), giving Ford one of the largest automotive research teams in the area.
Q& A with Dragos Maciuca, Technical Director, Ford Research and Innovation Center.

So, what brings Ford to Silicon Valley?
The major reason we are here is the fundamental shift in the auto industry towards software, and here in Silicon Valley, software is king. We’re here to leverage all the software development that’s taking place in Silicon Valley and bring it to cars, all the way from manufacturing to advertising platforms. We’re here to basically look at the latest trends, absorb them, and, together with the local talent, develop them and bring them into our cars.
We want to be part of the ecosystem in Silicon Valley—work with startups, work with VCs, work with incubators, etc. As software becomes a bigger and bigger component of our cars, it’s important to have the knowledge in-house to develop
it and bring it into our vehicles.

What are some of the projects that the Center is working on?
We’re looking at a million areas. One of them is connectivity. How do we connect the car to the cloud? Cars are not isolated things anymore. They’re getting connected to the cloud, to the rest of the infrastructure. You basically need to feel constantly connected, even when you’re in the car. It’s about the occupants of the car and about the car itself. They need to be constantly connected but that also means security and privacy. We need to address all these issues.

We’re also working on the Ford Smart Mobility program, which looks at how people move from point A to point B, how they use multimodal transportation from bikes to shuttles. It’s not just about cars, especially in dense urban areas. You can’t solve the problem of mobility just by selling more cars. You need to figure out how people actually move from point A to point B, and we’re trying to solve this and address societal issues in the process.

Do you have a favorite project that you’re working on?
I have many favorite projects but I can’t talk about many of them! I think the only one that we can talk about is connectivity with Amazon Echo. From the Echo, you’ll be able to check the status of your car in terms of fuel, charge, start/stop ignition, lock/unlock doors, etc. And from the car, you can do things in your house like open the garage door, turn on lights, etc.

It’s when the car gets connected and becomes, I hate to say it but, just another “T” in IoT. Then, you connect it with the other “T”s, leverage it, and get more than the sum of the “T”s. You end up exponentially increasing the value once all those things get connected.

What’s going on in your labs to enhance the driving experience?
We’re going to increase the number of connected vehicles. SYNC, our connectivity system, will be at the center of it. We
just released SYNC 3 and it was received very well. We’re expanding connectivity so that we have more connection between the vehicle and the cloud, and then, the outside world. That will help the driver have better information, and it will help us have better information about the vehicle, so that we can enhance the experience for the driver.

The Center has a very diverse team—designers, engineers, even anthropologists and ethnographers. It’s not something we think of when we think of a software or a car company…
We’re looking at user experience and that’s where industrial designers and ethnographers come in. We are trying to understand exactly how people use their vehicles and how to provide information and entertainment to them, especially as we move to autonomous vehicles. How does an occupant, who isn’t a driver, interact with the vehicle and how does the vehicle interact with the rest of the environment?

We’re trying to bring in a lot of skills from throughout Ford. We not only have engineers but, as you said, we also have ethnographers, industrial designers, and marketing and sales teams. In an open office like ours, there’s a lot of interaction, and those interactions lead to much more interesting solutions to the problems that we’re trying to solve.

Today’s Ford says, “We are no longer just an automobile company. We are a mobility company.” What prompted the organization to think differently?
The biggest reason is global trends where car ownership doesn’t necessarily make sense. In rural areas, it still makes sense. Suburban areas are probably going to be a mix. But in urban areas, car ownership is not necessarily the answer. It may be in some situations, but not all situations. We’re trying to solve societal problems by addressing mobility in urban areas.

It’s also a financial proposition. Ford has 6 percent of the traditional automotive market, but we have essentially 0 percent of the transportation services market. We’re trying to capture some of the transportation dollars through business model innovation. It’s not a completely separate concept, so we’ll leverage the two of them to expand our business. It’s not like we’re going to stop making cars.
We see the two strategies as very symbiotic, helping each other to give us a bigger business.

How do you see that happening? How does Ford see tomorrow’s transportation system?
We’re still experimenting and trying some things, but there’s going to be a mix between various modes of transportation. Some of it is going to be multimodal, where we’re going from bikes to cars to trains to shuttles.
In others, it’s going to be some form of ride sharing or hailing, be it autonomous or driven by a human.
Over the next few years, there are going to be changes in how people move, and we need to lead those changes. We’re definitely trying to be leaders in this field and trying to capture a large slice of the pie.

Ford has also spoken of subscription-based mobility services.
Yeah, we’re looking at the “transportation as a service” model, especially for millennials who are looking more at services rather than ownership over the long term. We think we can address this through either ride sharing or some sort of a subscription model. We need to figure out exactly what, and that’s why we have the Ford Smart Mobility program to figure out new business models, and how we can best monetize.

How are you trying to discover what pricing looks like for these new businesses?
For the smart mobility program, we actually ran about thirty experiments around the world. Some of them were about car sharing, ride sharing, and some were even about bikes. Within ride sharing, we looked at various pricing models at various densities. How many people does it make sense to put in a shuttle van? Is it five or is it fifteen? Would people prefer to be five in a shuttle, have more personal room but pay twice as much? Or would they prefer to be fifteen, not have personal space but save some money? Do they prefer to pay by the time or by the mile? The interesting and challenging thing is that it varies by geography. It varies even within the United States. You need to understand the cultural aspects extremely well. I’m sure with time we’re going to make adjustments, but these models open the horizon to what makes sense and what doesn’t, and at least give us a baseline to start with.

What about customer data? Is that something Ford is looking at leveraging?
We’ve said the data belongs to the user and we’re the custodians of the data. That being said, with the users’ permission, we can enhance their experience and manage access to their data for them. For example, if they have a relationship with an insurance company, with their permission, we can provide information to the insurance company so that they can have usage-based insurance. We’re trying to make life easier for our customers, as long as they understand exactly how the data is used and where.

Thanks for the chat, Dragos.
Thank you.

Continue reading success stories from the Subscription Economy in the latest issue of Subscribed Magazine!