Autonomous car adoption could increase downtown traffic

16 July 2018 Consulting.us

A new report finds that autonomous vehicle rollout will drive the increasing adoption of ‘mobility-on-demand’ options – robo-taxis, ridesharing, and autonomous minibuses. A study of Boston found that the mode of transport will increase to 30% of rides in the city area. However, mobility-on-demand’s increasing substitution for short mass transit trips may lead to increased congestion in the downtown core.

Autonomous vehicles (AVs) are on the cusp of making a breakthrough into the mainstream. Today, there are more than 100 AV pilot projects taking place around the world, including high-profile projects from Google and Uber. With rapidly expanding pilots and technological advances, commercial AV-taxi services are expected to already be in place in a number of large cities this year. The greatest revolution in personal mobility since the invention of the car is nearly upon us.

With AVs nearly on the scene, there is a real need by the public and private sector to understand how the technology might change the way people move in urban centres. A recent joint report from The Boston Consulting Group and the World Economic Forum examined how AVs would impact transportation in one city, namely Boston. Over the last three years, the partners researched consumer sentiment and conducted impact studies using active trials as well as city-wide traffic simulations.Openness to AVs and projected shift in transportation modesThe report’s survey results found that global consumers are open to adopting AVs, with 60% of respondents saying that they would ride in an AV. Acceptance, however, varied from 36% in Japan and 40% in the Netherlands, to 75% and 85% in China and India, respectively. The report linked the lower acceptance in countries like Japan, Holland, and Germany to a longer established car culture than in China and India, where the car market is still developing. Another factor was higher levels of congestion in cities like Mumbai and Beijing predisposing consumers in those markets to be more open to the prospect of AVs.

The report’s analysis projects that the advent of AVs will drive a significant shift to ‘mobility on-demand’ options (taxi/ride-hailing, autonomous taxi/shared taxi, autonomous minibus), growing the segment from 7% currently in the Greater Boston Area to 30% in the future. 87% of mobility on-demand will be composed of AVs, according to the analysis.

The switch to on-demand will cause mass-transit ridership to decline heavily in urban areas (-14%) because of the cost-competitiveness and convenience of autonomous ride-sharing. Mobility on-demand will account for 40% of trips in urban Boston, reducing personal car trips by the same amount as mass transit (also -14%).

The research found that in suburban areas, mobility on-demand will mainly replace personal car trips. The former will increase 21 points to 26%, while the latter will drop 23 points to 42%. Meanwhile, mass transit use will actually rise in suburban areas of the city, growing 2 points to 32%. Some of this has to do with the fact that on-demand AV trips are cheaper the shorter the trip is (which is part of what makes it more attractive to urbanites). For suburban travelers who have a longer average trip, especially if they’re commuting to work, a fixed-cost mass transit ride may make more sense economically.Disaggregating travel time impactBCG and the WEF then used an advanced simulation model developed by analytics division BCG GAMMA to examine the impacts of AV adoption in Boston. The model projected a 15% decrease in the number of vehicles on the road, mainly caused by the shift from personal cars to mobility-on-demand. The model also, however, projected a 16% increase in the distance traveled by vehicles resulting from the added trips of on-demand vehicles to pick up and drop off passengers, and the empty miles driven in between passenger rides. As such, it’s imperative that AV cars of the future are ‘eco-friendly,’ otherwise they may contribute to higher emission levels from transport.

The model found a significant decrease in the amount of parking space needed (48%) because of the shift to mobility-on-demand, wherein the car will just go on to its next passenger. The model also found a throughput (in this case, traffic flow efficiency) gain of 6.3% with 37.5% AV adoption. Increased efficiency derives from a lack of human driving behaviours like rubbernecking, poor lane merging, double parking, etc.

According to BCG GAMMA’s model, travel times in Boston would improve by 4% in the future. However, the introduction of shared AVs will actually increase congestion and travel times in the downtown core by 5.5%, as travelers substitute mobility-on-demand for short public transit trips – clogging the roads with more vehicles in the process. In suburban Brighton and Allston, on the other hand, shared AVs will mostly replace personal cars rather than public transit, reducing travel times by 12%. Thus, the roll-out of AVs will seem to give unequal congestion relief in suburban and urban boroughs.

The report offers a few options to mitigate the negative urban congestion effects. One suggestion is to create an occupancy-based pricing scheme, which makes travelling alone more expensive – whether in a personal car or a robo-taxi. Making single-person rides more expensive would shift travelers to mass transit and shared taxis and minibuses.

With almost 50% less parking needed, cities could also convert street parking to additional lanes and ease congestion. In the report’s estimation, 20% of on-street parking in Boston could be leveraged for conversion to peak-hour driving lanes.

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Google topples Apple to take top spot on BCG's list of innovative firms

28 March 2019 Consulting.us

After ranking first on strategy consultancy Boston Consulting Group (BCG)’s top innovators list for 13 years, Apple has finally been knocked off the top spot, landing at third place.

Google usurped Apple’s crown, and Amazon rose to second place on BCG's ranking of the top 50 global innovators. Microsoft and Samsung rounded out the top five, with Netflix, IBM, Facebook, Tesla, and Adidas filling out the top 10. BCG’s ranking was based on a global survey of more than 2,500 senior innovation leaders.

Tech firms dominated the top end of the innovators list. Traditional industries, however, still accounted for more than half of the top 50: Adidas, Boeing, BASF, Johnson & Johnson, and DowDuPont all ranked in the top 15.

The rising importance of digital technology – including artificial intelligence (AI), platforms, and ecosystems – was the central touchpoint of BCG’s survey. Top innovators are increasingly embracing AI in particular to develop new products and services, and to improve the internal innovation process itself.

"Digital technology and external innovation have become watchwords," Ramón Baeza, a BCG senior partner and the report's coauthor, said. "All of the top 10 companies – and many in the top 50 – use AI, platforms, and ecosystems to enable themselves and others to pursue new products, services, and ways of working."

2019 Most Innovative Companies

Platforms provide a foundation on which companies can develop their business offerings, with Amazon Web Services (AWS) and Microsoft's Azure offering some of the leading cloud-based platform services. According to BCG, ecosystems go a step further, pulling together technologies, apps, platforms and, other services to build an integrated solution. Android and iOS, for example, are now a complex ecosystem of telecoms, phone manufacturers, and app developers. AI, meanwhile, simulates human intelligence to achieve groundbreaking new technologies such as self-driving cars and "smart" digital assistants.

The top firms on BCG’s list extensively use AI, platforms, and ecosystems. Google has invested heavily into AI, which is apparent in the company's smart speaker Google Home, the accurate autocompletion of sentences in Gmail, or in its autonomous driving venture. Android, meanwhile, is a truly expansive ecosystem.

Amazon utilizes the cutting-edge Alexa AI voice technology as well as the widely used AWS platform. Apple offers Siri and iOS.

Of survey respondents, 90% said their firms are investing in AI, with more than 30% expecting it to be the innovation area with the highest impact on the businesses in the next three to five years.

Just under 20% of respondents said their companies were strong innovators and above average in AI innovation (what BCG terms "AI leaders"). Among the subgroup of AI leaders, 94% said they see AI as important to their companies’ future growth, as opposed to 56% of AI "laggards" (who rate their AI capabilities as below average).

"AI will have a significant impact on business processes, but its biggest potential lies in developing new products and services that can yield major revenue streams over time," Michael Ringel, a BCG senior partner and the report's coauthor, said.

Which areas of innovation are you actively targeting?

McDonald’s (21st on the list) is using AI algorithms on digital menus that change according to time of day, restaurant traffic, and the weather. Philips (29th) last year launched an AI platform that allows healthcare industry workers to access advanced analytics that curate and analyze healthcare data.

AI is already unlocking value for advanced users: 46% of AI leaders said AI-enhanced products and services represented 16% of sales, versus 10% for laggards.

In a world of platforms and ecosystems, the BCG report found partnership models are gaining steam. Strong innovators have upped their partnership usage from 2015-18, with incubator use rising from 59% to 75%, academic partnerships from 60% to 81%, and company partnerships from 65% to 83%.

Platforms and ecosystems help facilitate innovation, while expanding reach and collaboration, allowing for stronger, multiparty solutions. “Not all ecosystems are alike, however. They have different types of glue that bind their participants. Money is one type, of course, but knowledge, data, skills, and community can be equally important," Florian Grassl, BCG partner and report coauthor, said.

Four companies on 2018's top 10 list were also in the top 10 in 2005: Google, Amazon, Microsoft, and IBM. BCG deems these companies “serial reinventors,” which sets them up well for continued innovation dominance. Google continues to revise its offerings and algorithms, Amazon disrupts new categories and builds new services, and Microsoft and IBM have successfully transitioned into cloud-based services.

"The tools and technologies of innovation evolve,” BCG’s report states. “The basic orientation toward change – never being satisfied and always being willing to reinvent oneself – remains part of some companies’ lifeblood.”