A New Enterprise Approach:

Megacity Mobility [M2]

David Berdish
Sustainable Business Strategies, Ford Motor Company
Prince of Wales Business and Poverty Programme
November 13-16, 2006
Agenda
• Background: Sustainable Business Strategies
• Emerging 21st Century Megatrends
• A New Enterprise Approach: M2
• Work Plan and Scope

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Sustainable Business Strategies in perspective

• Key activities 2000 to date:

– Stakeholder Engagement – insight into changing societal
expectations and innovative community initiatives
– Disclosure – award winning Sustainability Reports
– Sustainability Risk & Issues – learning and management
of emerging issues notably climate change and human
rights
• Focus progressively shifting from risk management to
longer term opportunities of sustainable mobility
– Unifies wide ranging initiatives
– Responds to 21st century mega-trends
– Identifies new forms of added value and innovative
business models for FMC

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Unifying wide ranging initiatives

Piquette
Project
SMG CO2
Technologies roadmap

National
Human Rights
Dialogue

SBS
Environmental
Reporting
Management

NGO
Carbon Offset
Engagement
Green Bonds

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2006 Strategic Review
• SBS identified external threats and opportunities relevant to Ford’s
business, based on both internal and external research and the results
of the SLC Learning Summit in May – these observations, and our
responses, were presented to Automotive Strategy as input to the 2007
Strategic Plan

• Climate change and associated regulation will lead to new vehicle

standards and increased costs

• Increasing resource costs, and urbanization and congestion –

particularly in growing megacities – will cause customers to change
purchasing behavior and explore other means of transportation

• Shifting demographics and social inequality will lead to

increasingly diverse and fragmented markets

Addressing these issues can create vast new opportunities for the
company
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21st Century - Megacities

• 2015 = 33 megacities (27 in developing world): a

major shift of population from rural to urban areas
• 39 of the 50 most populated cities will NOT be in
the United States, Western Europe or Japan (a
major shift in per capita income)
• 2025 = 5 billion in cities
• 2050 = 450 megacities mostly in Emerging
Economies (vs. two in 1950)
• Two thirds of world population in cities: ‘social
disintegration and horrific urban poverty’

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Ford should respond to these factors

• Megatrends are resulting in megacities with

inevitable shifts in customer base and market
needs
• Present Ford business model will have to adapt to
meet radical new market requirements
• Affordable & city-effective transportation solutions
will require non-traditional models to deliver
megacity mobility
• No competitor is yet leading the way in
meeting/shaping the market needs resulting from
these fundamental shifts
• Ford has a real opportunity to establish
competitive advantage if it can develop the
solution sets that meet the new demographic and
economic dynamics
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Meeting the needs in Mexico City
• 18 million people with a per capita income of $15,000
• One of the largest, busiest and cheapest bus systems in the
world
• Ozone exceeding WHO limits 300+ days per year
• Over one million with permanent breathing problems

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Meeting the needs in Dhaka
• 13 million people with a per capita income of $2801
• 90% of schoolchildren with lead levels which impair
developmental and learning abilities
• The largest number of rickshaws (400,000) in the world

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Meeting the needs in Bangalore
• 6.7 million people with a per capita income of $842
• 1.4 million food ration card holders, 25% live in slums
• 300,000 IT employees travel 20km in 2 hours

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New Mobility Defined
• SBS partnered with U-M to explore
sustainable mobility solutions as a
result of Mobility 2030 and Changing
Drivers:
– New Mobility demands a highly-accessible,
seamlessly integrated, multi-modal
transportation system
– Meets individual transport needs while
minimizing its negative human and ecological
impacts
– Highlighted Ford’s potential role as a mobility
integrator
• Shifting our core competency (Building
Vehicles  Building Ideas  Building
Integration) will allow us to:
– Enter new, untapped, profitable markets
– Achieve progress toward sustainability-related
goals (GHG emissions reductions, etc.)
– Minimize threats from new, low-cost
manufacturers in the traditional market
• Can we come up with transportation
solutions that are lower costs to the
customer than a low cost car sale?
• How will the new solutions provide
revenue and growth opportunity for
Ford and its partners?
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A New Enterprise Approach: M2
• Creates new opportunities as a result of rapidly shifting demographics
that will create huge new markets with the majority living in cities
(and the needs of all levels of the economic pyramid)
• Creates prototype “products and services” based on the mega-city
needs and Ford's ability to deliver (skills, technology, patent portfolio)

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A New Enterprise Approach: M2
• Faced with increased competition from low-
cost auto manufacturers, stricter regulation
and policy standards, and immediate and
pronounced climate change effects from
high-impact individualized transportation,
Ford has the ability to generate profits and
alleviate poor conditions through new
mobility solutions
• Recall Ford’s beginnings: at the turn of the
previous century, Ford created a middle
class in the United States by offering
affordable options to the poor
• Ford can create new and different products,
not stripped down or inferior ones, that
fulfill identified needs
• Ford can rethink the problem:
– What do people need, and why?
– Do they desire a product, or does the inherent benefit take the form of the service
that the product provides?
– What does the revenue stream look like (not a car or part sale)?
– How can Ford catalyze economic, environmental and social development through
innovative mobility options?
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A New Enterprise Approach: M2

• Megacity Mobility is a vision for next-generation transportation

• It is a highly-accessible, seamlessly integrated, multi-modal

system that meets individual transport needs while minimizing
its impact on ecological systems

• Megacity Mobility includes personal and

commercial vehicles, public
transportation, other transport
products and services

• Value-add for current systems

– Smart
– Integrated
– Clean
– Efficient

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Megacity Mobility: Portfolio of Solutions
Leverage capabilities to design new technologies and success

Vehicle & Infrastructure Design “Market of the Majority” Transportation Services

• Advanced power trains • Planning & integration
• Vehicle materials • Car sharing
• Vehicles for seniors
• Village car
• Vehicles for congested cities
• Fleet services
• Vehicle alternatives in megacities
• Goods movement
Transportation Equipment • Turnkey solutions
• Interactive kiosks • Transportation for seniors
• End user equipment (readers/writers) • Urban to rural / rural to urban transport
• Safety systems • Remote medical transportation access

ITS Business Services

• Navigation systems
• Space & route optimization
• Ticketing & routing information
• Electronic payment systems
• Transit payment accounts
• Project financing & venture capital
• Mobility marketing services
• Outdoor and in-vehicle advertising
• Loyalty programs

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Work Plan and Scope
• Increased research on Mega-Cities and building Subject
Matter Expertise, including “research library”, including:
– Detroit
– Bangalore
– Istanbul
– Shanghai, Beijing, Chongqing, Jangling
– Hermosillo, Mexico City
– Bahia, Sao Paulo
– Cape Town, Johannesburg
– Hanoi
• Increased understanding of the needs of Mega-Cities’ citizens
while we continue to leverage:
– Sustainability reporting
– Engagement
– Human Rights Leadership
– Build Subject Matter Expertise in the Base of the Pyramid
Protocol

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Work Plan and Scope
• Development of new economic “systems” in Mega-
Cities, including a business planning approach for:
– Customers/Markets
• Citizens
• Community
• Mega-City Attributes
– Solutions
• New Mobility Portfolio
– Vehicle Design
– Transportation Infrastructure
– Technology and Logistics
• Partners
– Stakeholders
• Local Governments
• Local NGOs
– Investors
• World Bank and International Finance Corporation
• Social Venture Capitalists

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