Introduction to business model innovation in mobility and automotive aspects

The purpose of the following paper is to demonstrate the different possibilities of business model innovation in mobility and automotive aspects. More precisely, the written report focuses on business model innovation in respect of urban mobility. Since, urban mobility is getting more and more relevance of future management tasks. Moreover aspects of car sharing and renting cars are discussed in literature often. Therefore, the paper gives a detailed overview of the theoretical and practical background of business model innovations of urban mobility including automotive issues. The paper is structured in three main passages….

Mobility is a basic condition for participating in working life. Other relying aspects of mobility are engaging in social, cultural and political activities and availing educational opportunities. In the future, urban mobility will cost 829 billion euro by 2050. The amount of people and goods transported is expected to triple. On top of that, urban mobility will use 17.3 % of the planet´s bio – capacity (Lerner, 2011, pp. 1-15). The development of automotive issues and mobility reflects the economic, social and technical trends in the cities. The population of cities is constantly growing both for demographic reasons and migration into cities aspects. Cities are the central points of economic growth and thus of individual prosperity which lead to a growing differentiation in lifestyles and mobility requirements. The growing individualization of urban society coupled with a growing number of small households leads to more traffic. Cities are developing more and more into metropolitan regions within which the distances between homes, workplaces and recreational facilities increase. Moreover, an increasing geographic flexibility of employees makes the streams of commuters grow between cities (Gackenheimer, 1999, pp. 671– 689). New forms of shopping by transportation, especially in large malls and the use of relaxing facilities on the parking lane of cities generate new modes of traffic. On top of that, the usage of e-Commerce implements new shopping culture and, therefore, new ways of transportation, for example meals on wheels, result in growing individual delivery operations. The “just-in-time” delivery of physical products and services results in the growing transport of goods and people in cities. Last but not least, people’s increasing speed orientation leads to a high demand for mobility services on road and rail, on the water and in the air (Sing, 2013, pp.1-15). For these reasons, the question is how can business model innovation increase the performance of urban mobility and satisfy the needs of the citizens. In the following different business model innovations are introduced and more precisely explained in theory and practice.
Urban mobility management in Hong Kong

The following passage gives a picture of the use of business model innovation as an indispensable tool in mobility of urban development based on the case of Hong Kong. Therefore, general geographical and social facts of the city are mentioned. After that, transport characteristics and the urban mobility vision in Hong Kong are analyzed. Finally, a summary, lessons learned and an outlook of business model innovation of urban mobility in Hong Kong and the world is given.
Hong Kong is situated in the southeast coast of China. Around 7 million people are living in an area of only 1.000 km². Hong Kong emerges with the second highest population density in the world after Macao. As a leading Asian city, Hong Kong is ranked among the top 25 wealthiest countries and its citizens can increasingly afford luxury products and a modern way of living. Further, Hong Kong has slightly more than half of Japan´s real income per person and the average size of households is about 3.4 people (Mapp, 2006, pp. 35¬-45). The number of vehicles on roads is about 500.000 cars, representing a very low vehicle ownership ratio. The total length of road in service is about 1.900 km. More than 14 million person trips per day are made on various modes of transport. Over 80% of all person trips are made by using public transport excluding taxis. The high usage of public transportation systems is the result of an advanced urban mobility vision (Saunders, Wong, Duften, 2006, pp. 1-23). On top of that, Hong Kong has the highest urban mobility index in the world with 81.9 points. The urban mobility index examines the ways in which innovators are developing new technologies to not only move people but also bring them faster to the final destination. The index consists of two main facts that are performance and maturity aspects. Each category involves special analysis, for example the satisfaction with transport system or the penetration of smart cards. Below mentioned these aspects are examined for Hong Kong. The model split of the share of public transport, walking and cycling is excellent. Furthermore Hong Kong´s vision of mobility is well developed. The penetration of citizens living in Hong Kong and using smart cards is demonstrative. Since, the citizens are travelling with public transport modes and the low car per person ratio Hong Kong has a low transport related CO² output. The average travel speed is about 23 km/h and the mean of travel time to work is about 35 min. Nevertheless, Hong Kong has room for improvement regarding to the car and bike sharing performance. In general, Hong Kong’s population is satisfied with the possibilities of transport. In the appendix the chart of Hong Kong´s urban mobility index is listed. Hence, Hong Kong also has to face several challenges. The first urban’s challenge is the limitation of geographical extension potential. The infrastructure of the city is, therefore, jammed. An increase of population and the need for transportation must be managed under the limitation. Secondly, the traffic accidents increase of 4.0 % p.a. is a major problem for the urban mobility management. In the year 2003 about 9.7 million vehicles travelled to Hong Kong. 2011 more than 29.2 million vehicles were registered travelling from abroad to Hong Kong. This dramatic increase in cross border traffic must be organized and handled. As in many Asian cities, also Hong Kong must overcome the problems of air pollution (Adlittlel, 2011). Business model innovation can help and find solutions for the mentioned challenges. The city reacts with different initiatives and projects reflecting business model innovation. The most important project is called Octopus. Octopus is a multimodal mobility card. Innovation is the cornerstone of its success. The technology has extended from transport to practically every aspect of life in Hong Kong, and the growing number of new applications demonstrates how octopus and partners find new ways to apply the technology to everyday use. Octopus has come a long way since its debut in Hong Kong over a decade ago. Today, 95% of people in Hong Kong aged 16 to 65 uses Octopus to travel, to shop and to dine without the hassle of coins. From a simple way to pay fares on public transport, the card have extended the reach into small-value payments in the retail sector as well as many other applications, including access control for residential and commercial buildings and support for various facilities in schools. With the backing of over 5,300 service providers, innovative applications have been coming on the market to the delight of the customers. The growing number of business applications demonstrates how Octopus and its partners are continuing to find new ways to apply the Octopus technology to everyday life. Nowadays, Octopus is more than just a card. From on-loan cards to sold products for consumers and corporations, including key chains, ornaments, watches and limited edition cards, there is an Octopus to suit people´s lifestyle. The Octopus range continues to grow. Over 1 million customers currently enjoy the hassle-free automatic add value service provided by over 20 financial institutions, ensuring that they never run out of value. Octopus users can also reload manually with cash at thousands of locations all over town. In addition, there are over 3 million people registered under the widely adopted Octopus Rewards program, allowing members to earn reward regardless of their payment means, and redeem them as cash, across over 20 participating merchants. The multimodal card also seeks to enhance its services with a view to delivering a positive and delightful customer experience. Octopus' success is important to Hong Kong people not only because it's part of everyday life. It's also made everyday life so much easier. Octopus is committed to ensuring that customers who use the services each and every day continue to do so with the confidence and trust that have made the card an integral part of daily life in Hong Kong (Octopus, 2006). Another project of business model innovation regarding mobility aspects in Hong Kong is that Hong Kong has an extensive system of free charge escalator and people movers in the city centre. The high taxation of cars, 25-100% of the car´s value, is also one measure in order to dissimulate the car penetration rate. On top of that, the subway network is aggressively extended and a Mass Transit Railway (MTR) was built in the year 1975. “Carrying an average of 4.9 million passengers every weekday, the MTR is regarded as one of the world’s leading railways for safety, reliability, customer service and cost efficiency. To meet the needs of an average 4.9 million passengers each day who rely on railway as their main transport mode, MTR provides a wide range of services that add convenience and contribute to great living. For passengers, MTR stations are convenient places to shop because of the wide variety of goods and services they offer – from fashion, food and books to banking, dry cleaning, shoe repairing and travel services. Accordingly, occupancy rates in these high‑traffic locations have always been high, benefitting from Hong Kong’s favourable economic climate. With the rail merger, the large number of shops in MTR’s extended network now comes under one management. For retailers and passengers alike, this brings obvious benefits in terms of efficiency and economies of scale. Well‑known as a platform for innovative advertising and promotion campaigns, MTR uses traditional and digital advertising panels, free‑standing displays, concourse and trackside plasma screens, as well as the Newsline Express multi‑media broadcast service on board trains, and free publications etc, to create opportunities for advertisers to reach large numbers of targeted consumers. These and other promotional activities generate substantial revenue for the Corporation. MTR is one of the first railways in the world to introduce 3G‑capable telecommunications, allowing passengers to access the Internet and other high speed data services via their mobile devices along the MTR network. Wi‑Fi services are also available in 53 stations, Airport Express In‑train and on board the Guangzhou – Kowloon” (MTR Corporation Limited, 2012, pp.1-8). In summary, the aggregation of the demand across customers allows Hong Kong´s urban mobility management to realize the benefits of economic of scale more quickly. It also provides greater leverage over the overhead costs of keeping abreast of the latest technological developments. Nevertheless, the aspect of safety in mobility and its innovation is a significant success factor of Hong Kong´s urban mobility management (Weinman, 2011, pp.12-15).The analysis of Honk Kong´s implementation of different transportation modes in order to manage urban mobility difficulties gives an outline, how business model innovation can help a city to increase its urban mobility performance. The following aspects can be transferred to other regions and cities. In general, cities can implement and work with a plenty of different political, legal and structural instruments in order to build up a positive environment for business innovation in urban mobility. An individual mixture of fitting stimulations and restrictions is also an effective tool for increasing business model innovations. Furthermore, a success factor is the willingness of the city, partners and other participants. The intensive cooperation of all involved parties is the support of trust and a considerable basis for using the local potential. Leaders of the relevant stakeholder groups have to formulate a common vision for the mobility concept. Hereby, the overall visibility, the planning reliability and the degree of reliance rise. On top of that, by reducing travelling time and energy, business model innovation conserves urban mobility management focus. But also customer needs must be concerned (Maclean, Shalaby, Miller, Kennedy, 2005, pp. 393-414). Often, business model innovations run for the convenience of their operators rather than consumers. An also crucial aspect is the implantation of adequate competition. Since, services have a tendency to decline unless there is meaningful competition. With the help of modernization of processes, on the one hand, and the full understanding of the complexity in logistical areas, on the other hand, urban mobility and its business innovation will gain more and more importance in the future (Sing, 2013, pp.1-15). The study shows that business model innovation in urban mobility aspects must be faced holistically and systematically. Hong Kong is a pioneer in the innovation of business models in the aspects of mobility and automotive. The city stands for a high engagement in managing challenges and increasing mobility performance. An important aspect of Hong Kong is the integration and connection of mobility with other economical concepts. Therefore, octopus is one persuasive example. The development and implementation of new business model innovation in mobility aspects hold powerful potential for the vitality of cities and economies worldwide

Introduction to business model innovation in mobility and automotive aspects

The purpose of the following paper is to demonstrate the different possibilities of business model innovation in mobility and automotive aspects. More precisely, the written report focuses on business model innovation in respect of urban mobility. Since, urban mobility is getting more and more relevance of future management tasks. Moreover aspects of car sharing and renting cars are discussed in literature often. Therefore, the paper gives a detailed overview of the theoretical and practical background of business model innovations of urban mobility including automotive issues. The paper is structured in three main passages….

Mobility is a basic condition for participating in working life. Other relying aspects of mobility are engaging in social, cultural and political activities and availing educational opportunities. In the future, urban mobility will cost 829 billion euro by 2050. The amount of people and goods transported is expected to triple. On top of that, urban mobility will use 17.3 % of the planet´s bio – capacity (Lerner, 2011, pp. 1-15). The development of automotive issues and mobility reflects the economic, social and technical trends in the cities. The population of cities is constantly growing both for demographic reasons and migration into cities aspects. Cities are the central points of economic growth and thus of individual prosperity which lead to a growing differentiation in lifestyles and mobility requirements. The growing individualization of urban society coupled with a growing number of small households leads to more traffic. Cities are developing more and more into metropolitan regions within which the distances between homes, workplaces and recreational facilities increase. Moreover, an increasing geographic flexibility of employees makes the streams of commuters grow between cities (Gackenheimer, 1999, pp. 671– 689). New forms of shopping by transportation, especially in large malls and the use of relaxing facilities on the parking lane of cities generate new modes of traffic. On top of that, the usage of e-Commerce implements new shopping culture and, therefore, new ways of transportation, for example meals on wheels, result in growing individual delivery operations. The “just-in-time” delivery of physical products and services results in the growing transport of goods and people in cities. Last but not least, people’s increasing speed orientation leads to a high demand for mobility services on road and rail, on the water and in the air (Sing, 2013, pp.1-15). For these reasons, the question is how can business model innovation increase the performance of urban mobility and satisfy the needs of the citizens. In the following different business model innovations are introduced and more precisely explained in theory and practice.
Urban mobility management in Hong Kong

The following passage gives a picture of the use of business model innovation as an indispensable tool in mobility of urban development based on the case of Hong Kong. Therefore, general geographical and social facts of the city are mentioned. After that, transport characteristics and the urban mobility vision in Hong Kong are analyzed. Finally, a summary, lessons learned and an outlook of business model innovation of urban mobility in Hong Kong and the world is given.
Hong Kong is situated in the southeast coast of China. Around 7 million people are living in an area of only 1.000 km². Hong Kong emerges with the second highest population density in the world after Macao. As a leading Asian city, Hong Kong is ranked among the top 25 wealthiest countries and its citizens can increasingly afford luxury products and a modern way of living. Further, Hong Kong has slightly more than half of Japan´s real income per person and the average size of households is about 3.4 people (Mapp, 2006, pp. 35¬-45). The number of vehicles on roads is about 500.000 cars, representing a very low vehicle ownership ratio. The total length of road in service is about 1.900 km. More than 14 million person trips per day are made on various modes of transport. Over 80% of all person trips are made by using public transport excluding taxis. The high usage of public transportation systems is the result of an advanced urban mobility vision (Saunders, Wong, Duften, 2006, pp. 1-23). On top of that, Hong Kong has the highest urban mobility index in the world with 81.9 points. The urban mobility index examines the ways in which innovators are developing new technologies to not only move people but also bring them faster to the final destination. The index consists of two main facts that are performance and maturity aspects. Each category involves special analysis, for example the satisfaction with transport system or the penetration of smart cards. Below mentioned these aspects are examined for Hong Kong. The model split of the share of public transport, walking and cycling is excellent. Furthermore Hong Kong´s vision of mobility is well developed. The penetration of citizens living in Hong Kong and using smart cards is demonstrative. Since, the citizens are travelling with public transport modes and the low car per person ratio Hong Kong has a low transport related CO² output. The average travel speed is about 23 km/h and the mean of travel time to work is about 35 min. Nevertheless, Hong Kong has room for improvement regarding to the car and bike sharing performance. In general, Hong Kong’s population is satisfied with the possibilities of transport. In the appendix the chart of Hong Kong´s urban mobility index is listed. Hence, Hong Kong also has to face several challenges. The first urban’s challenge is the limitation of geographical extension potential. The infrastructure of the city is, therefore, jammed. An increase of population and the need for transportation must be managed under the limitation. Secondly, the traffic accidents increase of 4.0 % p.a. is a major problem for the urban mobility management. In the year 2003 about 9.7 million vehicles travelled to Hong Kong. 2011 more than 29.2 million vehicles were registered travelling from abroad to Hong Kong. This dramatic increase in cross border traffic must be organized and handled. As in many Asian cities, also Hong Kong must overcome the problems of air pollution (Adlittlel, 2011). Business model innovation can help and find solutions for the mentioned challenges. The city reacts with different initiatives and projects reflecting business model innovation. The most important project is called Octopus. Octopus is a multimodal mobility card. Innovation is the cornerstone of its success. The technology has extended from transport to practically every aspect of life in Hong Kong, and the growing number of new applications demonstrates how octopus and partners find new ways to apply the technology to everyday use. Octopus has come a long way since its debut in Hong Kong over a decade ago. Today, 95% of people in Hong Kong aged 16 to 65 uses Octopus to travel, to shop and to dine without the hassle of coins. From a simple way to pay fares on public transport, the card have extended the reach into small-value payments in the retail sector as well as many other applications, including access control for residential and commercial buildings and support for various facilities in schools. With the backing of over 5,300 service providers, innovative applications have been coming on the market to the delight of the customers. The growing number of business applications demonstrates how Octopus and its partners are continuing to find new ways to apply the Octopus technology to everyday life. Nowadays, Octopus is more than just a card. From on-loan cards to sold products for consumers and corporations, including key chains, ornaments, watches and limited edition cards, there is an Octopus to suit people´s lifestyle. The Octopus range continues to grow. Over 1 million customers currently enjoy the hassle-free automatic add value service provided by over 20 financial institutions, ensuring that they never run out of value. Octopus users can also reload manually with cash at thousands of locations all over town. In addition, there are over 3 million people registered under the widely adopted Octopus Rewards program, allowing members to earn reward regardless of their payment means, and redeem them as cash, across over 20 participating merchants. The multimodal card also seeks to enhance its services with a view to delivering a positive and delightful customer experience. Octopus' success is important to Hong Kong people not only because it's part of everyday life. It's also made everyday life so much easier. Octopus is committed to ensuring that customers who use the services each and every day continue to do so with the confidence and trust that have made the card an integral part of daily life in Hong Kong (Octopus, 2006). Another project of business model innovation regarding mobility aspects in Hong Kong is that Hong Kong has an extensive system of free charge escalator and people movers in the city centre. The high taxation of cars, 25-100% of the car´s value, is also one measure in order to dissimulate the car penetration rate. On top of that, the subway network is aggressively extended and a Mass Transit Railway (MTR) was built in the year 1975. “Carrying an average of 4.9 million passengers every weekday, the MTR is regarded as one of the world’s leading railways for safety, reliability, customer service and cost efficiency. To meet the needs of an average 4.9 million passengers each day who rely on railway as their main transport mode, MTR provides a wide range of services that add convenience and contribute to great living. For passengers, MTR stations are convenient places to shop because of the wide variety of goods and services they offer – from fashion, food and books to banking, dry cleaning, shoe repairing and travel services. Accordingly, occupancy rates in these high‑traffic locations have always been high, benefitting from Hong Kong’s favourable economic climate. With the rail merger, the large number of shops in MTR’s extended network now comes under one management. For retailers and passengers alike, this brings obvious benefits in terms of efficiency and economies of scale. Well‑known as a platform for innovative advertising and promotion campaigns, MTR uses traditional and digital advertising panels, free‑standing displays, concourse and trackside plasma screens, as well as the Newsline Express multi‑media broadcast service on board trains, and free publications etc, to create opportunities for advertisers to reach large numbers of targeted consumers. These and other promotional activities generate substantial revenue for the Corporation. MTR is one of the first railways in the world to introduce 3G‑capable telecommunications, allowing passengers to access the Internet and other high speed data services via their mobile devices along the MTR network. Wi‑Fi services are also available in 53 stations, Airport Express In‑train and on board the Guangzhou – Kowloon” (MTR Corporation Limited, 2012, pp.1-8). In summary, the aggregation of the demand across customers allows Hong Kong´s urban mobility management to realize the benefits of economic of scale more quickly. It also provides greater leverage over the overhead costs of keeping abreast of the latest technological developments. Nevertheless, the aspect of safety in mobility and its innovation is a significant success factor of Hong Kong´s urban mobility management (Weinman, 2011, pp.12-15).The analysis of Honk Kong´s implementation of different transportation modes in order to manage urban mobility difficulties gives an outline, how business model innovation can help a city to increase its urban mobility performance. The following aspects can be transferred to other regions and cities. In general, cities can implement and work with a plenty of different political, legal and structural instruments in order to build up a positive environment for business innovation in urban mobility. An individual mixture of fitting stimulations and restrictions is also an effective tool for increasing business model innovations. Furthermore, a success factor is the willingness of the city, partners and other participants. The intensive cooperation of all involved parties is the support of trust and a considerable basis for using the local potential. Leaders of the relevant stakeholder groups have to formulate a common vision for the mobility concept. Hereby, the overall visibility, the planning reliability and the degree of reliance rise. On top of that, by reducing travelling time and energy, business model innovation conserves urban mobility management focus. But also customer needs must be concerned (Maclean, Shalaby, Miller, Kennedy, 2005, pp. 393-414). Often, business model innovations run for the convenience of their operators rather than consumers. An also crucial aspect is the implantation of adequate competition. Since, services have a tendency to decline unless there is meaningful competition. With the help of modernization of processes, on the one hand, and the full understanding of the complexity in logistical areas, on the other hand, urban mobility and its business innovation will gain more and more importance in the future (Sing, 2013, pp.1-15). The study shows that business model innovation in urban mobility aspects must be faced holistically and systematically. Hong Kong is a pioneer in the innovation of business models in the aspects of mobility and automotive. The city stands for a high engagement in managing challenges and increasing mobility performance. An important aspect of Hong Kong is the integration and connection of mobility with other economical concepts. Therefore, octopus is one persuasive example. The development and implementation of new business model innovation in mobility aspects hold powerful potential for the vitality of cities and economies worldwide