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Reinventing the Automobile: GM & Ford vs. Startup Guy

By Shlomo  Maital   

Elio

   

  “In the ring, weighing in at about four ounces, is Silicon Valey startup guy Paul Elio.  Facing him, weighing in at 24,382 tons, is …General Motors, Ford, and VW.  12 rounds for the innovation championship in motor cars.”

    No contest.  A startup to make cars?    Non-starter, right?  Well, Paul Elio has done it.   There is a long LONG waiting list to buy the Elio automobile, a 3-wheeler, that gets…84 miles per gallon!  (Beats even the hybrids!).  The car is American made!   And its cost?  $6800.   (About the cost of 2.5  high-end Armani backpacks).   Here is what the Elio website says:

   “A few short years ago, automotive enthusiast Paul Elio sized up the prevailing status quo of personal transportation. He saw the soaring costs of the vehicles we drive. He saw fuel prices spike to record highs almost daily. He saw Americans struggling with an economy that was taking too much and giving back too little. Paul Elio decided that the world was ready for something radically new. The result? A three-wheeled masterpiece of automotive brilliance that bears his name.”    Elio’s vision?  “To provide a fun-to-drive, super-economical personal transportation alternative, that’s affordable, safe, and environmentally friendly. We are committed to the American dream, creating American jobs, and bringing American automotive ingenuity to every vehicle we build. This is, and will remain our mission at Elio.”

          The boxing match has begun.  It ends as soon as it begins.  Elio knocks out the automobile giants.  Why?   Big companies cannot innovate.  By definition.  They would never let a car like the Elio get past the drawing board.  Low margins.  Etc. 

        Elio Motors might yet fail. But like Tesla,  it could spur the car companies to actually try something innovative.   Innovation comes from rebels.  And rebellion is the last thing big companies seek or even allow. 

        Kudos to Paul Elio!   And Big Oil?    Think about trying another business.  

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Big Disrupters of 2014

By Shlomo Maital  

 disruption

Disruptive technology is technology that completely changes the ‘game’ for established players in an industry – changes the nature of business, products, services, marketing or other key aspects of doing business and creating value.  Harvard Business School Prof. Clayton Christensen drew our attention to disrupters many years ago.  Established companies that ignore disrupters do so at their peril.

   Here is  part of the Financial Times list of the major disrupters of 2014.   According to Financial Times reporters, “the range and number of individuals and companies that are upending business models around the world” is on the rise.  … “the disrupters are everywhere”.

  1. Uber: Tim Bradshaw and Murad Ahmed has become “the poster child of Silicon Valley for disruption”; the 5-year-old company revolutionised the taxi business in 230 cities and 51 countries without owning a single car, through its smartphone app.
  2. Alibaba: This online retailer, with $300 b. worth of online sales has transformed retail in China. It is now “snapping up low hanging fruit in overly state regulated markets” for everything. 
  3. Bob Diamond in Africa: He quit Barclays, and has now shown you can make money by inveting in sub-Saharan Africa. He raised $352 m. through an IPO in London in Dec. 2013, and has done deals in Botswana, Mozambique and Tanzania. 
  4. Aldi and Lidl: They are disrupting the grocery market around the world, and Aldi is even exploring China.  They have doubled their market share in the UK in the past four years.  Aldi has opened 1,350 stores in the U.S. and aims at 2,000 by 2018. Lidl too will soon invade the U.S. market.
  5. Ford:   Hard to think of Henry Ford’s moribund car company as a disrupter, but the new F-150 pickup truck, with an aluminium body, never used before on a high-volume vehicle, is indeed a disrupter. To do this Ford had to replace arc-welders with new machines to screw, rivet glue and laser panels together.   I remember another disrupter – Subaru, which made aluminium engines in 1973; I bought one, it was great, but was warned it would fail. Soon everyone was using aluminium for engines.
  6. Tesla: last June founder Elon Munk offered to open up its patent book, which is very large, to rivals, “in the spirit of open source movement, for the advancement of electric vehicle technology”. This was a clever move, not just PR. Munk wants the big car makers to adopt Tesla technology and boost the market for electric cars. Imagine if other large companies (Intel, IBM, Hitachi, Samsung, Apple) opened THEIR patent books so that everyone could use them free of charge.  

Blog entries written by Prof. Shlomo Maital

Shlomo Maital
September 2019
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