Enterprise

Facing in front of a high huge wall

Most dreamers or potential entrepreneurs who seeks to change the transportation scheme are like small mice standing in front of a huge wall and want to break it. Is it possible to pierce the huge block of problems that stands in front of the entrepreneurs who want to enhance their new proposals? Is it feasible to implement a full-scale innovative commercial transportation system?

Complication

Innovation and construction a full-scale new transportation scheme is a most complicated mission. Such scheme should comprise many disciplines, should be scrutinized from many aspects and above all should be accepted by many different customers with various demands, motives and interests. One obstacle can ruin efforts that weather many other obstacles, and the "most logical proposition" is not a guarantee for success.

Enmeshment in dummy circles

How were the first pliers created, when there where no pliers to make them? This is a dummy circle; a closed logic circle in which each component is dependent on the other. Sometimes it is hard or seems impossible to break the dummy circle. The vision of automated intelligent ground transportation net demands to break many dummy circles. Here are few examples:

  • Automatic intelligent surface transportation will be efficient when a global web of guide-ways will be built. A global web is dependent on consent of local regions. Local regions do not want inefficient system that is not global.

  • In order to achieve customers' confidence in a new automatic transportation scheme, a new scheme must be tried by the customers. The customers will not try new untested transportation scheme.

  • In order to change the targeted customer's transportation habits the customer must see his neighbors changing their habits first. The neighbors will not change their habits if they don't see the change of the targeted customer's habits first.

  • No one wants to buy an unproved and untested system. New systems cannot be proved and tested if nobody will buy and try them.

  • No one wants to buy or invest money in a new system that lack global standards.

  • The penetration and implementation of new transportation systems will be easy when the public will be ready to the change, but with small chances to be welcomed the entrepreneurs have no motivation, to promulgate their innovative products and no one lays a wide foundation for public readiness.

  • Investors prefer secured investments. Innovative systems will be secure investments after money will be invested in them.

  • Financial support may help to establish new organizations and innovative systems. Without sufficient finance there are no new organizations or systems that can be supported.

  • Credit depends on faith, but nobody has faith in those who can not raise credit.

  • Credit depends on low risk, without credit the risk is high.

Braking human dummy circles without exterior intervene is a mission that demands patient and small integrated steps of the dependent factors that combine the dummy circles. The small steps, heels beyond toes, are destined to build mutual faith progressively and evolutionary.

Hitting a moving target

The confrontation of innovative transportation entrepreneurs may not be confined to old-fashions. In modern world development of technologies is a dynamic process that faces hard competitive pressure, keeping pace with the world development is like hitting a moving target.

New technologies are emerging quickly and will try to catch their chunk whenever potential new market is revealed. In accelerated dynamic era of fast information transfer there is no technology that stands on a stable ground. The harsh competition may knockdown good intentions at the early stage of deliberating the intrusion to the transportation arena.

The process of transportation metamorphosis

The process of transportation transformation will be probably prolonged, evolutionary and dynamic. This outcome derives from the public interests, the marketing problems and the dummy circles that control the process. Incremental steps of acts and dialogs that will gradually educate and create faith in new systems could dissolve these problems.

It is also probable that the wall of traditional transportation will fall by the acts of many "mice entrepreneurs" that will nibble this wall or tease the "elephants" to join them at a certain stage.

The process of dynamic evolution will include perpetual negotiation with the customers and the interests that hold domain in the transportation world, but the obstacles will not be confined to those set by the wall of conservatives. New rivalries, technologies and concepts are existing and emerging. What seems to be promised idea today may become obsolete by new innovations or concepts tomorrow.

During the process, standards might be crystallized. A scheme that will evolve regardless to the standards without adaptability capabilities to be straight with new standards may not sustain.

The way to encounter the process characteristics is by holding evolutionary oriented strategies. These strategies oblige elasticity in the design and manufacturing of the product and the shape of the organization that design and produce the innovative systems. Adaptability to new demands and technologies may keep the pace with the fast shifting environment as well as the sustainability of the organization.

This web-site proposes few strategies for the "mice" who stand behind the huge wall. Strategies of simplification the huge problem, of survival in risky process, and survival in a dynamic, lengthy, evolutionary process. Our assumption is that it is better to swim with the process stream rather than against it.

Some range distinctions

Risks and the chances

It is a historical fact that until now attempts to substantively change the existing transportation concepts did not succeed. Entrepreneur who seeks to challenge the existing transportation scheme should understand that he gambles in a very risky game, especially in short terms. On the other hand, in the long run there are better chances that can be great drive for motivation and investments.

Insight of the genuine risks and chances is most important before planning to implement sustainable innovative ground transportation system. The high risks set high barriers. These barriers should be faced soberly by facing and confronting reality and not illusions or wishful thinking. It is not only a moral obligation not to mislead partners, customers or investors, with illusions. High expectations may lead great disappointments and harm in the long run.

There are strategies to deal with business risks, risks and chances have fair price, and there are some noticeable advantages in risks and uncertainty:

  • When there are so many huge problems, each of them overshadows the others and makes them relatively small.

  • When potential entrepreneurs, partners, investor or customers, calculate the real risks, their expectations are very low. Low expectations are a vantage for negotiation. It would be easier to reach consensus about the best design of new transportation system when the partners and the customers have low expectation, or it would be easier to set the shares of the participants or the profits division between investors who have low expectations.

From the present prospect, it can be estimated or speculated that there is a general curve of risks and chances rating along the time axis. The chances of innovative transportation systems to be implemented and yield profits in short terms are very low, and the risks are great. Along the time axis, in a medium or long terms the chances may be increased with acceleration toward the climax, that might be a turning point to down course. We will try to explain this estimation.

  • Short range - In a short period, when the dummy circles are closed and everyone is waiting to the first initiation of the other, there are very flimsy prospects for cost effectiveness or profit collection. At the beginning the progress will be very slow and the risks will be high. Newborns' problems like research and development, faith procurement, right of way acquisition, system construction, marketing penetration, systems proving demonstrations, childhood illness or trial and error may cost heavy price.

    Vis-a-vis the investments the incomes are supposed to be limited and low since the penetration will probably start in a small niche with low profits and minimal public support.

  • Medium range - after the breakthrough, the process will probably be accelerated dramatically and the chances will increase. When the dummy circles will start to be broken, faith in innovative systems may yield positive expectations, which will be leverage to implementation.

  • Long range - On the long run reason prevails. Logical and moral systems will substitute one day existing transportation systems. The questions are just when, how and where? The huge wall might collapse after evolutionary process of public sobriety, percolation of new ideas to the public opinion, or shifting of trends or fashions. As well as the chances for evolutionary process, the wall might collapse dramatically because of extrinsic factor like gasoline crisis or ecological crisis that can be foreseen.

    When the huge wall will fall the "mice entrepreneurs" will have much better chances to implement their systems in global markets. Public opinion might be changed rapidly when new rivaling entrepreneurship of innovative transportation system will invest money in order to promulgate their businesses, and the new ideas will start to penetrate into public mind.

    In a communicative and dynamic world, shift could be done as a storm, when business forces may discover the high potential of innovative transportation systems, and a modern gold rush will dash to this channel. Transportation markets are enormous and have high potential; the success of the Internet companies in stock markets may repeat itself in the transportation field.

  • Very long range - Transportation is not a private matter, it involves public and hence politics. In democratic regimes it is impossible to change transportation without public interfere, therefore even if one succeed to implement better transportation system he will have to share the "potluck" with others, if he were lucky enough that no one snapped it out of his hands. New inventions never stop to emerge, after succeeding to make a progressive step, new technologies will keep challenging the existing technologies and risk their domain.

    • Long and short range inputs

    An important key distinction should be displayed when dealing with entrepreneurship that wish to intervene in the transportation "natural" evolutionary process - The distinction between long and short range inputs. The range distinction is common to and derived out of the risks and chances analysis.

  • Long range input - Long-range inputs are those with potential and fair chances to be integrated in the long process and yield long-range profits if and when the process will serve some anticipation. This category may include intellectual properties, technologies, know-how, knowledge, experience or goodwill.

  • Short range inputs - Short-range inputs are those that may be consumed with no future prospects, like materials, energy or labor that do not yield special experience or know-how.

    In addition "universal inputs" must be mentioned. "Universal inputs" are money investments that deserve special discussion. According to the assumption of the risks and chances analysis, long range inputs must keep the process perpetuity, and be the crane that will lever the whole process.

    • Long and short range income resources

    In order to sustain and survive, a business corporation should present a business plan that shows the methods to pay back investments and yield profits within expected time from investment. Revenues of new transportation system are a key factor that should be considered.

    Innovative transportation systems may yield definitive benefits like safe, clean, quick or comfort mobility, economic growth or time saving, but benefits are not enough if they could not be restated as sources of financial incomes. We mentioned that the pricing of transportation benefits and disadvantages is sometimes distorted, and important components are not quantifiable. This distortions should be taken into account by anyone who wants to present a solid business plan based on conservative assumptions and not on utopic revolutionary economy of transportation.

  • Selling transportation services - the term "services", usually relates to personal services; in the context of transportation services, taxi or bus drivers are supplying transit services. This terminology may not fit well to automated transportation scheme without drivers, otherwise relating the services to the persons that operate and maintain the automatic net. We use the term "service fees" as the payments the rider will ask to pay for the ridership on the automated system.

    Conservatism lead to the assumption that new transit "services fees" will be prices that are similar or derived out of the prices paid for traditional transit services. This assumption may be based not only on the competition and balance with conventional transit methods, but also on the deep involvement of the public in transportation economy.

    Generally, the fares which consumers pay for existing public transit are relatively low and completed by public subsidies. Business plan cannot be done in general way, Nevertheless, by rough estimation it can be guessed that at early stages of new transportation system operations, incomes from services fees alone may refund costs of operation and maintenance, but very doubtfully will refund other investments.

    If the innovative system will be highly efficient it might begun to return investments after long term of fares collection, or after succeeding to be wide enough to gain advantage from its size, or at more developed stage from mass production.

  • Selling transportation assets - transportation assets are private vehicles, which can be subjected to private ownership or other property rights.

    It should be remind here that private transportation assets have some deficiencies from the general public outlook, and are significant contributors to the bubble effect in transportation. Private transportation assets are unused most of the time while consuming parking lots wherever they stand futile, and customary their size over-qualify the needs of the users, but fit to serve unusual maximal needs. On the other hand transportation assets are efficient tools to encumber transportation taxes on property owners, and have balancing effect on supply and demand - since people tend to care more for their private belongings.

    From individual consumer's point of view the transportation assets enable the freedom to move, with an under the hand available and efficient mean. Transportation assets serve important social, behavioral, psychological needs of most individuals to express their personality, and sometimes may be fitted specially to unique needs of their owners.

    Apparently transportation assets have most significant advantages to the transportation industry and may retain this value for innovative transportation industry. Transportation assets serve marketing strategies by enabling to segment different needs, positioning of different products, encouraging transportation use, source of single extensive income, (relatively to services), and to answer different wishes. Transportation assets are answers to emotional needs, the best incentives to wide-open consumers' wallets.

    Although automated transportation is most compatible to be used in a method of "use and go" services, limited amount of private vehicles should be considered from profitability point of view.

  • Renting or leasing transportation assets - Since automatic transportation systems rises questions with regard to the appropriateness of the term "services" it may be defined as rent. Rent of lease of vehicles can evolve variant kinds of transactions, which may fit markets demands, and may lead to better marketing and enhanced revenues.

  • Subsidies - Public transportation is usually subssidized. Without the subsidies, and even with them, profits are not promised. Entrepreneurs of innovative transportation systems should take into their accounts that their rivalries may get subsidies and have economical advantages, and to draw together as much public support as possible, in order to achieve financial public assistance.

  • By products of the new system benefits - This category include creative sources of peripheral incomes that will be linked, derived or motivated by the benefits and the future prospect of automated intelligent transportation systems.

    • Innovative transportation systems promise significant benefits like free users time, free occupied lands, better safety and health, clean air, or less energy consumption. Agreement of payments against successful accomplishment of promises, rewards those who deserve it, and fits particularly the exigency to sell unproved systems and break some closed dummy circles. Arrangements in which the public share its benefits from better transportation systems with the private entrepreneurs who suggest innovative systems may be a fair compromise between the interests.

    We suggest some practical measures in which the public may let the entrepreneurs to enjoy peripheral fruits of the innovation.

    • Part of the parking lots, road space or stripes that will be freed by innovative transportation system may be allotted to the private entrepreneurs.

    • The benefits of consumers free time or health, saved by innovative system, may be exploited by franchising the entrepreneurs with exclusive rights to operate leisure business like recreations or amusements parks, (one of the leisure may be a traditional car racing or driving).

    • The betterment of lands close to the transportation main corridors may be given to the transportation entrepreneurs.

    • Franchise to use advertisement space or means outside or inside the automatic vehicles may be a peripheral revenue source.

    Responses and comments would be welcome at rothar@inter.net.il
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