Originally published on Medium.
Last week, Ohio’s Governor John Kasich announced a $45 million investment in the Transportation Research Center (TRC) for connected car and driverless testing. Two weeks ago, the US DOT anointed 10 cities as test and development sites for driverless cars. Even though Ohio did not have a city on the list, the wheels are already in motion to make the investments and policy changes that are necessary to attract R&D from the major automakers. Also, Columbus, Ohio won the Smart City challenge with $150 million that will be invested in central Ohio over the next 5 years.
The wind is at our backs! Momentum is building and with the right execution, Ohio can capture a large % of the investment in automotive innovation. The result should be the creation of new and improved transportation services that will be available, first, to Ohioans. We can create repeatable programs that can be exported to other cities.
“By being one of the first — and best positioned — states to embrace autonomous and connected vehicle technology, Ohio can also be among the first to benefit from its rewards, giving Ohioans a safer, better driving experience . . .” said ODOT Director Jerry Wray November 2016
The investment going into transportation innovation, however, is small compared to the massive amounts of dollars that states already spend on roads, maintenance, and transportation infrastructure. The cities that lost the Smart City challenge are racing ahead to implement their plans. The opportunity is there, but we need to experiment and move fast. If Governor Kasich wants to scale automotive innovation in Ohio, we need to start thinking like a startup.
Startup founders know that establishing Key Performance Indicators (KPIs) is an essential part of building a scalable company. For App startups, important KPIs might be your daily active users (DAUs) or for a SaaS startup, it could be your monthly churn. For a state, the KPIs need to be measured more frequently, they need to impact all citizens, and someone needs to be held accountable for achieving them (and rewarded when we exceed them).
Self-driving cars are at the end of the road for transportation innovation. Self-driving cars are the end game, but alot has to happen before our ride just picks us up. If we don’t move past individual-owned vehicles, then the investment in self-driving cars will disproportionately benefit the affluent few that are able to afford these vehicles. Our KPIs should be focused on how we will move away from car ownership to community-focused mobility-as-a-service programs. If we think like a startup, we need KPIs that help drive the business of innovation. I wrote these for Ohio, but they will work for every state and they can even be implemented at a local level.
These are 3 KPIs that every state should adopt for transportation innovation.
#1 : % of Household Income Spent on Transportation
#2 : % of Population Utilizing Public Transportation
#3 : % of Connected Vehicles Registered
#1 — % of Household Income Spent on Transportation
The average American family spends 19% of their household income on transportation, exceeded only by housing. Ohioans, on average, spend 17% of their earnings on transportation (2015 Report). This % remained the same between 2012 and 2015. Living where you work, eat and shop can reduce your transportation costs by as much as 10%, but that is not possible for the majority of people and cities could not support an influx or re-urbanization. By making the % of household income spent on transportation a KPI for transportation innovation, states will be accepting the challenge of reducing transportation costs for their citizens. If this is not a goal, why are we innovating?
The end goal of transportation innovation should be to reduce the cost of transportation. Owning a vehicle is incredibly expensive. It’s not just that cars are depreciating assets, but the total cost of ownership is extreme when you consider the utilization of your vehicle. Imagine paying a mortgage for a house that you lived in only 5% of the year and couldn’t rent out and just sat empty. We should rage against the high costs of transportation and demand change!
For the last 20 years, the cost of transportation as a % of household income has remained flat. Mobility-as-a-service is essential to reducing the % of income spent on transportation. It is not about buying a more affordable car. It is about fully utilizing the vehicle you have and eventually being able to forego a personal vehicle in exchange for a mobility suite that includes ridesharing, carsharing, and public transportation.
If we are spending less on transportation, disposable income will be available to reduce individual debt and stimulate economic growth within our communities. My startup advice to states is: Measure this KPI monthly and develop campaigns to actively encourage citizens to reduce their transportation costs by taking advantage of new forms of transportation. If states make this a priority, they will accelerate the demand for self-driving cars that will be an essential part of a mobility suite.
#2 — % of Population Utilizing Public Transportation
Only 2.4% of Ohioans use public transportation to commute to work. Those who take public transportation pay most with their time in exchange for a lower cost of transportation. Fixed routes and limited destinations make public transportation unusable for many people. Self-driving buses will not make public transit more accessible or more convenient. Instead, it will just eliminate a job while increasing safety by eliminating human error.
States already measure public transit utilization and Ohio reports on this with data from the census. The most recent report I could find was from 2000, so it is not useful for decision making today (which is the reason you have KPIs). % of Population Utilizing Public Transportation should be a KPI that is measured annually (and the startup CEO in me says it should be more frequent — but annual is a start). Our transportation officials should be reporting on the number of monthly active users (MAUs) and the number of new users that are being acquired each month for public transportation services. They should report on the churn of public transportation riders and invest in new rider acquisition. They should invest in customer growth and start thinking like a startup.
First and last mile is one of the major reasons that 97%+ of Ohioans do not use public transportation. Ride-sharing and car-sharing fleets can serve as the first and last mile for public transportation, but I am not seeing collaboration between these groups. If we are investing in 10 year-off technologies like self-driving cars, we should be making equal investments in public transportation services that utilize community-based ride-sharing and car-sharing programs. If states actively worked to increase the % of citizens using public transportation, they will accelerate the adoption of mobility-as-service and then we will have self-driving cars.
#3 — % of Connected Vehicles Registered
There are roughly 6.7 million vehicles registered in the state of Ohio. Most new vehicles being sold today are “connected” and their telematics systems are sending data from back to the automaker. Take a moment to think about all of the ways that data from the vehicle will be utilized and monetized. ITS BIG!
Connected cars are an extension of the internet of things. We define connected cars as any vehicle with an internet connection. For the sake of this article, we do not consider legacy vehicles that get their internet connection from a phone to be a part of the connected car market. We won’t get self-driving cars until we eliminate the non-connected cars on the road today. The average life of a vehicle is 8 years and 150,000 miles (according to Consumer Reports). The lifespan of a vehicle in the future will be much less as utilization is maximized and the 150,000 mile useful life of a vehicle will be consumed in one or two years. That will create an innovation adoption curve that looks more like microchips where every year or two the old technology is being replaced by far superior new technology. With vehicles lasting 8 years, it will take a long time for the cars bought today to be off the road and until those cars are gone.
States should adopt this as a KPI and start measuring the % of connected cars on the road because they need to accelerate the adoption of new vehicles. By measuring the % of connected vehicles registers on a monthly basis, states will be able to see if they truly are accelerating the adoption of new vehicles. States can easily do this by tracking vehicle registrations at the DMV.
Connected vehicles enable V2V and V2X innovation (Learn more about V2X — vehicle to everything). If more connected cars are being sold, automakers will recoup their investment in current vehicle lines and they will then make meaningful investment towards actually manufacturing self-driving cars. Every auto manufacturer COULD have self-driving cars, but there is an economic reason they do not and it is NOT because of liability.
Connected cars were only 3.9% of the market in 2016 so there is alot of room for growth. The % of connected cars registered is an essential KPI for states that want a piece of transportation innovation. If states want self-driving cars on their roads, they need to first start measuring the number of connected cars on the road.
Why is # of Traffic Deaths Per Year Not a Startup KPI?
I did not include # of traffic deaths per year because that is already a KPI that states are tracking. States have been flashing the number of deaths on overpasses for years and its a number that, sadly, increases until the new year turns it back to zero. From 2011 to 2015, Ohio reported steady traffic fatalities with a low of 990 in 2013 and a high of 1,122 in 2012. Reduced traffic deaths will be a result of ADAS vehicles that reduce driver errors. If a state is successful at reducing the cost of transportation, increasing the % of citizens using public transportation, and the # of connected cars on the road, the states will begin to see a decline in traffic deaths.
If you are interested in highway safety statistics, check out this dashboard from the DOT where you can build your own reports. ROADWAY SAFETY DATA DASHBOARD
If you are interested in meeting other people working on Automotive Innovation, check out the monthly AutoTech CBUS events in Columbus, OH.
Bonus KPI for Transportation Innovation
NPS — Net Promoter Score. If you care about transportation innovation, you need to care about customer satisfaction. Public transportation services should be surveying their users more frequently. States should care about consumer satisfaction for all transportation services and having an NPS system would be unique and exceptional (very startup-y).
Uber and Lyft use a two-sided scoring system where a 5 star rating is essential to keeping the supply and demand happy. If public transportation funding was tied to customer satisfaction or NPS, would there be a better user experience. States should consider how the experience of transportation impacts the perception of the service. If you love and trust your transportation, you will choose it over and over again. If states want to lead with transportation innovation, they need to build programs that establish love and trust with the passengers of the future.