This places the largest online merchant in direct competition with some of the largest retailers in the US – grocery stores – and continues Amazon’s move into “bricks and mortar” businesses.

On this blog Paul and I have been writing about the importance of innovation in platforms and ecosystems.

With this acquisition, Amazon is attempting to extend its platforms into the “real” world and link up its power in the online world with physical stores.  Amazon understand a lot about attracting customers to its site, and does a reasonably good job at distribution.  Amazon gains a trusted “bricks and mortar” company that is respected (or sneered at) by consumers.  Whole Foods isn’t nicknamed “Whole Paycheck” for nothing, and there are some interesting dynamics between a company that isn’t concerned with profits and a company well-known for top of the line products and good customer service.  But we aren’t here to evaluate the integration of these companies, as much as to identify an ecosystem gap.

Amazon and the last mile problem

The “last mile” problem was originally identified in utilities – water, electricity and landline telephones.  That’s because origination and distribution were expensive but relatively easily solved, up until the “last mile”.  That’s because the power, water and phone connections had to branch from central pipes to connect to each and every house.  Large scale production and distribution sites aren’t hard to create, but connecting to each house is very expensive.  This was true when high speed internet arrived – most communities still don’t have fiber to the curb and that’s why cities petition Google to be the next one that Google wires up.  It is difficult and expensive to reach everyone in the last mile, even when the population is relatively dense (in cities and suburbs).  It’s even more difficult when you get into largely rural areas.

But the benefit that the utilities have is that once the houses are connected, all that remains is maintenance of the lines or pipes.  What Amazon and other online retailers face is getting products that customers order online to shoppers at home.  To do that, they build large distribution centers and then rely on the Post Office, UPS, Fedex and others.  Amazon created Amazon Prime to help people ignore or overcome shipping costs, and built large distribution centers in key cities to lower the delivery time for some items.  But in a “want it now” world, getting a product from Amazon or any online retailer will take a few days.

Enter Whole Foods

Whole Foods may represent another step into Amazon’s entry to “bricks and mortar” and help it win a portion of the valuable retail and grocery business, but it isn’t going to solve the last mile problem.  Whole Foods is primarily located in high end suburbs and large cities, places where Amazon already has plans for distribution centers.  Moreover, unless Amazon reworks Whole Foods stores and distribution centers, these aren’t going to provide much more coverage or delivery capability.  Amazon has its own reasons for wanting to compete with the likes of Kroger, Publix, Safeway, Giant and Wal-Mart, and Amazon has far less pressure to turn a profit.  With the addition of Aldi and Lidl super-discounters from Europe, we could see a real price war in the States.

But we still face the last mile problem, and recall that others have attempted to solve this before.  Many grocers have programs that allow shoppers to place orders on line and then pick up the orders at the store at the shoppers’ convenience.  Walmart is experimenting with a new pod in its parking lot that allows a shopper to pick up groceries anytime.  Further, back in the dot com boom Webvan and Peapod and others offered daily delivery of groceries to the home.  Very little of that capability remains.

The missing ecosystem piece – last mile delivery

There’s a missing piece to this equation:  the delivery to the home. Whether it’s groceries or clothing or electronics, Fedex, UPS and the Post Office run established, daily routes for general delivery and specialized delivery is too expensive.  Promising a two hour delivery to the majority of the population will require another ecosystem player, a company with the flexibility to shift mobile delivery assets around, unscheduled and somewhat unsupervised.

Amazon and others are also making a critical mistake, in my view.  That mistake is assuming that people will simply pop into a store, a Whole Foods or other site to pick up their purchases.  This is something people are already trying to avoid.  Paul and I have written before about the customer experience issues within a platform and ecosystem, and this is an important one.  The customer experience doesn’t stop at the purchase of the goods, but at the consumption.  Requiring a customer to make another trip, even a convenient trip, doesn’t add to customer experience.

If Amazon or other online retailers were really interested in solving the last mile problem, at least in the cities and suburbs, they’d go hunting for a potential partner that is now a wounded animal – Uber.  Uber drivers could fill an important gap in unscheduled but near immediate delivery needs.  On top of the regular deliveries by Fedex, UPS and the Post Office, Uber drivers could become a part of the “last mile” solution.  The benefit of Uber is that unlike Fedex and UPS, the drivers use standard size cars for the most part that won’t interfere with traffic or cause as much congestion as the larger vans and trucks that the big shippers use.  Plus Uber drivers are far more used to unscheduled “on demand” requests that shoppers may require.

This solution leaves out a significant portion of the population, however:  the rural areas.  30-40% of the population in the US live in less dense locations and rural locations where Uber doesn’t exist and where companies like Whole Foods doesn’t compete.  The last mile issue is heightened in the rural areas by the distance between houses and in some cases the roads and transportation links.  Since few retailers exist in these small towns and rural areas, they appear to be at the mercy of WalMart – the largest retailer in many of these locations – or online retailers who can only reach them with the Post Office or Fedex or UPS.  Quartz just published an article about the acquisition and noted that 34% of the population lives within 5 miles of a Whole Foods, which means that two-third doesn’t live within a convenient drive or delivery distance from Whole Foods.  The last mile problem will remain acute in the ex-burbs and the rural areas, the places that were formed by ordering from Sears Roebuck originally.  Strange how things come full circle.

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The post Amazon and Whole Foods expose an ecosystem gap – the last mile first appeared on Your Ecosystem Design Hub.

My collaborative colleague here on this website, Jeffrey Phillips, recently wrote a piece on his own blogging site “What autonomous cars tell us about the future of innovation.”  I could not resist picking up on this by taking a broader ecosystem perspective to autonomous vehicles and all the mounting “unintended consequences,” many yet to be fully worked through.

We tend to focus always on the innovation promises of new growth and achieving a clearer competitive advantage, yet we often ‘gloss over’ or push issues and problems onto others to resolve, it is often that innovation has many “unintended consequences”.

Many “unintended consequences” are often very unfortunate and we so often fail to see the consequences, many times our capabilities run ahead of our foresight.Casual maps or cognitive mapping can help reduce these.

We often fail to recognize the “connected system” as we focus on our narrower objectives and fail to fully appreciate the primary objectives of others or the impact this might have. We need to take more of the ‘wider system’ approach into consideration as it might highlight missed opportunities but equally, consequences can have a higher impact cost than expected that allows one part of this wider ecosystem to gain increased value and return but for many others will have a higher knock-on economic cost.

We do need to ask deeper questions

If we take self-drive cars and all the complexity this requires, it is transforming a part of society and challenging our accepted habits. This is not just really difficult to address technically but have we sufficently questioned enough of does it fulfill a real customer need? What about the full impact cost to society?

The autonomous car will change our relationship with the car as we lose our control and leave driving simply to the car. The idea of a self drive solution sounds fascinating, potentially advancing on our existing solutions but is this not “problem learning, technology solution solving?” It really is transforming something, way beyond ‘just’ a smartphone, which we still have significant control over and constantly are managing. The autonomous car is something where the ‘control’ and ‘relationship’ dramatically changes. Where are those emotional attachments within the emerging solutions?

A self-driving car takes control, great or is it?

Does it go beyond a technology and industry ‘need’ and provide a real customer value outcome? Is it at a real solution-orientated stage or might it co-destruct? Are we solution designing before the real problem learning or deeper ‘needs’ relating that ‘driving a car’ establishes? Are the feasibility and assumptions driven by the solution provider sufficent to address ALL the customer experiences or be ready for the consequences if this is not fully thought through? M2M’s shift the design of solutions back into really understanding the wider position, in the problem analysis. This thinking beyond is a real Horizon Three piece of thinking.

We can ‘rush’ to apply feasible solution thinking before we have truly understood the customer problem or deeper needs (emotional, intangible and tangible). Complex M2M’s require far more system understanding, applying an outside-in perspective not an inside-out in narrower problem definition and then, and only then, in solution designing to that limited intent and focus.

By thinking through this a little deeper we can partly retrofit and reassess ‘risks’ and impact in the wider ecosystem

I recall a good introductory paper written by Peter Andrews, a consulting faculty member at the IBM Advanced Business Institute entitled “Unintended consequences of innovation” ( a PDF downloadable here) written back in 2005.

It takes a valuable view on how to start to analysis unintended consequences or the ‘knock-on effect that becomes useful for examining any ecosystem.

In the IBM paper, they suggested seven simulation points of unintended consequences and explored each

So let’s take the Autonomous Car in the Wider Ecosystem Perspective

Jeffrey in his post discusses the critical ones of 1) invested infrastructure and its compatibility or how it will need to be disrupted to accommodate the autonomous car, 2) risk and how insurance companies will adjust to this as he rightly points out until they quantify and validate the risk of the autonomous car will premiums be attractive, 3) regulation and all the byzantine regulations to cross local, regional, state, country borders and all the approval bodies and those with present ‘vested’ interest will block and stall any regulation that challenges their entrenched position.

Each of these is certainly some of the real ‘biggies’ to resolve, within each has a host of unintended consequences and barriers to adoption. They begin to raise the unknowns and as Jeffrey points out, often the risk, unknowns and innovation are very uncomfortable bedfellows. He nicely states: “autonomous cars have lots promise but some peril as well”.

When you consider the broader ecosystem for autonomous cars it does challenge our existing way of life and will this be (fully) accounted for, can it ever be?

We have to recognize we have some very clever engineers and technology specialists to get the autonomous car to even this point, As stated earlier “capabilities race ahead of foresight“, we might need a level of chaos to happen to prompt a wider system change required, to advance this revolution in personalized transportation. What does come into play and this becomes the really open questioning is all the  “unintended consequences of the autonomous car” is in societal relevance and need, we need to view this through ‘multiple sets of lens’, applying aspects of social science and psychology even.

We do have a pathway of escalation of Autonomous Cars to go through, to get ready and ‘adjusted’

It could be as we progressively adapt and adjust as we gain this wider ‘adoption time’ and through this, we become clear on all the consequences over time. At present there seems general agreement on different levels of autonomy of the car, level 0 to level 5 set by the SAE (Society of Automotive Engineers) in the US, I am not sure this is accepted worldwide:

• Level 0: the Automated system has no vehicle control, but may issue warnings.
• Level 1: Driver must be ready to take control at any time. The automated system may include features such as Adaptive Cruise Control (ACC), Parking Assistance with automated steering, and Lane Keeping Assistance (LKA) Type II in any combination.
• Level 2: The driver is obliged to detect objects and events and respond if the automated system fails to respond properly. The automated system executes accelerating, braking, and steering. The automated system can deactivate immediately upon takeover by the driver.
• Level 3: Within known, limited environments (such as freeways), the driver can safely turn their attention away from driving tasks, but must still be prepared to take control when needed.
• Level 4: The automated system can control the vehicle in all but a few environments such as severe weather. The driver must enable the automated system only when it is safe to do so. When enabled, driver attention is not required.
• Level 5: Other than setting the destination and starting the system, no human intervention is required. The automatic system can drive to any location where it is legal to drive and make its own decision.

These are our engineering stages what about the conditioning of society to all of what autonomous cars might mean. I am not sure I have seen an ‘exhaustive list so I thought I’d begin to compile one based on this wider ecosystem impact and more thinking about these “unintended consequences”

I am not sure I have seen an ‘exhaustive list’ so I thought I’d begin to compile one based on this wider ecosystem impact and more thinking about these “unintended consequences” prompted by the seven points shown above.

Entering the realm of societal consequences, a larger part of the wider car Ecosystem

We are entering the emotive and rational realms where real change needs this wider system view and here are a few thoughts that have an ecosystem consequence, certainly not a full list of potential consequences but a wider viewpoint of the ‘total’ ecosystem impact

On the plus side we gain with autonomous cars:

• The potential for the utilization of the vehicle as 95% of the ‘car’s time’ it is not utilized
• We believe it has the potential to reduce deaths, currently standing at 1.25m worldwide and 35,000 in the US are accidents per year
• We imagine riding to work or shopping where we can read, simple chat and allow the car to do all the work
• The potential of “on-demand” cars simply being available when and where we need them
• The potential of ‘car pooling’ to reduce our costs
• It (magically) free’s up time to do more ‘productive things’ or simply sleep to work
• We achieve free flowing traffic as cars follow each other as they are nice and safe!

On the downside (perhaps) we need to adjust to new thinking of driving:

• We lose control of driving ourselves
• We force the car to travel under conditions that it is unprepared to drive in (weather extremes)
• We lose one of the emotive parts “our rite of passage”- passing the driving test and learning how to drive, you could argue many have achieved that`! Why do you have to wait until a certain age for being in control to drive-assist in an autonomous car?
• We lose perhaps anther part of that belief in ourselves, we all have them. We believe we drive well, it is the other driver to blame and we switch off from rational engagement just that little bit more, I mean how can we be blamed?
• We begin to develop anti-social behavior where we have multiple cars ready for our convenience to pick us up and drop us off, to pick up the pizza, to cruise around or ‘park’ adding to present road problems.
• We suddenly see the “prowling car” as the alternative to the present “thrill-seeking” driver and all the social behaviors associated with seeking out a different experience. What other socially unacceptable behaviors arise?
• Many people suffer traveling sickness if they read in the car due to sickness motion, with more ‘leisure time’ as we drive along will this become worse, change alter what we do in the car? What other health problems might arise?
• When do we decide to dive into the “control loop” and take control of the car will our concentration be able enough to take back control of the prevailing conditions? Who or what decides? Concentration and orientation are totally different when driving a car than simply being a passenger inside a car, suddenly deciding to take over. The ability to judge who drives suddenly takes on a whole different meaning.
• We lose even more precious time to “decompress” from the office, or home events. We are drawn more into our personal bubble of being on-line 24 x7 to be even more productive but increasingly less effective.

Yet what about the pending societal consequences?

• Law enforcement needs to seek trade-offs from the loss of fines, parking tickets to make up a significant part of their running budgets. Local Government will need to find ‘creative’ ways to make up the difference or force through alternative ‘taxing’ laws
• We need potentially fewer cars, fewer replacement parts, fewer garages yet more technology repair centers.
• If cars do gain higher utilization or can ‘cruise around’ and the whole view of the different business model of fee’s, employment in the wider auto industry, space required for parking, road lanes all need reconfiguring.
• What about the possibility that many who owe their living to driving others suddenly are less in demand
• A hacker or virus renders your car to ransom or the whole ecosystem to not function correctly, what and who pays
• We will expect a totally different car experience as we see more “idle” time, with a car having a divan, pull down beds, more ready-stocked bars and eating facilities
• Does our health change, we eat and drink more as we are bored, we do less exercise as the autonomous car progressively takes over our way to travel.
• What if your car breaks down, a technical malfunction, it will be more dangerous than a mechanical one as you have no ability to ‘manage’ the loss of control. Learning this procedure and having the necessary coverage, will create a whole new coverage of potential loss spawning a new range of industries associated with this ‘rapid’ response, rebooting, recovery.
• The cost of technology coverage across all our network of roads will require an enormous investment in transponders, routers, sensors, boosting signals, the ability to constantly update incredible ‘flows’ of data- really on an already overloaded internet. On rail systems this has been a steady investment to allow us internet access but this takes on a very different (higher) dimension of having ‘real-time’ information for the vehicle to respond and adjust.
• Who pays for this? Society or taxpayers will ultimately foot the bill to support the AV revolution. That should raise many questions.

The unintended consequences might be on the incumbents themselves who make up the Auto industry

• Why would we look to buy the more expensive car, if we lose the chance to drive it, to “put it through its paces.”
• Why bother with a Lamborghini or a Porsche? We lose that emotive attachment if “something else” is driving.
• Surely if we share more cars, utilize them in ‘pooling’ ways then we have less demand for the car?
• Our ‘consumption’ appetite for the car goes radically down- it simply becomes a basic mode of transport, we lose all the ‘emotive’ attachment for the brand, make of car or the history associated with them
• We begin to see it like a train or a bus, just a means to get from A to Z, more convenient but far from top of mind, that today’s car has become
• The car becomes less differentiated on the outside, perhaps more on the inside. What does that mean in the industry and designer opportunities it can bring, who loses out, who takes advantage?
• All the emotional appeal of cars at trade shows, marketing will have to change if all cars get us simply from A to Z safely, who cares? What impact does that have on today’s industry and marketing model? This would have a direct impact on the car salesman and all that is closely associated with financing models.
• Of course, the auto insurance gets totally disruptive, on a model that have evolved over nearly eighty or so years. Risk takes on a different dimension as discussed by Jeffrey in his post (link above).
• I think we will see a significant merging of car manufacturers, all grappling with the unintended consequences a technological solution means to them in volume, positioning of the car within our psyche and what we gain and lose as the trade off.
• The investment impact, the decision to write off “productive assets” and re-equip for a different type of car are massive.
• What would the worldwide impact really be on the Auto Industry.? Can they predict this, can they plan for this when it has so many consequences unknown or not recognized, surely?

This has a real social impact

When we face highly disruptive moments in our lives the unintended consequences often surprise us in their social impact. A couple of examples I have seen raised that might point to these unintended consequences are: Prohibition tried to ban drinking to lower consumption, yet it thrived in different ways and eventually started to cost society far more by having the ban. High-rise house transformed the way we lived but whole communities broke down and replaced by the many social problems we are still coping with today. I place the autonomous car in this category.

The autonomous car has the potential to make a similar society-changing impact.

It has effects on people, on their environment, on the wider environment they are part of, the way they alter their relationship with the car, with the industry. These become the eventual consequences.

There is a much wider system view to the changes that might occur from the advent of the autonomous car. It is a highly complex connected ecosystem and if you take the seven simulation points mentioned above you can begin to fill out a rich set of unintended consequences that are less engineered solutions of the car but societal ones.

It might well be Jeffrey is wrong in one of his comments “Technology is the answer, not the problem” might be more than likely “technology can provide an answer (autonomous cars) but does society wish to adopt them” as multiple parties resist “new innovation” unless the unknowns and unexpected consequences are not thoroughly worked through. A rush to market equally has its unintended knock-on effects that cost society more than the concept itself

Open ourselves up to the wider ecosystem and its total impact and consequences

We need to open the discussions up, get a more balanced view and not rush ahead expecting a retrofit to ‘bridge’ risks. It goes beyond the complexity of having technology solutions solving the driving dilemma, it goes deeper and wider. Yet will we, who wanted the car when we seemed fairly happy with the horse and buggy as “our way of life”.

The significant implications of autonomous cars in a wider connected Ecosystems thinking does get ‘sort of really interesting’ in all its consequences, good and bad, intended and unintended.

So these are just my rambling thoughts on the wider implications of the Ecosystem impacts, it gets incredibly complicated, a truly complex interrelated connected system that needs someone attempting to connect all the parts, building the different cognitive maps required of ALL the stakeholders involved to ‘size’ the unintended consequences of an innovation like the autonomous car.

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The post So Let’s Take the Autonomous Car in the Wider Ecosystem Perspective first appeared on Your Ecosystem Design Hub.