Trendspotting with Ford: How the Auto Industry Prepares for the Future

7/3/12Follow @XconomyDET

Sheryl Connelly, whose title at Ford is “Global Trends and Futuring Expert,” doesn’t spend much time thinking about cars. Her mind is on big-picture global trends: what’s going on socially, technologically, economically, environmentally, and politically.

“My approach is, what are the things we have no control over?” Connelly says when reached by phone. “What is the range of possibilities? What are the drivers, the global market implications? I try to understand how things are intertwined and how they might affect the auto industry, and then I sit down with someone on the automotive side of the company.”

Ford held a conference in Dearborn last week that seemed to be the culmination of Connelly’s work and invited journalists and bloggers from around the globe to come learn about the latest trends in urbanization, eco-psychology, accessible design, and connectivity, and how those trends influence Ford’s product line. It’s all part of a larger effort by Ford, which just opened a new research facility in Silicon Valley, to let the world know that it’s thinking well beyond next year’s automobile models.

Connelly says the global trend that will be “one of the biggest challenges of our lifetime” is the aging of the population. This affects different parts of the world differently. In a few years, in the EU and elsewhere, there will be more people over age 65 than under 65. In China, policymakers are already thinking about something called the “421 dilemma”: Every child alive today will eventually be responsible for supporting at least four adults, whether parents or grandparents.

As the ratio of workers to retirees shifts, Connelly says, it will erode GDP in many countries and cause economic powers to shift. That’s why India, with one of the youngest populations in the world, is firmly on Ford’s radar. With only 29 retirees for every 100 workers, India could see the kind of explosive growth China has recently experienced , Connelly notes.

But aside from dictating which parts of the globe Ford should concentrate on, the aging of the population also influences design. Connelly says it’s not outside the realm of possibility that her young children and others in their generation will live past the age of 100. “If I think I’ll live to 105, how does that affect what I want designers and engineers to do to enable autonomy?” she asks.

Right now, Ford engineers are strapping on a kind of “space suit” that allows them to feel what it’s like to live in an old body. Cars will have wider doors, more sensors to keep the driver from getting into an accident, and a camera that gives 180-degree angles for drivers who have trouble turning their necks. “But the key is we can’t say we built this car for old people, so the engineers have to do it through universal design.”

The other big emerging market of consumers is women, who now control 80 percent of all household buying decisions and more than $85 billion in automotive expenditures, according to Ford research. Does it make a difference if a woman is buying a car instead of a man? Yes, Connelly says, because women concentrate on benefits while men concentrate on features. Women aren’t willing to compromise on safety and security, Connelly adds, which is why you’ll see more rain sensors, never-flat tires, and a system that autodials 9-1-1 when the airbags deploy.

Eco-psychology: Are Consumers Still Willing to Pay to Be Green?

Though consumers have been slow to buy electric vehicles, likely because the prices remain prohibitive, Connelly says consumers are still concerned about sustainability and values. “Consumers think, ‘What does it say about me when I do business with you?,’ ” Connelly adds. “It lets people know they stand for something, and they’re willing to pay a premium to tell people they care.”

Post-recession, Connelly says, consumers are still willing to pay that premium, but the key phrase now is “careful consumption” that balances passion with practicality. “People will spend money on sanity savers or things that simplify or enhance their lives,” she says.

For example, the 2013 Ford Escape will have a hands-free liftgate. If your hands are full of groceries, you give a gentle kick to make the back open. (You must have your keys in your pocket or purse for it to work.) “It seems kind of silly, but it’s an investment that makes life easier. What’s neat is that the technology isn’t new, it’s just a new application of it,” Connelly says.

Ford is also rolling out innovations in lightweight and recycled materials, which the company says will cut the amount of water it uses, its energy consumption, and the amount of waste it sends to landfills by 100 million pounds. It also makes the cars more efficient. By the end of 2012, eight Ford models will get 40 miles per gallon or better.

Connectivity and Control: The Age of Information Addiction

Ford’s dedication to connectivity continues, with the company announcing last month that its Palo Alto, CA-based Silicon Valley Research Lab, which seeks to draw ideas from and build relationships with the surrounding tech community, is officially open for business.

Despite the problems Ford has had with its MyFordTouch system, which critics charged was prone to crashing often and distracting drivers, it remains committed to getting its voice-activated SYNC system into more cars—9 million by 2015. Also coming is SYNC AppLink, a new, free Ford feature using industry-first technology that allows drivers to control their iPhone, Android, and Blackberry apps through voice recognition software.

That plays into another trend: information addiction. The new status symbol, Connelly says, is being considered a person who’s “in the know” by family, friends, and social networks. “Having information at our fingertips means we’re better able to control our environment,” Connelly adds. “That translates to power, success, and affluence.”

Though smart phones, tablets, and laptops are marketed as time savers, Connelly says what they’ve actually done is create a world of 24-hour commerce and conversation that allows us to be spontaneous, but also leads to “time poverty.” “Time poverty isn’t new, but it’s something different in the modern world,” Connelly notes. “We have no reason to shut down. The boundary between work and play has never been weaker.” And we expect our cars to interact with us and provide us with a “delightful” experience, which is why they’ll soon read you your text messages while you drive—including emoticons.

Urbanization: The White Picket Fence American Dream Is Over

As a resident of Detroit, the American city whose future is arguably most in question, I found the urbanization portion of the Ford conference to be fascinating and informative. David Kirkpatrick, best-selling author, journalist, and CEO of Techonomy Media (which will hold its first Detroit event on Sept. 12), and Carol Coletta, the former president of CEOs for Cities and the current leader of ArtPlace, a national initiative to transform communities through place-making, sat down for a panel discussion on why innovative, highly functional cities will soon be in top demand.

“Cities enable connections and creativity, which enables innovation, which enables job growth,” Coletta said at the conference. “Cities underpin our economy. If our cities don’t work, our nation doesn’t work.”

Talent trumps every other factor in a city’s success, she added, and the percentage of college graduates in a city accounts for up to 58 percent of its success, according to some studies. But it’s not enough for cities to attract talent—they must also hold on to it. That’s where “being cool” counts, and where safe streets, abundance of park land, great schools (though not necessarily a great school system), and efficient public transit make or break a city. (Are you listening, Mayor Bing and Detroit City Council?)

The age 25-34 demographic has already shown it prefers to live in cities—they’re 102 percent more likely to live in cities than other Americans if they’re college graduates, according to Knight Foundation data—and ideally within a three-mile radius of a city’s downtown. Mostly what people are seeking, Coletta said, is vibrancy, and the swing toward urbanization has been dramatic.

“The image of the white picket fence has been hardwired into American politics, but it’s grossly out of step with the choices young people are making,” Coletta said. “We can no longer treat urban living as an alternative lifestyle. The people are ahead of [government] policy on this one.”

Ford is responding to this trend by partnering with companies like Zipcar, which rents cars by the hour in cities and college towns (it has a fleet of four cars in Detroit), and by partnering with the telecommunications industry to develop mobility technology that uses radars and cameras to improve vehicle flow and ease gridlock. “The future of transportation is integrated mobility—a blend of things like Zipcar, public transit, and private car ownership,” Coletta predicts.

Kirkpatrick thinks Ford’s future will rest on its continued willingness to think outside the box, whether that means integrating mobile technology into vehicles or funding more research in Silicon Valley. The purpose of businesses should be to improve their customers’ lives, he said, and then expect the value of their companies to flow from that.

Kirkpatrick said much of the updated thinking at Ford can be attributed to its CEO, Bill Ford, whom he compares to Facebook founder Mark Zuckerberg, at least when it comes to a desire to give people the tools to be who they want to be. “He’s not just foisting cars down the throats of customers,” Kirkpatrick said.

Of course, that makes him a bit of a black sheep in Detroit. “Bill’s been an outlier for most of his career,” Kirkpatrick said. “I really believe that if his last name wasn’t Ford, he would have been kicked out here 25 years ago.”

Sarah Schmid is the editor of Xconomy Detroit. You can reach her at 313-570-9823 or sschmid@xconomy.com. Follow @XconomyDET

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