Driving Autonomous Heavy Vehicles Into the Future a Business Model Perspective
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DEGREE PROJECT IN THE FIELD OF TECHNOLOGY INDUSTRIAL ENGINEERING AND MANAGEMENT AND THE MAIN FIELD OF STUDY INDUSTRIAL MANAGEMENT, SECOND CYCLE, 30 CREDITS STOCKHOLM, SWEDEN 2020 Driving Autonomous Heavy Vehicles into the Future A Business Model Perspective GABRIEL KITZLER ANNA SAIBEL KTH ROYAL INSTITUTE OF TECHNOLOGY SCHOOL OF INDUSTRIAL ENGINEERING AND MANAGEMENT This page was intentionally left blank Driving Autonomous Heavy Vehicles into the Future A Business Model Perspective by Gabriel Kitzler Anna Saibel Master of Science Thesis TRITA-ITM-EX 2020:330 KTH Industrial Engineering and Management Industrial Management SE-100 44 STOCKHOLM Driving Autonomous Heavy Vehicles into the Future Ett affärsmodellsperspektiv av Gabriel Kitzler Anna Saibel Examensarbete TRITA-ITM-EX 2020:330 KTH Industriell teknik och management Industriell ekonomi och organisation SE-100 44 STOCKHOLM Master of Science Thesis TRITA-ITM-EX 2020:330 Driving Autonomous Heavy Vehicles into the Future – A Business Model Perspective Gabriel Kitzler Anna Saibel Approved Examiner Supervisor 2020-06-09 Lars Uppvall Matti Kaulio Commissioner Contact person Scania CV AB Rodrigo Caetano Abstract In light of the many environmental challenges that the world currently faces, new sustainable solutions are called for. The concept of autonomous heavy vehicles (AVs) is considered to be one of the next megatrends within transportation and this technology shift is predicted to improve safety and logistics as well as to cut driver costs and reduce CO2-emissions. However, from a company's perspective, technology shifts are not without risks as technical disruptions can cause core competencies to become obsolete and radical technology innovation can be fatal to a company that does not innovate its business models simultaneously. Due to the complexity and novelty of the AV technology, business model innovation within the field has been lagging behind and there is an area of uncertainty regarding how a future business model for AVs could be formulated In order to investigate potential business models for AV applications, this study has been carried out as an exploratory case study of two industry specific applications for goods transports within confined areas at the heavy vehicle manufacturer Scania in Södertälje, Sweden. The Business Model Canvas tool developed by Osterwalder and Pigneur (2010) has been used to map the business models of these two cases with the purpose of combining them into a general model. Furthermore, four important capabilities at the company have been identified and determined as to whether they qualify as core competencies based on the criteria presented by Prahalad and Hamel (1990) and then discussed in relation to how they can be leveraged in a future business model. The findings of this study help to formulate a business model perspective for future AV goods transport applications that consists of a service-based model characterised by a focus on collaboration and value co-creation, an adaptable level of integration with the customers' systems, transfer of ownership of products to the manufacturer and a value-driven source of differentiation. Lastly, the study concludes that Lean production and modularity are two existing core competencies of Scania that could be leveraged dynamically in a future business model connected to this technology shift. Keywords: Autonomous Heavy Vehicles, Technology Shifts, Business Model Innovation, Business Model Canvas, Core Competencies, Servitisation Examensarbete TRITA-ITM-EX 2020:330 Driving Autonomous Heavy Vehicles into the Future – Ett affärsmodellsperspektiv Gabriel Kitzler Anna Saibel Godkänt Examinator Handledare 2020-06-09 Lars Uppvall Matti Kaulio Uppdragsgivare Kontaktperson Scania CV AB Rodrigo Caetano Sammanfattning Mot bakgrunden av de många miljömässiga utmaningar som världen står inför idag krävs nya hållbara lösningar. Konceptet självkörande tunga fordon (eng. autonomous heavy vehicle - AV) anses vara en av de nästa megatrenderna inom transportindustrin och detta teknikskifte förutspås förbättra säkerhet och logistiksystem samt sänka förarkostnader och minska koldioxidutsläpp. Från ett företags perspektiv är teknikförändringar dock inte utan risker då tekniska disruptioner kan göra kärnkompetenser föråldrade och radikal teknisk innovation rentav kan innebära en dödsdom för ett företag som inte simultant innoverar sina affärsmodeller. Till följd av teknikens komplexitet och låga mognadsgrad har affärsmodellsinnovation inom fältet hamnat efter och det finns ett område av osäkerhet gällande hur en framtida affärsmodell för självkörande fordon skulle kunna formuleras. I syfte att undersöka potentiella affärsmodeller för AV-applikationer har denna studie genomförts som en utforskande fallstudie av två industrispecifika applikationer för godstransporter inom avgränsade områden hos lastbilstillverkaren Scania i Södertälje, Sverige. Verktyget Business Model Canvas, utvecklat av Osterwalder och Pigneur (2010), har använts för att kartlägga affärsmodellerna för dessa två applikationer i syfte att kombinera dem till en generell modell. Vidare har fyra viktiga kapabiliteter i företaget identifierats och fastställts huruvida de kvalificerar som kärnkompetenser baserat på kriterierna som presenteras av Prahalad och Hamel (1990) och sedan diskuterats i relation till hur de kan utnyttjas i en framtida affärsmodell. Resultaten av denna studie hjälper till att formulera ett affärsmodellsperspektiv för framtida AV- godsapplikationer som innebär en servicebaserad modell kännetecknad av ett fokus på samarbete och värdesamskapande, en anpassningsbar integration till kundernas system, överföring av ägandeskap av produkter till tillverkaren och en värdedriven differentiering. Slutligen dras slutsatsen att Lean produktion och modularitet är två befintliga kärnkompetenser hos Scania som skulle kunna utnyttjas dynamiskt i en framtida affärsmodell kopplat till detta teknikskifte. Nyckelord: Självkörande tunga fordon, Teknikskiften, Affärsmodellsinnovation, Business Model Canvas, Kärnkompetenser, Tjänstefiering Table of Contents 1 Introduction 1 1.1 Background........................................ 1 1.2 ProblemStatement.................................... 3 1.3 Purpose.......................................... 4 1.4 ResearchQuestions.................................... 4 1.5 Delimitations ....................................... 4 1.6 ThesisSponsor ...................................... 5 1.7 Disposition of Report . 5 2 Frame of Reference 7 2.1 SurvivingTechnologyShifts ............................... 7 2.2 BusinessModelInnovation................................ 8 2.2.1 BusinessModelAmbiguity ........................... 8 2.2.2 TheBusinessModelCanvas........................... 9 2.3 Competitive Advantage, Capabilities and Core Competencies . 11 2.3.1 Identifying Core Competencies . 11 2.3.2 The Risk of Core Rigidities . 12 2.3.3 Dynamic Capabilities . 13 2.3.4 Critical Competency . 13 2.4 Collaboration and Value Co-creation . 14 2.5 Servitisation........................................ 15 2.5.1 Downstream Vertical Integration . 16 2.6 Summary of Frame of Reference . 17 3 Methodology 18 3.1 Choice of Methodological Approach . 18 3.2 ResearchDesign ..................................... 19 3.2.1 Initial Phase . 19 3.2.2 Main Phase . 21 3.2.3 Final Phase . 22 3.3 FrameofReference.................................... 22 3.4 Data Collection . 23 3.4.1 Interview Methodology . 23 3.4.2 Observations . 23 3.4.3 Methodology for Data Analysis . 24 3.5 Limitations . 24 3.6 Validity and Reliability . 25 3.7 Ethical Considerations . 26 4 Case Description 27 4.1 Mining Case Background . 27 4.2 Harbour Case Background . 30 5 Findings and Analysis 33 5.1 MiningCase........................................ 33 5.1.1 Mining Development Phase - Business Model Canvas . 33 5.1.2 Mining Commercial Phase - Business Model Canvas . 36 5.2 Harbour Case . 38 5.2.1 Harbour Development Phase - Business Model Canvas . 38 5.2.2 Harbour Commercial Phase - Business Model Canvas . 40 5.3 IdentifiedCapabilities .................................. 42 6 Discussion 45 6.1 Comparison between Mining and Harbour Applications . 45 6.2 FutureCoreCompetencies................................ 48 6.2.1 Core Competencies in the Business Model . 50 6.2.2 Dynamic Capabilities, Core Rigidities and Critical Competency . 51 6.3 AFutureBusinessModelPerspective. 52 6.3.1 AService-basedBusinessModel . 52 6.3.2 An Alternative Business Model . 55 6.3.3 Sustainability . 56 7 Conclusion 58 7.1 Conclusions........................................ 58 7.2 Implications........................................ 59 7.2.1 Industrial Implications . 59 7.2.2 Academic Implications . 60 7.3 Suggestions for Further Studies . 60 References 60 Appendix A SAE Levels of Automation Classification 66 Appendix B Exploratory Interview Guide 67 Appendix C Identified Capabilities at Scania 69 AppendixDCaseStudyInterviewGuide 70 Appendix E Final BMC for a General Model 71 List of Figures Figure 1.1: Major technology shifts a↵ecting the transportation industry (Scania, 2020a)2 Figure 1.2: Illustration of a hub and hub2hub transportation system (Scania, 2020a). 2 Figure 1.3: Illustration of how the business opportunities could scale over time for heavy Autonomous Vehicles (Scania, 2020a)..................... 3 Figure 2.1: The Business Model Canvas (BMC) tool, adapted from Osterwalder and Pigneur (2010) . 9 Figure 2.2: An illustration of core competencies seen as the roots of a tree structure (MBA, 2020) . 12 Figure