Biznology
Where business and technology create a winning customer experience.

You probably saw the investment that GM made in Lyft. Maybe you wrote it off as another dinosaur brand trying to catch a wave with a good technology investment to prop up its earnings. But reading the announcement tells you that this is a deeply strategic investment for GM. Reading the tea leaves tells you about changes in marketing that affect many businesses–maybe even yours.

First, the strategic reason behind Gm’s Lyft investment is simple. Self-driving cars are coming. 70% of the price of a Lyft ride goes to the driver. Self-driving cars + Lyft = insanely cheap rides, which means many people who currently own a car might not need to. They might get away much cheaper using Lyft and Uber (and Zipcar if they need to go further).

So, that means that Lyft, Uber, and their imitators might have serious spikes in usage, which makes this a good investment. But that’s not what makes the investment strategic for GM.

What GM sees is that it is becoming a B2B business unless it starts to own the operators of the cars–the ones consumers actually buy from. If you get your rides from Lyft, Lyft becomes the brand. Chevy is a B2B brand that car-sharing services buy from.

Given that GM doesn’t have the greatest brand image among consumers, this seems like a fresh start for GM. It’s likely that rich people will continue to purchase BMWs to show off, but GM sees that the half life of the Buick brand is considerably shorter. Specialty vehicles, such as trucks and maybe minivans might survive a bit longer, but the average sedan to drive to work is an endangered species in the next decade–at least as a consumer brand. The growth is in self-driving Lyft cars.

So, GM is buying a piece of Lyft for the same reasons that Ford hooked up with Hertz decades ago. It is a great way to have a built-in number of sales every year. And it is a lot easier to mass produce very similar cars for Lyft than a wide array of vehicles to tickle every consumer’s fancy.  How many TV ads do you think they need for this business? None?

What you are seeing here is the next step in technology driving new business formulations. Lyft, Uber, Airbnb, and other companies are pioneering dynamically-assembled value chains: they don’t own much except the app on the customer’s phone and a network of independent suppliers that follow certain standardized rules–along with social norms that police quality in the form of reviews.

In addition, technology is what is driving (so to speak) the removal of the person in operating a car.  GM is watching these two technology-induced trends and extrapolating what comes next.

Are you doing the same thing for your business? Are you recognizing the trends that might fundamentally alter your customers’ expectations? (In GM’s case, precisely who their customers are is what is changing, which couldn’t be a bigger alteration in expectations.)

No longer do you need vertical integration to have a brand to deliver a standard service with quality outcomes. Dynamically-assembled value chains have altered the game and you need to ask how that affects your industry.

If you are not feeling smarter than GM this morning, maybe that should tell you something.


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Mike Moran

About Mike Moran

Mike Moran has a unique blend of marketing and technology skills that he applies to raise return on investment for large marketing programs. Mike is a former IBM Distinguished Engineer and a senior strategist at Converseon, Revealed Context, and SoloSegment. Mike is the author of three books on digital marketing, an instructor at Rutgers Business School and a Senior Fellow at the Society for New Communications Research. He is also a Certified Speaking Professional.

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