Wednesday, November 4, 2009

Build Your Dream Car

After active duty in Iraq in 2005, John Rogers attended Harvard Business School with a mission - to build a new, sustainable car company – not in the alternative fuel, eco-friendly sense, but in reducing waste from mass-production of cars. Local Motors (LM”), which launched in March 2008 after Rogers raised $4M, plans to differentiate itself producing vehicles on-demand in local “micro-factories” where buyers watch and can participate in building dream cars. The LM site calls for designers to submit dream car sketches, and they can enter their ideas for specific cars to win contests (even up to $30K).

LM has 4,000 active contributors. It will release its first original vehicle, the off-road Rally Fighter (pictured), in June 2010. The Rally concept received rave reviews after being posted on LM, and Rogers thinks it will reach an under-serviced niche market for off-roaders. Interested buyers pay $99 for dibs to purchase the car, are invited to Wareham, MA to help build the car when production starts, and can buy the completed cars for $50K. Twenty-three orders exist.

The idea intrigued me for a couple of reasons. First, the concept of submission and critique of ideas on the site incorporates design thinking in a way I had not thought about – Rogers is putting the onus on customers rather than paid designers such as those employed by IDEO. This follows the principles of design thinking that Brown laid out in his article (2008) and which we have discussed. Presumably, members of LM’s community are the would-be users, or at least interested enthusiasts, who can connect design to utility. This seems effective to me, and something we could think about in developing final projects.

Also, Rogers has his eye on other disruptive innovations in the automobile market (such as other, green-focused entrepreneurs like Tesla Motors) and is taking this concept into an under-shot section of the market – custom design and build for niche customers – and skipping the possibly over-shot green car market. (Anthony and Christensen 2003).

Rogers claims he is trying to “rethink rather than overtake the traditional auto industry.” Regarding our discussions on targeting niche markets: If an innovation only stays within this specific market, has it been a successful one? Or does entrance into the niche market have to lead to a disruption of the larger market share?

So, Rogers is not interested going mainstream. However, manufacturing cars is a complicated business involving safety, environmental implications, manual labor, expensive parts, and more. Can a small customer base like Rogers’ sustain the resources it will need to stay afloat in this complex, and currently very troubled, market.

I think it’s iffy – especially given decreases in discretionary spending and negativity associated with the auto industry. The framework in which Rogers has built LM, with the online community of design thinkers and the focus on customer interest and input is effective, but I’m not sure making cars is the right place to employ it.

On the other hand, is Rogers preparing a business that will boom when the economy does recover, i.e., is he taking a risk to predict the future state of the industry that will pay off as we recently discussed?

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