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Local Motors Story

The story of how Local Motors is re-inventing the automobile industry by applying Co-Creation to the design and production of vehicles.

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Local Motors Story

  1. 1. Enterprise Co-Creation Stories<br />The Story of<br />Local Motors<br />
  2. 2. Enterprise Co-Creation Is a Strategy and Methodology for Engaging Stakeholders to Create New Mutual Value<br />ValueFruit<br />ExperiencesBranches<br />Value comes from new experiencesfor stakeholders<br />New experiences come from new interactions<br />InteractionsTrunk<br />Enterprise Co-Creation: The systematic development of networks of individuals, stakeholders, and enterprises to create value together, through engagement platforms designed to enable mutually valuable interactions and experiences<br />New interactions require engagement platforms… <br />…which sprout from stakeholder engagement<br />Engagement<br />PlatformsSeeds<br />Engagement platforms assemblenew networks and communities<br />Networks<br />NetworksRoots<br />
  3. 3. Local Motors: Co-Creation in Car Design and Production<br />Local Motors is a new car manufacturer with a completely co-creative business model: <br />Co-creation of vehicle concept and design, including subcomponents and the car model <br />Co-creation production, down to the buyer’s participation in vehicle assembly<br />Open sourcing of existing automotive parts<br />Local Motors illustrates all aspects of enterprise co-creation – co-creation of value, new experiences and interactions, engagement platforms, and networks/communities<br />
  4. 4. Small-Volume Manufacturing Enables Co-Creative Design and Production<br />Local Motors was founded in 2008 based on a Harvard Business School student’s thesis<br />Venture capital-funded<br />Headquartered in Phoenix, AZ<br />First production vehicles unveiled in November 2010<br />
  5. 5. The Local Motors Process<br />1. Join the online community<br />Member pages include design portfolios that go far beyond Local Motors’ cars<br />The community is active in critiquing one another’s designs<br />2. Contribute to design competitions launched regularly by Local Motors<br />Some design competitions are suggested by members<br />Local Motors chooses the winning design suite based on enthusiasm and sophistication of community comments<br />3. Co-create development of a real vehicle<br /><ul><li>The community co-develops the design as it moves to technical specs
  6. 6. Components are broken out into separate competitions</li></ul>4. Build the final vehicle<br /><ul><li>Local Motors chooses a mini-factory somewhere in the US for manufacturing
  7. 7. Only pre-purchased cars are built, up to 2,000 per design
  8. 8. Buyers participate in the production process</li></ul>5. Modify vehicles<br /><ul><li>All specs for all systems and components are available, which aids with modifications</li></li></ul><li>A New Paradigm of Auto Manufacturing<br />In the old paradigm<br />High capital intensity, current global auto manufacturers<br />They design a single model, make hundreds of thousands of copies a year, and push it through a network of dealerships<br />Mass Customization and the search for low-volume runs is elusive and expensive given the value chain structure<br />The customer feedback loop is inadequate and broken. Service choices are at the dealer or through a jungle of independent service providers<br />The result: an undifferentiated experience and a customer making the second largest purchase of his life while being consistently dissatisfied<br />Here is how we do it differently<br />We will license a lightweight, superior safety, chassis that can be produced profitably at 2000 units/year within a $59,000 price point<br />On top of that we will layer design from our proprietary open source design community. This community empowers an army of hot-shot, competitive designers from around the world to innovate and refine design<br />Our team specifies the target segment that fits the price point. The community delivers the innovation<br />Our team of can-do engineers and master machinists fit the winning design to the common chassis. These designs are then transferred to our network of suppliers who deliver the necessary sub-assemblies direct to the Local Motors facility on a JIT basis. All cars are assembled, tested for quality, and sold locally by a 20-person business unit at a facility with 1/100th the capital of today's auto plants<br />The result: consistently newer, safer, more exciting, more efficient cars bought and serviced in a more pleasurable local experience<br />Source: Local Motors<br />
  9. 9. The Local Motors Experience Has Many Facets<br />What is the "Local Motors Experience"?<br />Participating in the design process, collaborating to create a no-compromise vehicle you love, then participating as the design you love transcends from sketch to road-ready production vehicle. Even after your car is built, purchased, and driven home the Local Motors experience continues. The auto-servicing aspect of Local Motors will be a pleasure and will set a new standard for customer service. The Local Motors Experience is about design inspired by you, about collaboration, and definitely about a gratifying personal experience<br />Car enthusiasts and design lovers are invited to participate in every aspect of Local Motors. From voting on original car body designs, to generating feedback for a designer you admire you can sculpt the Local Motors brand. As a car lover and an active voice representing the "market", this community is eager to design a car you want to drive. The Local Motors Website is not an impersonal suggestion-box approach to community feedback; this is a hands-on tool for you to promote, create and ultimately drive your ideal car<br />Source: Local Motors<br />
  10. 10. The Local Motors Website Hosts Active Design Boards<br />
  11. 11. Community Members Share Their Design Portfolios<br />
  12. 12. Monthly Regional and Topical Design Competitions<br />How is Local Motors different from other portfolio hosting sites, or other car design competitions?<br />We are building a community that puts the designer on a pedestal. This is not a black box, where you send stuff to us and a discrete panel of judges tells you if it is good. This is an interactive community where comments and suggestions and voting are happening on real time; Based on interviewing many designers, we know this is something that is really exciting and has not been done before<br />We run a competition every month, and pay out every month. Not every year<br />Source: Local Motors<br />
  13. 13. The Development Process is Where Co-Creation Comes to the Fore<br />The Local Motors community iterates the design during “Checkup” steps<br />Development of components is broken out into separate competitions<br />Open-source CAD files are available for components and accessories<br />
  14. 14. Inside the Co-Creation Process<br />Interview with Local Motors’ founder Jay Rogers:<br />The tough part was getting a community of designers and his team of engineers to agree on anything. [Rogers says,] “You have to get them to talk. The designers want one thing, the engineers will tell you no, and often you have to get the two to reach a compromise. Both sides will defend their choices, and sometimes you’re going to piss people off,” he says. “But by exposing our decisions to the harsher light of day, we were able to get a lot of outside perspective.”<br />Source: “Rally Fighter Takes Flight,” Gas 2.0 website, Feb. 12, 2010<br />
  15. 15. Winning Designs<br />How are winners chosen from the Local Motors Sketch Competitions?<br />Local Motors will choose the winner of each competition. Community enthusiasm and voting for each design is the most important factor taken into account. We will be looking for designs that specifically satisfy the needs of people in each specified area. Greatness, in our estimation, comes from how purely the design expresses the objectives of the vehicle aesthetically and functionally. A winning entry will also express the individuality of its designer<br />Source: Local Motors<br />
  16. 16. The Rally Fighter – the First Co-Created Model in Production<br />From car blog, Nov. 6, 2009:<br />This is Local Motors' Rally Fighter, the first car openly developed and built using crowd-sourcing. It will change the auto industry forever. More importantly for me, with its P-51 fighter plane-influenced design, it might be the coolest-looking car ever. The Rally Fighter is the first-ever crowd-sourced "creative commons"-like car, is the culmination of 35,000 designs by 2,900 community members from over 100 countries. Local Motors, the company behind it, plans to change forever the way cars are designed<br />For starters, Local Motors doesn't even have a designer for their cars on staff. Each major system of the vehicle — whether it's the exterior design, interior design or doors — heck, even the name — are developed in an open source development process. Once there's enough support for any single design, Local Motors will develop it openly. That means members of the Local Motors community not only choose which designs are developed, but also, they get to help develop them. Contests are held for the development and the winner receives a monetary prize based on the importance of the system to developing the overall vehicle. Thus, door design might receive less money than say, exterior design<br /><ul><li>That includes the "where" as well as the what. Local Motors cars are built in regional micro-factories. The first vehicle the community chose to build — the Rally Fighter — will be built at both Local Motors' headquarters in Massachusetts, but also in Arizona, where the car — built for off-road and desert races of the American Southwest — will be primarily used. Each car the Local Motors community designs will be based on regional desires, tastes and preferences</li></li></ul><li>Separate Design Contest for the Interior and Other Modules<br />From, Feb. 18, 2009:<br />Local Motors has announced its first interior design competition, which asks participants to create the interior of the Rally Fighter, the off-road vehicle project currently under development for production. The submission deadline is 3 March 2009<br />“The Rally Fighter is a purpose-built off-road rally racer slated for the American Southwest,” says Local Motors CEO, Jay Rogers.<br />“The interior will be purpose-built as well, and it should have everything you want and nothing you don’t.  This competition will generate all sorts of fresh interior ideas and excite the imaginations of designers and customers alike<br />"We will learn customer desires, and we will incorporate these preferences in the production of the Rally Fighter interior design, just as we have for the exterior design.”<br />Entries will be accepted starting Wednesday, February 25th 2009.  The submission deadline is March 3rd 2009 and community members are invited to vote and choose the winner by Tuesday March 10th 2009<br />The first three prizes are $2,000, $400, and $200 respectively,in addition to the chance to see the design in a production vehicle<br />
  17. 17. Rally Fighter Buyers Help Build<br />Buyers are required to help build their vehicles at Local Motors’ mini-factory in Phoenix<br />Rally fighter production started in June 2010<br />As of Nov. 2010, 127 models had been reserved for purchase, and 4 had been produced, at a cost of $50,000+ each<br />
  18. 18. Local Motors Sites Its Small-Run Production Facilities in Locations Around the US<br />Production site of the Rally Fighter in Phoenix, AZ<br />Each car design is targeted at a local market, and the manufacturing is also local<br />
  19. 19. Local Motors Hosted a Defense Dept. Design Contest<br />DARPA ran a contest for a military transport vehicle through Local Motors in Feb.-March 2011<br />Local Motors is working in conjunction with the Defense Advanced Research Projects Agency (DARPA) to create a new process for the development of future military vehicles. The first step in this new process is to test the co-creation of a Militarily Relevant vehicle through a unique Experimental Crowd-derived Combat-support Vehicle (XC2V) Design Challenge. The winning design from this challenge will be rapidly developed and transformed into an operational prototype that will be shown around the United States as a proof of concept. The stakes are high: In addition to being able to have the winning design turned into a functioning concept vehicle, the winner will receive a $7,500 cash prize.  Source:<br />3D file provided by DARPA, uploadable from Local Motors website<br />An early design concept<br />Contest announcement on<br />
  20. 20. The XC2V Concept Car Was Designed and Produced in Just 3½ Months<br />The winning vehicle, from a crowd-sourced design, was presented to President Obama in<br />June 2011 <br />[CEO Jay] Rogers’ team of designers and engineers at Local Motors in Phoenix built the car, nicknamed FLYPmode, from scratch in less than four months, unveiling it for President Obama last week before delivering it to the military’s mad-science division in Virginia. If makers like Rogers get their way, the first Experimental Crowd-derived Combat Support Vehicle, or XC2V, just might be the future of the military industrial supply chain.<br />… The goal was to quickly design and build a fully deployable vehicle, and Local Motors beat DARPA’s deadline, Rogers said. It’s the sort of task that would be next to impossible in a traditional military procurement process.<br />Source: “How The First Crowdsourced Military Vehicle Can Remake the Future of Defense Manufacturing,” Popular Science, June 30, 2011<br />President Obama said "Not only could this change the way the government uses your tax dollars — think about it, instead of having a 10-year lead time to develop a piece of equipment, if we were able to collapse the pace of which that manufacturing takes place, that would save taxpayers billions of dollars — but it also could get technology out to the theater faster, which could save lives.”<br />
  21. 21. The Evolution of Local Motors: Local Forge<br />In June 2011, Local Motors CEO Jay Rogers announced that Local Motors would launch Local Forge, an extension of its platform to parts for cars and other vehicles<br />Parts are much more scalable than full automobiles<br />Local Motors works closely with SEMA, the Specialty Equipment Marketing Assn.<br />Local Forge could apply to motorcycles, boats, airplanes, helicopters, and other vehicles<br />July 1, 2011<br />Exciting news! Keep an eye on this "Site Improvements" forum for wireframes of ideas that we are sketching out for the new Local Forge web site coming this fall! We need your feedback, so don't be shy... vote on the concepts and add your thoughts!<br />Source: forums<br />
  22. 22. How Local Motors Illustrates Key Co-Creation Elements<br />New Value and Experience<br />Reduced capital investment, faster time to market for Local Motors<br />Highly involving buying and ownership experience for customers<br />New Interactions<br />Local Motors opens up several typically closed OEM processes to stakeholders, including concept definition, vehicle design, part sourcing, assembly, and color/finish<br />By having customers assemble their own cars, Local Motors engages in the back end of the ownership experience, thereby enabling easier self-service and maintenance<br />Engagement Platforms<br />The Local Motors website provides three different engagement platforms: one for concept definition; one for expert design, including design tools; and a third for customers to get community help with the design of their vehicle “skin”<br />The Local Motors micro-factory is an engagement platform where customers come together with company experts to assemble their own cars<br />Communities and Networks<br />Local Motors cultivates an active designer community<br />Local Motors also cultivates an open-source supplier network to provide off-the-shelf vehicle components<br />
  23. 23. Co-Creation Lessons Learned From Local Motors<br /><ul><li>Co-creation can tap the passion of many different actors – for instance, amateur car designers, off-road enthusiasts, and people who love to build things
  24. 24. Given the opportunity to contribute their talents, many participants in a co-creation process will go far beyond minimum requirements
  25. 25. The customer experience can trump the product or service
  26. 26. Co-creation is not about letting the community build something on its own, but rather enabling the community to build something better together with the company
  27. 27. Co-creation is not anarchy; decision-making is required to adhere to company goals (in Local Motors’ case, choosing to develop a car aimed at a financially attractive niche market)
  28. 28. Co-creation can be the basis of a new business model
  29. 29. Co-creation with a community can lead to new co-creative opportunities, such as Local Forge</li></li></ul><li>Invitation to Co-Creation<br />Enterprise co-creation is a fundamentally different way of looking at value creation between the enterprise and its consumers, customers, suppliers, partners, employees, and public-sector agencies. We believe that these stakeholders should be treated as active equals rather than passive respondents in the core value creation processes of the enterprise.<br />Do you know of a good example of enterprise co-creation? Please share your cases and comments with us on this site or with the site’s facilitator Ryan Cahill at<br />Disclaimer: This case study was drawn from primary sources and external research<br />We welcome corrections and amendments<br />