The Mobility Service Canvas: An (Almost) New Way to Describe Mobility Service Business Models
“Another Something Model Canvas?!” — if this was your first thought after hearing about the Mobility Service Canvas, we won’t take offense. If you’re working in the world of business models, entrepreneurship, and innovation, you’ve likely come across countless versions of Osterwalder and Pigneur’s Business Model Canvas. We have, too. But there’s a reason why the canvas is so popular: It’s an incredibly helpful tool for understanding business models and the subtle but important differences that make successful organizations gain an edge over their competition. I love the simplicity and structure of Osterwalder’s canvas and have used it in countless workshops and classes.
But when my colleagues Malte Ackermann, Stefan Rosteck and I were analyzing the business models of the ever-changing mobility services industry, we noticed that the traditional business model canvas was falling short. It just didn’t help us get to the core of understanding mobility services and the business mechanisms behind them. So we set out to create a tool that’s truly focused on mobility services: The Mobility Service Business Canvas.
We hope that this tool is not just helpful for mobility nerds like us but also for public officials, mobility engineers, and researchers who are looking for tools that help them better understand, communicate, and manage the challenges that come with the transformation of our mobility systems.
What Are Mobility Services?
Mobility services aren’t really a new thing: Historians date the first taxi cabs — in the shape of horse-drawn, for-hire carriages — back to the 1600s, and since then, humans have started to use a range of taxi-, chauffeur-, bus-, air travel-, and rickshaw services to get from A to B. Over the past two decades, however, the rise of the mobile internet has turned the service landscape upside down: Information on mobility options is available at your fingertips, it’s possible to coordinate mobility supply and demand in real-time, and instant communication between travelers and vehicles (or drivers) allows for new ways to be mobile. Driven (pun not intended) by these technological advancements, a multitude of new mobility providers entered the market: Carpool- and ridesharing companies became popular around the world, shared bicycles, scooters, and microscooters now populate many cities, on-demand bus services are available in urban and rural areas alike, and some mobility apps combining different mobility options have changed the way we travel. And of course, the rise of autonomous vehicles means that more changes to the industry are on the horizon.
Why the Classic Business Model Canvas Is Not Getting to the Core of Mobility Service Businesses
Mobility services could of course be considered as just another service. But as you look at this kind of service more closely, you’ll discover some aspects that make these businesses truly special:
1. Mobility services are highly regulated
Most mobility services are subject to tight regulations. Besides vehicle regulations, there are many more rules a mobility provider has to navigate. For example, if you’re running a car-sharing service, you need to make sure all drivers have a license. And you can’t operate a bus or taxi if you don’t have the required permit. Also, prices are heavily regulated especially in the more traditional areas of mobility like the taxi or public transportation business.
In addition to that, subsidies often play an integral role. While some mobility service companies operate for profit, others can only survive with heavy subsidies. It’s not possible to truly understand and compare these businesses without looking at the role of regulations and subsidies. The classic business model canvas models, however, don’t acknowledge this perspective.
2. Mobility services have a special relationship with the public
Another important difference from other kinds of services is that mobility services operate in public spaces. They use public street and parking infrastructure, and widespread adoption of a service may have significant effects on the citizens’ lives. Just think about the discussions about microscooters that are randomly parked on sidewalks, about traffic jams caused by Uber vehicles, or thousands of bikes that have “flooded” cities all over the world. But also positive effects are worth mentioning: Researchers found out that new mobility options like bike-sharing made it easier for some people to access public transportation and participate in social life, and that car-sharing vehicles can replace personally owned cars, reduce vehicle miles traveled, and contribute to reduced greenhousegas emissions.
So it is obvious that cities and governments have special interests and responsibilities when it comes to mobility services operating within their territory. Thus, the relationship between the operator and the public plays a crucial role in the business model of a mobility service provider.
Mobility companies use different strategies to deal with public authorities: While some companies strive to establish long-term and trusting relationships with public authorities, others even position themselves in opposition to the traditional rules. Just think about how Uber has clashed with regulators all over the world or how Ofo has overwhelmed cities by distributing thousands of bicycles. This special relationship is not covered by the traditional Business Model Canvas as the relationship with public authorities is by its nature not a partnership in which the parties work together to promote their mutual interests. But as these relationships tend to have a big impact on the success or failure of a mobility service and the quality of life in a city, they need to be considered when talking about mobility services.
3. Using and paying for mobility services can be very detached
Another challenge in describing mobility services is getting at the core of who’s a customer and who’s a user: In many cases, people who use a service are not the ones who pay for it. For example, think about business trips: while the company pays for the trip, it’s the employee who is actually traveling and waiting in the rain when they miss their train connection. In fact, the company and the employee likely have different interests and priorities when it comes to travel. The business might want to save costs while the employee might try to maximize comfort. The existence of extensive corporate travel guidelines illustrates that there is an issue (theorists might find that the principal-agent-theory plays a role in this relationship).
Or, as another example, think about a public transit journey: The trip that a passenger takes might be subsidized, so although she benefits from the trip, she does not actually pay the full price — the rest is paid by the general public which may or may not benefit from that trip. Similar questions arise when we think about car traffic, as traffic infrastructure is heavily subsidized and the cost is only partially covered by tax revenues on vehicles.
4. Mobility services let their users do (parts of) the work
Describing the role of the user comes with some more challenges as user involvement often plays an integral part in providing the service. From an end-user perspective, taxi services probably provide the most convenient service: the driver takes care of everything. The driver picks up passengers at the doorstep, takes care of their luggage, buys and maintains the car, and pays attention to all regulations. However, in other models such as car-sharing or car rental, the users are heavily involved in the transportation process: They have to drive, navigate, and provide the vehicle with energy. Often, this involvement is a crucial part of the business model that we have to consider explicitly.
As the original Business Model Canvas does not cover these aspects that are essential for understanding mobility services, we were looking for alternatives. We came across several models like the Social Enterprise Model Canvas or a value mapping approach. But we have not found what we were looking for. So we created our own model.
Introducing the Mobility Service Canvas
The Mobility Service Canvas builds on the Business Model Canvas and adapts it to allow a deep dive into understanding the mobility services industry. We have modified the existing fields and added additional ones to cover the peculiarities of the mobility service industry that we covered above. The goal was to create a tool that makes it easy to analyze and compare mobility service business models — and thus get a better understanding of this fast-changing industry. With its 12 building blocks, the Mobility Service Canvas describes how a mobility service company creates value, interacts with customers, partners, and the public, and how the company plans to cover its costs (and in some cases: how to make a lot of money).
The 12 building blocks represent three main areas of a business. They show how a company creates value and for whom (right-hand side), they illustrate what’s needed to create this value (left-hand side), and they shed light on the financial perspective (bottom). The blocks relate to each other and are intertwined. For example, it can make a big difference whether a mobility company hires drivers or employs them as freelancers, as this can have a significant impact on the customer experience, cost structure, and quality of service.
The Building Blocks of the Mobility Service Canvas
Let’s take a brief look at each of the blocks that shape the Mobility Services Canvas.
Value Delivery
The right-hand side describes how a company creates value and for whom. It explains how the company interacts with its customers and users, including relationships between them, how they are established, how users access the services, and how they are involved in the service provision.
Mobility Offer
There are many ways mobility services can contribute to the mobility of people or goods, from just providing assets that have the mere potential to move someone or something to actually transporting people in a certain way.
The “Mobility Offer” block describes the value that a mobility offering provides for the company’s customers, or, in other words, how the customers and users benefit from using the service. Some mobility offers address safety and reliability, others are used to represent a certain status. In some mobility offers, fun, flexibility, or convenience play an important role, while other offers emphasize economic or social aspects such as accessibility or sustainability.
Customers and Users
As discussed earlier, the people who use a service are not necessarily always the ones who pay for the service or who benefit from it. If the users pay an adequate fee to cover the mobility service cost, they are also the customers of the mobility service. If not, it is important to clearly identify the parties that contribute to covering the cost and the value that they derive from the service. Involved parties might include companies, public authorities, or the riders themselves. Understanding the different target groups, their individual interests, and how they relate to each other is key to understanding a mobility service. It is important to mention that the experience for customers and users is heavily influenced by the relationship of the different parties.
User Involvement
Users not only “consume” a service, they often play a crucial role in providing the service as many mobility service providers outsource parts of their value creation to their users. In exchange for benefits, some services might ask users to recharge or refuel vehicles, relocate them, or even require them to bring their own cars to drive other users around. This block covers the major involvement mechanisms of customers and users.
Access to Mobility
Mechanisms to get access to mobility are the main interfaces of a mobility service company to its users. Access mechanisms comprise informational elements such as schedules or real-time status information, but also elements that are important for using a service such as ticketing, booking, navigation, or unlocking a vehicle. There are physical access mechanisms — think about train stations or airports — and digital ones like mobile apps. A company can use its own access mechanisms by providing its own app or building its own mobility stations. It can also use mechanisms that are provided by others: take a mobility provider that allows its services to be booked through third-party apps or an airline that provides access via airports as examples. Access might be concurrent or exclusive and the mechanisms are part of the value delivery.
Customer Relationship
Mobility service companies interact with customers and users in very different ways: From very personal interactions with a personal chauffeur to an anonymous relationship in an automated subway system. Some relationships are very short-term, and others are set up for longer periods of time. The relationships can aim for one-time use of a service or for long-term relationships. The goal of the relationship might be customer acquisition, retention, or upselling. How a company sets up its customer relationships has a huge impact on customer and user experience.
Value Creation
On the left-hand side of the canvas, you’ll find the elements needed to create the value that we described in the previous section. Among them are the main actions a company has to take and the resources which are needed to provide the mobility service. Also, the relationships with partners and suppliers, and the public are presented on this side of the canvas.
Key Activities
This building block describes the crucial activities that a mobility service company needs to perform to be successful. Among them are vehicle acquisition and maintenance, charging and fueling, software development, dispatching, routing, data analytics, and contract management.
Key Resources
Key resources are the physical, intellectual, technological, financial, or human resources required to provide customers and users with the desired mobility offer. In the mobility service context, these key resources often include vehicles, energy, streets or rails, hubs, parking- and IT infrastructure, algorithms, software developers, and service teams.
Main Partners and Suppliers
Offering mobility services is quite complex, and mobility service companies rarely control the entire value chain from engineering vehicle parts to invoicing customers for single trips. Instead, they rely on external parties. In our model, we distinguish between partners and suppliers. Suppliers provide the company with goods or services with clearly identifiable characteristics. With partners, on the other hand, the company develops a relationship that builds on mutual trust, openness, and shared goals. Partnerships and partnership networks play a particularly important role in the mobility sector — especially when it comes to the high-risk and expensive development of new technologies like autonomous driving where we see a complex network of companies — that partner. Companies enter partnerships to gain access to knowledge, share development costs and risks, get in a better position for standardization, or increase their political influence.
Companies also often face the decision of whether to buy things from third parties or produce them internally. This influences the configuration of the business model — it can determine how dependent or independent a company can operate, and how quickly it can scale its business. Also, its cost structure is heavily dependent on these decisions. Important partners and suppliers of mobility service companies are vehicle manufacturers, energy and IT providers, software developers, or service teams.
Relationship with Public
As described before, mobility companies often have a very special relationship with the public: They operate in the public space and are heavily influenced by regulations. At the same time, their services have the potential to influence the lives not only of customers and users but also of citizens who do not use their services.
This section describes the unique relationship between a mobility operator and the public. The companies can follow trusting long-term approaches, but can also be very confrontational. In this field, the canvas also covers access to public infrastructures such as parking or charging infrastructure, public data-sharing requirements, as well as subsidies, and other support measures.
Value Capture
The bottom of the canvas describes the financial perspective of the business model. Traditionally, only cost and revenues are covered in the Business Model Canvas. We also consider that some mobility services are not profit-oriented and serve other purposes. That is why we have introduced a new block to the value capture section of the Mobility Service Canvas which is dedicated to the mechanics of the business.
Cost Drivers
Creating and operating a mobility service comes with expenses. The main cost drivers can be derived from the key activities, resources, partnerships, and relations with the public. Among the cost drivers in mobility service business models are vehicle acquisition, IT, marketing, service, and maintenance of vehicles and infrastructure.
Revenue Streams
To cover the costs, a company needs to harness revenue streams. This block describes the ways a company generates income from the different customer segments, or, in other words, for what value the customers really pay money. The companies may sell their services in exchange for a one-time fee, recurring subscriptions, or a combination of both. The pricing mechanisms for mobility services include fixed prices per transportation process, km, or minute. We can also find price bundles with a basic fee plus a usage-dependent component, or demand-driven pricing — just think of surge pricing at ride-sourcing companies and airline yield-management. Other pricing models are independent of actual usage: if you have a public transit subscription, you pay the same price no matter how much you travel.
We not only see one-to-one relationships between revenue streams and customer segments. That’s because a company might establish several parallel revenue streams for a customer segment. In the car rental business, for example, it is very common to have rental fees, insurance fees, and fees for other accessories and services. Plus, and in contrast to other business models, there might also be several revenue sources for services that a single customer consumes: For instance, employee and employer both pay a part of the price for the commute (job ticket) or the government covers a share of the commute-cost (commuter allowance).
Business Mechanics
The mechanics in various segments of the mobility service market are significantly different: Some segments are heavily regulated or subsidized, in other segments, companies try to maximize their profits. This block sheds light on the mechanics of the market a company operates in. It explains how a company intends to balance the difference between cost and revenues, and if there is a surplus, how to use this. The surplus money can be used to pay out dividends in some companies while in not-for-profit businesses, there might be reinvestment obligations.
Take three companies as examples: a public transit agency, a venture-capital-backed microscooter-operator, and a car-sharing company that is owned by a vehicle manufacturer. In our example, all three companies create losses. While the transit agency receives public subsidies to provide its public service obligation, the microscooter-operator covers its current losses from investments and hopes that it will be able to operate profitably and payout or reinvest the profits. The car-sharing company might even pursue totally different goals and receive support from its mother company for contributing to the company’s vehicle sales or achievement of other KPIs.
A New Tool for Understanding Mobility Service Businesses
We hope that the Mobility Service Canvas will be a helpful tool for practitioners and academics alike. It’s sought to improve the understanding of mobility service businesses and thus improve the discussion on different levels: The level of the company, but also the level of customers, users, partners, suppliers, and public administration. The canvas might be helpful to increase the success rate of mobility service businesses and also contribute to leveraging the positive effects of new and more sustainable mobility services.
To sum it up:
- The Mobility Service Canvas offers new ways to describe the characteristics of mobility service business models and considers the peculiarities of the mobility services industry.
- The Mobility Service Canvas is a tool to better understand and communicate the strategies of mobility service companies.
- The Mobility Service Canvas can be useful to compare different forms of mobility services, to identify successful approaches and failures, and to define requirements that need to be met to be successful in the mobility service area.
Next steps
Now, let’s put the Mobility Service Canvas to work! Remember how we started this project because we wanted to analyze and compare mobility service businesses? Now, with a canvas that truly gets to the core of mobility business models, we have a framework to do just that. We’ll create a collection of case studies that describe different mobility service business models and highlight areas in which these companies excel.
If you are running a mobility service company and want to be a part of that initiative, we’d love to talk to you!
