Alan Moore, Guardian Sustainable Business
22nd May 2013
Local Motors shares its innovations and lets customers be part of the car-building process, while keeping it local.
Last year, I spoke at Shanghai’s Radical Design Week about the transformational design of business. I talked about car manufacturing and how, with state of the art 3D fabrication tools, a networked participatory culture and rapid innovation, the car company Local Motors claims to build cars five times faster at one hundred times less the capital cost of conventional manufacturers.
Local Motors is perhaps one of the most comprehensive examples of a revolutionary approach to the design, engineering, manufacturing, sales and marketing of cars. But don’t worry if you are not in the automotive industry, the Local Motors story is one about the firms of the future.
Designing high performance organisations
Companies today can change their shape, capability and performance by rethinking and redesigning core processes. In the case of Local Motors, its factories (the Local Motors micro-factory was rated by Jalopnik as one of the world’s top 10 most impressive car factories), R&D, sales, marketing and production represents a design system that is an industrial ecology, rather than a series of boxes and silos. Moreover it is much less costly to set up, run and maintain, which enables the company to invest its energies into high quality design and production.
An open networked innovation platform
Local Motors runs competitions to find innovations. For its first vehicle competition, 44,000 designs were submitted and 3,600 innovators shared their knowledge and insights. No one company can hire that many people and there was no cash prize. So, what inspired so many people to participate?
Through its open participatory platform called The Forge, Local Motors has collaborated in automotive innovation with DARPA, the US military research agency, co-designing and building a fully functional prototype of a combat support vehicle in three and a half months. Even large car manufacturers have turned to Local Motors, such as BMW, which is currently running an urban driving experience challenge.
So Local Motors becomes more than just a car manufacturing company – it’s an automotive innovation platform and a true community. Local Motors attracts innovators because it is creating and releasing social and intellectual capital into a common pool. This open innovation platform is counter intuitive to many assumptions about how businesses are run, and how intellectual products are created and protected.
The economics of sharing: open legal frameworks
Normally all this innovation would be locked down with copyright law that seeks to limit the dissemination of intellectual property, whereas all of the Local Motors designs created within the common pool are freely available to access and download. It might seem a radical step for an automotive company to operate this way, but what is becoming clear is that operating under Creative Commons legal frameworks has exponential benefits that can radically accelerate the innovation process, whilst dramatically reducing the costs of innovation.
Creative Commons is based on the economics of sharing. It is a set of permissions allowing creative work or intellectual knowledge to be shared and used in a number of different ways. It enables the sharing and dissemination of knowledge, encourages diversity and learning while stimulating commercial activity. It was specifically created as a response to a broken copyright model. The framework emphasises the benefits of sharing and mutuality as key to establishing a richer more vibrant world economically, socially and culturally.
The online communities of innovation are part of an industrial ecology that is designed to be lightweight, adaptive, and highly efficient. Local Motors builds micro factories where one vehicle design is built, it works with the Penske Group for automotive parts supply, pre-fabricates frames, chassis, bodies, and uses 3D printing in its manufacturing process.
And when you buy your Rally Fighter you go to the micro factory, and spend six days with a mechanic building your car. Building your own car means you bond with it, and may be less likely to default on repayments. The cost of the build process is transformed into a memorable experience for each and every customer.
The company is fascinating because it fundamentally changes the relationship with supply and demand by rethinking and redesigning the process from conception to production. It harnesses a distributed knowledge network which is both hyperlocal and superglobal, and makes a clear point of being green and sustainable.
It innovates through engaging enthusiasts who are passionate about car design and engineering, and uses competition as both risk mitigator and innovation accelerator. The company also fosters regional development. Rather than building another car plant, Local Motors is building micro-factories, so that money flows into local communities, and creates local jobs.
Finally, learning is seen as a constant daily process to enable the company to evolve and to grow, and understand what work and what doesn’t.
Local Motors is an example of a lightweight, flexible and adaptive business that can work at unprecedented velocities, and where sociability is embedded into the very fabric of the process.
Alan Moore is an author and founder of the innovation company SMLXL.