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A Multimethod Approach for Creating New Business Models: The General Motors OnStar Project

General Motors Corporation, Corporate Strategy and Knowledge Development, 400 Renaissance Center, P.O. Box 400, Detroit, Michigan 48265
General Motors Corporation, OnStar Headquarters, 1400 Stephenson Highway, Troy, Michigan 48083
General Motors Corporation, OnStar Headquarters, 1400 Stephenson Highway, Troy, Michigan 48083
General Motors Corporation, Corporate Strategy and Knowledge Development, 400 Renaissance Center, P.O. Box 400, Detroit, Michigan 48265
General Motors Corporation, OnStar Headquarters, 1400 Stephenson Highway, Troy, Michigan 48083
Decisio, 320 West Cheyenne Road, Colorado Springs, Colorado 80906
vince.barabba{at}gm.com
chet.huber{at}onstar.com
fred.cooke{at}onstar.com
nick.pudar{at}gm.com
jim.smith{at}onstar.com
m.paich{at}att.net

We developed a multimethod modeling approach to evaluate strategic alternatives for GM's OnStar communications system. We used dynamic modeling to address some decisions GM faced in 1997, such as the company's choice between incremental and aggressive marketing strategies for OnStar. We used an integrated simulation model for analyzing the new telematics industry, consisting of six sectors: customer acquisition, customer choice, alliances, customer service, financial dynamics, and dealer behavior. The modeling effort had important financial, organizational, and societal results. The OnStar business now has two million subscribers, an 80 percent market share of the emerging telematics market, and has been valued at between $4 and $10 billion. The OnStar project set the stage for a broader GM initiative in service businesses that ultimately could yield billions in incremental earnings. Most important, OnStar has saved many lives that otherwise would have been lost in vehicle accidents.

Key Words: Industries: communications; Transportation: automotive

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