GM Creates the Telematics Industry Using System Dynamics
The Official Website
onstar.com is the official website in which you can become a member, get familiar with the services and purchase a plan.
The Issue You Tackled
In 1997, General Motors (GM) assembled a project team to develop its OnStar telematics business. Telematics is the provision of communications services to cars, including crash notification, navigation, Internet access, and traffic information. OnStar is GM’s two-way vehicle communication system that provides a variety of services that enhance safety, security, entertainment, and productivity. At the time, GM faced fundamental strategic decisions with respect to OnStar. The default and safe strategy was to market OnStar as a car feature that would improve vehicle safety and security. An alternate strategy was to view OnStar as a service business that could contribute greatly to GM’s profits.

What You Actually Did
GM formed a project team to consider alternative strategies for OnStar. GM makes important strategic decisions through the dialogue decision process, in which the project team interacts with the decision board that is responsible for actually making the decision and committing resources. Dynamic modeling can be a part of this process.
In this case, application of modeling was difficult. In the vehicle business, GM has decades of experience and plentiful historical data. Modelers can build on a wealth of previous analyses and examples of best practice. The OnStar business was very different in that the telematics market did not exist. To cope with the inherent uncertainty, we needed a modeling process that would allow integration of various methods and data sources. A simulation model was our core tool in the OnStar strategy project. The final model had six key sectors: customer acquisition, customer choice, alliances, customer service, finances, and dealer behavior.
In late 1997, the project team recommended a very aggressive strategy that included installation on all GM vehicles, recruitment of other manufacturers into the OnStar system, making the first year of service free and aggressively pursuing alliances with content partners.
The Results
Through 2001, the implementation of the OnStar business strategy has progressed very much as expected. The project contributed to creating a new enterprise mental model for GM, in which the transactions revenue is augmented with a stream of revenue from service businesses like OnStar. The OnStar project also created the new telematics business which did not exist before GM implemented its strategy. Today, Wall Street analysts project that the industry will grow to $12 billion over the next 10 years. By far, OnStar’s most important contribution is saving lives. OnStar answers thousands of emergency calls each month and has often made the difference between life and death.
Name | The General Motors OnStar Project |
---|---|
Modelers | Vince Barabba, Chet Huber, Fred Cooke, Nick Pudar, Jim Smith, Mark Paich |
Client | General Motors |
Client Type | Corporation |
Do you want to know more?
Publications
A multimethod approach for creating new business models: the General Motors OnStar project | Download |
Did You Know?
System Dynamics Application Award
The System Dynamics Applications Award is presented by the Society every other year for the best “real world” application of system dynamics. In 2007, the Society awarded its first Applications Award to Vince Barabba, Chet Huber, Fred Cooke, Nick Pudar, Jim Smith, and Mark Paich for their work A Multimethod Approach for Creating New Business Models: The General Motors OnStar Project.
To see the citation that was made by James Lyneis at the conference, please follow this link. (Jul 2007)
OTHER SUCCESSFUL APPLICATIONS
The World Bank Uses System Dynamics to Identify Root Causes of Poverty
The World Bank Uses System Dynamics to Identify Root Causes of Poverty EXECUTIVE Summary Madagascar has one of the highest poverty rates in the world. In 2022, an astonishingly three out of every four people in Madagascar lived below the poverty line. Poverty has...
Fast-Track Cities Uses System Dynamics to Enhance HIV Care
Fast-Track Cities Uses System Dynamics to Enhance HIV Care EXECUTIVE Summary Low levels of viral suppression at 69% for people with HIV make it hard to believe the 95% target level will be achieved by 2030 in St. Louis, USA. As a solution, Fast-Track Cities-STL opted...
System Dynamics Unravels ICU Tensions at the Portuguese Oncology Institute
System Dynamics Unravels ICU Tensions at the Portuguese Oncology Institute EXECUTIVE Summary The Portuguese Oncology Institute (IPO) faced a critical challenge in its intensive care unit (ICU) where doctors and nurses experienced high turnover due to tensions with...
Upcoming Events

India Chapter Meet Up w/Bob Eberlein
We are very excited to invite you to another year-end meet up and chat, this time featuring Bob Eberlein – who has been a vital member of the SDS since its early days and also a pivotal developer of Vensim, and now Stella – some of the most widely used...
Recent Posts
Call for Presenters: Seminar Series
Call for Presenters: Seminar Series We at the System Dynamics Society are continually seeking vibrant and knowledgeable presenters for our ongoing Seminar Series. As we unfold the calendar, there’s always a place for more insights, experiences, and expertise to enrich...
Honoring Excellence: A Glimpse into the Awards of the International System Dynamics Conference
Honoring Excellence: A Glimpse into the Awards of the International System Dynamics Conference The International System Dynamics Conference brings together experts, practitioners, and students to exchange ideas, showcase real-world applications, and celebrate...
From Bergen to Global: UiB’s System Dynamics Group
From Bergen to Global: UiB’s System Dynamics Group The System Dynamics Group, an autonomous research group at the University of Bergen (UiB) was established in 1971 by professor emeritus Svein Nordbotten. Inspired by the work of Jay W. Forrester, Nordbotten...
Join us
OTHER SUCCESSFUL APPLICATIONS
The World Bank Uses System Dynamics to Identify Root Causes of Poverty
The World Bank Uses System Dynamics to Identify Root Causes of Poverty EXECUTIVE Summary Madagascar has one of the highest poverty rates in the world. In 2022, an astonishingly three out of every four people in Madagascar lived below the poverty line. Poverty has...
Fast-Track Cities Uses System Dynamics to Enhance HIV Care
Fast-Track Cities Uses System Dynamics to Enhance HIV Care EXECUTIVE Summary Low levels of viral suppression at 69% for people with HIV make it hard to believe the 95% target level will be achieved by 2030 in St. Louis, USA. As a solution, Fast-Track Cities-STL opted...
System Dynamics Unravels ICU Tensions at the Portuguese Oncology Institute
System Dynamics Unravels ICU Tensions at the Portuguese Oncology Institute EXECUTIVE Summary The Portuguese Oncology Institute (IPO) faced a critical challenge in its intensive care unit (ICU) where doctors and nurses experienced high turnover due to tensions with...
Recent Posts
Call for Presenters: Seminar Series
Call for Presenters: Seminar Series We at the System Dynamics Society are continually seeking vibrant and knowledgeable presenters for our ongoing Seminar Series. As we unfold the calendar, there’s always a place for more insights, experiences, and expertise to enrich...
Honoring Excellence: A Glimpse into the Awards of the International System Dynamics Conference
Honoring Excellence: A Glimpse into the Awards of the International System Dynamics Conference The International System Dynamics Conference brings together experts, practitioners, and students to exchange ideas, showcase real-world applications, and celebrate...
From Bergen to Global: UiB’s System Dynamics Group
From Bergen to Global: UiB’s System Dynamics Group The System Dynamics Group, an autonomous research group at the University of Bergen (UiB) was established in 1971 by professor emeritus Svein Nordbotten. Inspired by the work of Jay W. Forrester, Nordbotten...
Upcoming Events

India Chapter Meet Up w/Bob Eberlein
We are very excited to invite you to another year-end meet up and chat, this time featuring Bob Eberlein – who has been a vital member of the SDS since its early days and also a pivotal developer of Vensim, and now Stella – some of the most widely used...