UBERIZATION - FINDING YOUR DISRUPTIVE INNOVATION

February 19, 2015

 A world with no dispatchers, low rates, push button access, driver tracking, and notification of driver arrival so you can wait comfortably indoors.  No bureaucracy, just an efficient allocation of human capital! It’s the pinnacle of the new “on demand” economy.

 

Since its’ inception in 2009, Uber has taken the $11B U.S. taxi and limo market by storm, democratizing the taxi experience and monetizing the downtime of clean driving Americans.  $1.2B was invested into Uber in the summer of 2014 fuelling growth to an estimated 160k drivers by the end of 2014.  Uber represents a brilliant intersection of a smart web app coupled with a marketing and PR machine.  

 

Uber’s technology platform has created flexibility in fitting work opportunities around busy schedules.  This on-demand economic model serves both drivers seeking flexible economic opportunities and customers seeking greater speed, cost effectiveness and service experience.    

 

The traditional value proposition model is to “pick two” of three main propositions:  speed, cost, or quality.  The argument widely held is that a business can’t provide all three simultaneously and must resort to picking two with a refined delivery mechanism to do them better than your competition. With Uber, they’ve tackled all 3 (and them some)… 

 

Uber value propositions (to name a handful):

• Security - Driver screening process to ensure safety, reliability, and driving records

• Low cost - Low cost model with minimal overhead, no inventory, no warehouses, no terminals, etc.  

• Equilibrium pricing - Wages and rates are set by a dynamic measure of supply and demand centralized and processed through the simple web app

• Choice - In the level of service experience desired (based upon type of vehicle)

• Convenience -  Real-time tracking driver availability, location, and status

• Quality/experience – Drivers must maintain prescribed feedback scores to maintain driving activation

 

To recap, a couple guys take a disruptive approach to democratizing the way in which people interface with taxi and limo transport.  They evaluate a crowded and bureaucratic $11B market space and pick it apart to find ways to democratize the process, dynamically set wages / prices, efficiently allocate human capital, monetize people’s downtime, bypass expensive inventory/overhead, leverage a web app to manage the process, and bypass much of the bureaucracy inherent in the industry. Some estimates say the founders started it with under $2M and parlayed it to raise over a billion dollars creating a valuation north of $40B.  

 

The mindset to uncover your Uber disruption…

 

1. Don’t be afraid to be disruptive within your competitive or industry.   Where is the disruptive innovation that can improve (or democratize) your product or service in ways that the market does not expect?  

2. Where are the idle resources in your supply chain – how do you locate and leverage these idle resources through a more efficient use of technology?  

3. How can you tap the internet or web apps to monetize idle resources?   

4. How can you shed inventory, costly fixed assets, receivables, etc. thus lowering risk and increasing flexibility?  

5. Where can you lower prices or apply Uber’s “surge pricing” – How can you capitalize on supply and demand curves through a dynamic pricing model?

6. Welcome the messenger – Encourage and embrace feedback, crazy ideas, and a genuine desire to uncover and exploit the unmet needs of your market.  

7. Embrace bad PR.  If you’re not too large, there is no bad press.  Leverage any press to stimulate further conversation, differentiate, and create brand awareness.  

 

It’s tough to find your disruptive innovation when you’re entrenched in day-to-day operations, hanging in the same industry peer groups, and surrounded with resources unwilling to challenge the status quo.   Partnering with an objective and experienced external resource can help to catalyze your organization and ignite your own Uber dispruption.   shart@flvcp.com

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