Societal benefit versus implications for change.
Will Uber be the end of the world as we know it?
A recent media report suggested Uber’s “systemic disregard for regulations can undermine the laws of the land that everyone else follows” (CBC, January 24, 2016). Quoting a law professor, the article went on to state “This isn’t just an Uber problem. If they get away with it, every company will do this; every company will become a platform and just say ‘oh, the laws don’t apply to us.’ If we enter into that stage, then it’s game over for vast swathes of business regulation: environmental, insurance, civil rights, worker protection, consumer protection, that’s all gone”.
From a Strategy Perspective
This strong reaction to Uber is understandable given the disruptive nature of the Uber technology. However, from a strategy perspective, it is important to consider the potential merits of the concept before limiting its potential by diving into all the implications of its adoption.
Remove Known Constraints
Developing strategy, for an organization or for society, starts with exploring “what” might be possible first. This exploration of new ideas and new thinking often requires suspension of known constraints.
Understand the Implications
Once options for the future are identified and framed, the second step is to understand the implications of these options. Reversing these two steps seriously limits creative and innovation potential. Think of the many innovations in our world that became realities because the innovators focused on the possibilities first, not the implications.
Responding to the Market
So what is the strategic merit of Uber to society, over and above the company’s profit potential? Uber has demonstrated strong consumer demand in the markets they have entered. This consumer demand is not just about a lower price point, it is more fundamentally about the customer experience. Uber customers get to request a ride from their mobile device, receive immediate response about ride availability and expected time to arrival, are able to track in real time the status of their ride arrival, experience a clean vehicle and a pleasant driver interested in making the ride a pleasant experience (by all reports), and upon completion of the ride are able to complete the transaction via their mobile device without any exchange of funds with the driver. All in all, Uber offers a superior customer experience than a typical taxi ride.
Why have taxi companies not taken the initiative to realize a similar customer experience?
Uncovering the Potential
Not only does Uber offer a better customer experience, but as a ride sharing service it has the potential to significantly improve asset utilization of automobiles in our society. While much of our dialogue about sustainability tends to focus on consumables, e.g. fuel, achieving higher utilization of all assets is another piece of the sustainability puzzle. Ride sharing services like Uber offer the potential to break down existing environmentally unfriendly norms like the dozens of taxis idling to keep warm while waiting at an airport because they have exclusive rights to pick up inbound passengers.
Balancing the Benefits with the Implications
The strategic benefits to society for ride sharing services like Uber are strong. Now we know this is where we want to get to, we have to consider the implications of this choice. The impact on existing taxi companies and taxi operators, that may have paid for licenses and for exclusive rights, need to be considered. A period of transition may be required so their investment is not unfairly affected. Similarly, laws and regulations need to be respected.
However, when there is clear societal benefit, regulations may need to evolve to realize this potential. Existing regulations and norms can’t be used as the excuse to preclude innovations that will benefit society.
If you would like to learn more about taking a strategic perspective, please contact John Galloway or Richard Nott.