Munir Mandviwalla

Uber is a ‘unique’ disruption

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Before emerging in the taxi industry, Uber began as a Black Car/Limousine service. They offered a much less expensive and far more convenient service that was viewed as “better” than the current providers. Because every ride has a low marginal cost for Uber, more rides translates into more profit. Their platform created a great deal of opportunities for limo drivers, which in turn translated into direct profit for Uber. In disruptive innovation theory, how a company measures its profitability determines what is up-market, not how consumers perceive the value of the service. This unique movement “up-market” into the taxi industry (which was initially viewed as down-market), helped Uber increase ride volume and utilization of their technology platform. It is argued that Uber did not actually become a taxi company at their inception and that their disruption of the taxi industry came as a reaction after a period, which creates confusion on whether they are disruptive. Though taxi organizations have fought against Uber (and failed), they are still not viewed by some as a disruptive innovation to the taxi industry.

 

  1. Do you agree with this point of view about being non-disruptive? If you disagree, which type of disruption is Uber: New Market or Low Cost? Elaborate.
  2. Uber moved from a perceivably higher class market into the taxi market and were incredibly successful. Can you cite any other organization that made a move like this which was dependent on technology?

 

Uber, disruptive innovation, and regulated markets

4 Responses to Uber is a ‘unique’ disruption

  • Profile photo of Kin San Lee

    Uber would be an innovative disruption because of three things. One of them is that Uber made the travel more efficient with the pickup and locating passengers using a simple app. This gave a more flexible way for the drivers and also the passenger do not need to wait too long for a transport. The second point is that going too far away places in US is simply boring if there are no attraction in the transport. Uber not only offers a good ride with the personal vehicle but also there are treats and good service. Last is that Uber would never do long and unnecessary rides just to have profited from the passengers. Therefore, Uber is an innovative disruption to the transport market.

  • Profile photo of Andrew R Fiss

    I think that uber is certainly disruptive, especially considering the impact that it had on the taxi industry. I think that Uber would fall more under low-cost disruption. While most people do find Uber more appealing than cabs, as you said they did not become as extensively well known until they started moving into the low end market where their low prices appealed to a wider range of consumers.

    I think another example of this might be 4g internet networks. In the past accessing 2g or 3g internet networks from mobile devices was expensive and inconvenient. The smart phone coupled with the evolution of faster LTE networks has allowed 4g mobile networks to become a very widely available and profitable product.

  • Profile photo of Michael Anthony Dennis

    Disruptive innovation theory is tricky because of its lack of defined rules and structure. There are multiple methods to justify a classification of a technology. For instance, since Uber targets non-consumers if still considered a limo service, which it has to classify itself as for legal reasons, then Uber is a new market disruption. Whether or not you classify Uber as a limo service or taxi service comes down to semantics but it effects who you apply disruptive innovation theory. However, uber is definitely some type of disruption and you could classify it a few different ways.

  • Profile photo of Elijah Michael Jamison

    Uber seems to me to be a low-end disruption. This is because it doesn’t necessarily do anything new, only the means of getting the end result are different. The actual service, transport, has been around for centuries, and being able to call in a transport has been around for a long time as well. The only real innovation behind Uber is the business structure and the effectiveness of the application. And of course, because of it’s innovative business structure, it is able to offer far lower prices than any of the ‘legacy transportation systems’ (cabs). With this in mind, and its ability to offer prices taxis couldn’t dream of, it is a low-end disruption.

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