MIS4596-Tony Messina-Sec 002-Spring 2017

Expanding the definition of disruptive innovation

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Zipcar counts as a disruptive innovation. Uber doesn’t. The latter is according to Clayton Christensen, Michael Raynor, and Rory McDonald in their recent HBR article “What is Disruptive Innovation?” The authors explain that disruption “describes a process whereby a smaller company with fewer resources is able to successfully challenge established incumbent businesses.” They also write that “disruptive innovations originate in low-end or new-market footholds.” Zipcar, qualifies as a disruptive innovation because it created a whole new market: demand for cars rented by the hour (as well as by the day). For them, applying technology in a totally new way — to reserve and open the cars — was a key enabler of this new market segment. Without the internet and wireless communications, car rental by the hour was an impossibly expensive and tedious transaction for such a small increment of time. Founded back in 2000, Zipcar effectively modeled how technology could be applied to open up entirely new markets, as well as new ways of using existing assets. Christensen, Raynor, and McDonald argue that Uber is not disruptive because it offers neither a low-end service, nor a new market. Using that lens, we can agree that Uber is basically a taxi service. It provided a well-designed app that took the dispatch function out of the black car and traditional taxi markets. This was not world changing. But what was totally disruptive was when Uber adopted Lyft’s model: enabling people to drive their own cars as taxis, particularly via its UberX service. The breakthrough lay in tapping excess capacity: downtime from your other means of earning income and making use of the car you already owned.

Do you think that Christensen’s disruption theory is incomplete and missing the new disruption in town?

How would you defend your point of view regarding disruptive innovation (Give your own understanding of Christensen’s theory)

2 Responses to

  • Uber started as a sustaining innovation to the limousine market (not a disruptive innovation), but UberX (as you mentioned) was a low market disruption to the taxi industry. UberX was more accessible (to interested drivers) due to the decrease in requirements compared to becoming a taxi driver. These requirements to become a taxi driver included extensive driver and car requirements. As the UberX driver community increased in cities, ride prices fell, wait times decreased, and UberX now applied to the mainstream market, competing directly with taxis. This shows the low-market entrance and increase in accessibility that then lead to mainstream market competition, aligning with Christensen’s definition of disruptive innovation.

  • Uber can be unpredictable because passenger demand and driver supply vary by so much. An Uber driver could be around the corner when you make the request or they could be 15 minutes away. That kind of unpredictability isn’t ok when you have an important appointment to make, like a job interview or a meeting. Zipcar allows you to schedule a car in advance, so if you know you have an important meeting coming up, it’s a better idea to book a Zipcar than to request an Uber and hope your driver shows up fast enough. Zipcar is definitely a market disruption because this is really the first service of its kind. It’s just like the bike rental Indigo, but with cars.

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