“Organizations that destroy the status quo win. Whatever the status quo is, changing it gives you the opportunity to be remarkable.” – Seth Godin
In January, I attended a startup conference called ResolveTO. Head of Open Innovation at General Motors, Ted Graham was one of the speakers where he introduced some key points from his newly released book, The Uber of Everything.
Uber was started in 2008 by Travis Kalanick and Garrett Camp as an easier way to commute by hiring civilians to drive their own vehicles. It rocked the taxi industry and impressed consumers. Uber is now available in over 560 cities around the world. In a Bloomberg article published this summer, “according to… a professor who specializes in equity valuation at NYU’s Stern School of Business” he values the company at $26.5 billion. Others have valued it much higher – up to $62.5 billion. Bottom line, it’s worth a lot and it has become the blueprint for other disruptive technologies. In fact, according to Graham there are over 500 examples of “Uber” companies. The most notable being AirBnB.
Uber’s significance goes beyond the transportation industry. Its true significance is its ability to democratize a monopolized industry, utilize unused inventory (95% of cars sit idle), and effectively deliver profits based on economic principles of supply and demand through surge pricing.
According to Graham, there are three key lessons that differentiate Uber from traditional business models that enable it to disrupt and grow:
- Treat your stakeholders well. Uber focuses on providing convenient training that is useful to its drivers. They offer sessions like “How to Deliver 5-Star Service”. Due to their extensive data, they also offer heat maps of pick up areas, regular notifications and alerts and continuous training via WebEx.
- Offer two-way feedback with consequences. Drivers can rate customers and customers can rate drivers. This constant feedback loop enables Uber to identify problematic drivers or customers right away. If drivers regularly receive low-ratings, they are kicked off. If customers receive low-ratings, the supply of drivers diminishes.
- The reward outweighs the risk. When Uber was first introduced there was a lot of push-back. There were targeted social media campaigns against the company to try to tarnish the brand. The rewards of the business model though outweighed the negative press and swayed the public. The usability and convenience of the app enables consumers to order an Uber quickly and efficiently. Also, it gives drivers another way to make extra cash.
These three lessons can be applied to any business. Consider these questions:
- Are you providing professional development to your staff that is useful and in a platform that is convenient for them?
- Do you use feedback loops that identify issues when they first happen enabling you to resolve the issue quickly?
- And does your product or service have a compelling reason or reward to inspire your consumers to keep coming back for more?
Uber has opened the door for new ways to think of business. It’s time to rethink, readjust and change.