Industry Insights

Uber Changed my Life: a Blue Ocean Strategy Story

Posted by Sam Zalcman on Feb 16, 2015 6:00:00 AM

I have always had great customer experiences with Uber and it has undoubtedly become my preferred taxi-replacement service. In fact, anyone I have met who has used the service seems to become an Uber-advocate, helping to extend their brand reach through word-of-mouth – a highly cost-effective way for the company to market themselves and build their brand. I often work with clients to explore the practical application of Blue Ocean Strategy and to build capabilities to embed the tools and frameworks that this model provides, and it struck me that Uber is an excellent case study for value innovation (value up, cost down), examples of which are often characterised by word-of-mouth marketing.

I was assigned the duty of determining the best way to get to the hospital.

As a quick disclaimer, taking my wife to the hospital using Uber was not the first time I had used the service. Leading up to the final weeks of pregnancy I was assigned the duty of determining the best way to get to the hospital when the countdown clock started. We live around 30 minutes away from our chosen hospital, located on the outskirts of Paris, and after ruling out public transport (free advice for fathers-to-be: do not suggest this approach to the future mother of your child) I determined that there were three main options: private ambulance, taxi or Uber.

I contacted a couple of private ambulance firms but despite advertising that they were available 24/7 it soon became clear that most of these companies only had two or three vehicles and if your need coincided with several other births (or other medical incidents), it would work on a first come, first served basis. Adding additional uncertainty to what is a fairly stressful time did not seem like a good idea so I moved on to the traditional taxi option until I read some worrying articles about taxi drivers refusing to take heavily-pregnant women to the hospital. So Uber became the most logical option as it has always been a quick, easy and painless experience and I have always been impressed by the customer service provided by the drivers and the quality and cleanliness of the cars.

I managed to use the simple app with my trembling fingers.

The night when we first thought our son was going to arrive (he actually arrived over 24 hours later) provided us with a heady mix of excitement and blind panic but the Uber experience did not disappoint. Having already set up my account and registered my credit card, I managed to use the simple smartphone application with my trembling fingers to book the closest car – which the app showed me was only 6 minutes away. I rushed to grab my wife’s pre-packed bag, poured a weeks-worth of food into the cat’s bowl and escorted my grimacing (and radiant) wife down stairs to meet the car just as it arrived.

When he realised, the driver didn’t miss a beat and drove us to the hospital extremely steadily despite the strange noises emanating from the back seat every few minutes. On arrival, the Uber system paid the driver automatically, avoiding the need for change, currency or tipping and after helping us out of the car with our bags, he offered us some extra bottles of water before we headed into the hospital. It was just the kind of service that we needed and we arrived relatively calm for the start of what was to be an amazing, life changing experience.

Part 2

I am well aware that Uber and other similar services such as Lyft or Sidecar often court controversy and there are a number of ongoing disputes across many of the cities in which they operate, including here in Paris where taxi drivers have blocked roads in protest against Uber. Undoubtedly there will be ongoing debate around the legality and safety of these services, but my stance is clear – there is an inevitability that companies like Uber will continue to grow in popularity for the simple reason that they provide a customer experience that better reflects passengers’ rising expectations when compared to traditional taxi firms. As I said in the previous article: value up, cost down.

Taxi firms have been under little pressure to develop their customer value proposition.

The taxi industry has been ripe for disruption for many years – the market in most major cities is usually some form of oligopoly due to the regulatory environment and the high cost of licensing. It is clear that taxi firms have been under little pressure to develop their customer value proposition, a situation that often arises from an industry that has little or no competition. Historically, passengers have had no real breadth of choice when choosing a cab and most existing services are fairly indistinguishable from each other except for perhaps the colour of car, the quality of beaded seat cover or the number of bizarre dash-mounted ornaments.

Looking at the service provided by traditional taxi firms, we can start to categorize the elements of their existing offering:

  • An average level of offering for many areas such as: price, speed to pickup, cleanliness of cars, driver experience, ease of payment etc.
  • A high level of offering for other areas such as: extra services (wheelchair access, child seats etc.) and perhaps local knowledge of drivers etc.

The taxi industry has remained relatively unchanged for decades.

Most industries in the world were massively affected by the birth of the information age at the end of the 20th century, but not so the taxi industry which remained relatively protected until start-ups such as Uber recognised some of the elements that were missing from their offering:

  • Location Tracking: no sharing of driver locations with prospective customers
  • Electronic payments: disjointed approach to accepting anything other than cash
  • Customer Reviews: little opportunity for customers to provide or assess driver feedback

These three features reflect some of the information age’s significant trends and customers have grown to expect these types of services to be readily available. The historic lack of any real threat from new entrants into the market meant that traditional cab companies were able to ignore these types of trend and the rise of cheap, mobile technology offered start-ups a fantastic opportunity to disrupt the industry.

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