Industry Insights

Uber the disruptor: a Blue Ocean Strategy story part II.

Posted by Sam Zalcman on Feb 23, 2015 6:00:00 AM

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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Topics: Innovation, Customer Centricity

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