Introduction
Technological transformations and innovations characterize modern societies. Christensen, Horn, and Johnson (2011) explain that several companies in the modern world employ new ideas, creativity, and critical thinking so that they can initiate new products or modify existing ones. Remarkably, innovation is a concept that enables organizations to develop new products or modify existing ones (Gans 2016).
To optimize innovation, organizations need to ensure that there is the inclusivity of all stakeholders and human resources because it facilitates the generation of new ideas. Besides increasing the market share of an organization, innovation leads to improved product quality. Markides (2006) asserts that inclusivity, empowerment of human resources, and creation of an environment that encourages the generation of new ideas are some of the tenets associated with effective innovation.
Uber is a service provider that entered into the transport industry in 2009 and initiated a range of transformations and varied reactions from consumers and service providers (Isaac 2014). Uber utilizes online platforms to contact consumers and deliver their services. The purpose of this report is to examine Uber and its impact on the minicab industry.
The Nature of Innovation Brought about by Uber in the Taxi Industry
Focus of innovation
The entry of Uber into the transport industry led to new development and changed the overall quality of service delivery. As opposed to conventional taxis, the ability of Uber to utilize technology in service provision made it an exceptional service provider among its competitors.
The nature of innovation that Uber brought into the taxi industry relates to the use of technology. By introducing a service that employs technology in its delivery, Uber Company took the transport services a notch higher than its competitors in the car hire and taxi industry. According to Christensen (2000), modern consumers are lovers of technology and consume technology-oriented services.
Fundamentally, the innovation focus employed by Uber is a result of market push and technology pull. Isaac (2014) avers that market push is evident from the experiences of consumers in regions such as San Francisco. Inefficiency and competition are some of the factors that characterized the experiences of consumers who used the transport industry. As a result, Uber developed products that focused on addressing these experiences.
Consequently, the focus of innovation later changed to become a technology pull. The development of Uber and its use of smartphones and online platforms is an outcome of technology pull. Markides (2006) explains that modern individuals are consumers of technology and the only way that service providers can access them is through the utility of online platforms. By employing market push and technology pull, Uber advanced, and acquired the highest market share globally in relation to other competing brands such as Alibaba and Tencent holdings (Fletcher School 2014).
Levels of Innovation
Apparently, the levels of innovation adopted by Uber are incremental. According to May (2014), the characteristics of incremental innovation comprise extension, modification, and repackaging of existing products. In the context of Uber, their services are an extension of the existing services delivered by taxis and car hire companies. Isaac (2014) alludes that Uber extended transport services to incorporate the use of smartphones as opposed to the previous nature of services delivered by conventional taxis. As such, the level of innovation used by Uber falls squarely within the tenets of incremental innovation.
Berman (2016) states that the incremental nature of the services offered by Uber relates to the use of smartphones as media of communication between drivers and consumers, a factor that extends the nature of services provided by minicabs. Cramer and Krueger (2016) outline the fact that the incremental nature of Uber services concerns its foundations that comprise the provision of transport services. Formerly, the taxis and car hire companies delivered the services but Uber extended the nature and quality by introducing online platforms to connect consumers and service providers.
Type of Innovation
Uber utilized a type of innovation, which focuses on service delivery. Transport is a service and consumers rely greatly on external components like comfort to define the quality. As such, Uber focused on external components such as efficiency, convenience, availability, and pricing to ensure that consumer perception of the service was optimum. The services offered by the organization followed an open type of innovation that comprised independent contractors, who are the drivers and consumers.
Gans (2016) claims that by creating online platforms where consumers and drivers exchanged their ideas and opinions regarding service quality, the company ensured that its type of innovation was open. Consequently, the company also utilized a process and strategy type of innovation. The application of the innovation type relates to the components of Doblin’s model, which outlines the relevance of offerings, organization, and interaction with consumers.
Hall and Krueger (2015) aver that in the model, Doblin explains that the manner in which a product is designed, packaged, and presented dictates its performance in the market. The model also outlines the essence of ensuring that an organization is in a better position to execute the innovation and the interaction of end service providers with consumers is satisfying and productive.
Roger’s Model of Diffusion
Apparently, the effective application of process and strategy type of innovation requires an understanding of the concept of diffusion. Roger’s model of diffusion explains that when innovation emerges in a market, organizations need to communicate the product over a particular period using the right channels and human resources (Isaac 2014). From the diagram, it is clear that innovation requires communication so that it becomes successful and achieves the desired objectives.
Berman (2016) explains that society forms the social setting within which communication takes effect over a period. In the context of Uber, the scale of diffusion is still low, a factor that explains why the company is still operating in about 80 countries years after its inception.
The Main Drivers that Encouraged Uber to Innovate in the Transport Industry
Overview
According to Christensen, Horn, and Johnson (2011), some of the drivers that encouraged Uber to enter into the transport business include competition, technological advancements, short product lifecycles, and demand gaps. As such, the company looked into the strengths, opportunities, weaknesses, and threats and strived to address consumer demands in the marketing environment.
SWOT Analysis
Apparently, SWOT analysis is a very important model that helps understand the various factors that encouraged Uber to enter into the transport industry. Some of the strengths that the organization analyzed before entering the market include the utility of the 4Ps otherwise known as promotion, product, price, and place (Andrews & Wood 2013). Markides (2006) states that Uber analyzed how promotion, product, price, and place could act as strengths and help them advance transport services.
The aftermath of the analysis was the introduction of a new style of management where the people who work under the Uber umbrella are independent contractors and enjoy shared revenues (Isaac 2014). Consequently, some of the weaknesses that the company strived to address included the poor implementation of the 4ps, which can result in a short life cycle of products and untimely exit in the service industry.
Formerly, when Uber introduced its services in San Francisco consumers complained about their high prices (Fletcher School 2014). In its quest to address the issue, the company introduced consumer-oriented prices. The price orientation enabled it to win a greater market share as opposed to its competitors that included Lyft and Sidecar (Hall & Krueger 2015).
Opportunities and threats prevalent in the marketing environment are also some of the factors that encouraged the company to introduce innovation in the transport industry. Fletcher School (2014) explains that competition, legislation, technological advancements, and consumer demands comprised some of the factors that triggered the need to introduce innovation in the transport industry. After realizing that there was a demand gap and consumers lacked a platform that connected them to the service providers, Uber introduced a competitive service that capitalized on the gap (2014).
The slogan of the company “Everyone’s Private Driver.” played a pivotal role in promoting the organization and addressing the demands of contemporary consumers (Hall & Krueger 2015). The company circumvented the threat of competition and technological advancements by introducing competitive, efficient, and convenient transport services that utilized technology (Andrews & Wood 2013). It is important to understand that for companies to continue in the market, they need to understand that consumers engage in value migration. Companies that offer niche and high-end products receive more consumers as opposed to those that refuse to adjust. To address the threat of legislation the company engages in extensive research before introducing its services in new markets (Goodall & Dixon 2015).
Enablers and Hinderers of Uber’s Innovation
Role of People
Glöss, McGregor, and Brown (2016) elucidate that some of the enablers and hinderers that came into play when Uber introduced its innovative services concerned personal, project, organizational, and environmental. Markides (2006) explains that regular training, rotation, and trust among the workforce is one of the factors that can improve the quality of services delivered by a company. In the context of Uber, workforce training, and the creation of a productive working environment is critical in ensuring that consumers receive their desired services (Isaac 2014).
Projects or Organizations
From the perspective of Andrews and Wood (2013), projects or organizations need to work together and share information, which improves the quality of services. The role played by organizations comprises research in order to ascertain the needs of consumers (Hall & Krueger 2015). Goodall and Dixon (2015) state that after ascertaining the demand of consumers in the market, the organization works together with service providers to ensure that they convert client needs into finished products.
Role of the Environment
Assessment of the environment enables Uber and its service providers, the drivers, to look into the scale of competition, possible alliances, and legislations that affect its operations (May 2014). Thereafter, the organization works collaboratively with the concerned stakeholders and ensures that the services are efficient and convenient (Dyer, Gregersen & Christensen 2011).
Enablers
Principally, the enablers that facilitated the progress of Uber’s innovation revolve around the personal, project, and organizational commitment (May 2014). Andrews and Wood (2013) aver that engaging in productive delivery of services, individuals, and organizations that work together with Uber circumvent the challenges presented by the environment to their benefit. It is important to explain that effective participation of service providers working together with Uber is one of the factors that enabled its innovation.
Moreover, the commitment demonstrated by Uber’s team and organization in ensuring that services between consumers and service providers are seamless acts as one of the enablers that amplified its reputation (Isaac 2014). Dyer, Gregersen, and Christensen (2011) assert that by working together with the drivers, the organization strives to create a productive environment, which suits its operations. As such, the commitment demonstrated by the organization and the service providers is one of the enablers that make the company achieve its innovative objective.
Hinderers
Some of the factors that hinder or act as obstacles and hamper the progress of Uber’s innovation include varying technological advancements, limited consumer awareness in some regions, and poor reception. According to Goodall and Dixon (2015), some countries are still developing, and therefore, do not have a high number of Smartphone users. The low number of Smartphone users is a serious setback and hampers the entry of the organization into the country.
The setback takes effect because the company relies on Smartphones to undertake its services. Furthermore, some regions do not know about the company and its nature of the operation (Gans 2016). Little awareness from the target consumers implies that the company has to undertake extensive promotions, which may be costly (Downes & Nunes 2013). Costly promotions are in most cases a hinderer that affects the overall progress and delivery of services.
In the context of poor reception, Glöss, McGregor, and Brown (2016) explain that in places such as China, the potential consumers choose domestic brands such as Alibaba Holdings in place of Uber. Poor reception that the company receives in these parts of the world is a hinderer that greatly affects how the company delivers its services. Moreover, some areas such as India and Peru have terrains that hamper effective communication and internet connectivity, and thus, cripple Uber’s operations (May 2014).
The Extent to Which Uber is a Disruptive Innovation
Apparently, Uber’s scale of disruption is low as opposed to other disruptive innovations like Netflix (May 2014). Disruptive companies according to Christensen (2000) are those that provide low-end services and gradually improve the quality in order to appeal to new or passive consumers. Moreover, disruptive innovation focuses on markets that are no longer profitable or abandoned and create new products or extensions that trigger renewed demand among potential clients.
In the context of Hall and Krueger (2015), Uber focuses on an existing market, which has consumers. Although their services are an extension of taxi services, their scale of disruption is minimal because their product is existing and profitable (Isaac 2014). Moreover, the service providers are in business delivering the services. Therefore, the scale of disruptive innovation demonstrated by Uber is low.
Conclusion
From my point of view, Uber is one of the companies that introduced the technology in the field of transport. However, in as much as their services are commendable, Uber’s scale of communication and marketing is low. The outcome of low marketing is little knowledge in countries that would present profitable ventures. The company needs to engage in research and awareness creation in order to increase its consumer base and market share. Moreover, the company needs to be vigilant because competition can pose as a challenge especially in countries where citizens prefer domestic companies.
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