Uber and the Economics of Disruption

In a previous post on Uber Mathematics, I asked how the magic of digital would allow a centralized company with international overheads (Uber or Lyft) to provide a service more cheaply and cost-effectively than local cab companies.

Uber once promised it would achieve economies of scale, thanks to network effects. But then, as Ali Griswald comments,

What is scale if not a company that operates in 72 countries and more than 10,500 cities, which last year had 118 million active users every month and completed 6.3 billion rides/trips/deliveries? Uber is the definition of scale, yet it is still nowhere near consistent and reliable profitability.

Uber appears to retain an advantage over local cab companies in terms of consumer convenience, which we can frame in terms of the economics of alignment. But as Henry Graber points out, it remains to be seen how much consumers are willing to pay for this convenience when they are no longer being heavily subsidized by over-optimistic investors, and Uber is no longer the cheapest option.

Another point Graber makes about Uber is that it has disrupted alternative modes of transport, by a combination of predatory pricing and political influence, and the regulatory environment in many cities has been altered in Uber's favour.

There are processes here that operate at different tempos. There is a demand tempo - getting sufficient numbers of drivers to a specific location at a specific time to satisfy peaks of demand. And an acquisition tempo - how long does it take to increase the number of available drivers, given the necessary investment in vehicles and equipment, driver training, and a whole range of safety issues.

Because there's a big difference between these two tempos, the challenge for a healthy ecosystem is in the intermediate tempo, which we call the integration tempo. What are the options for cities to restore requisite variety to local transportation?

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Aaron Gordon, Uber And Lyft Don't Have A Right To Exist (Jalopnik, 30 August 2019), Uber and Lyft Are Out of Ideas, Jacking Up Prices in Desperation for Profit (Vice, 27 May 2022)

Henry Grabar, The Decade of Cheap Rides Is Over (Slate, 18 May 2022)

Ali Griswold, Uber wants to show you the money (Oversharing, 10 May 2022)

Digital Disruption, Delivery and Differentiation in Fast Food

What are the differentiating forces in the fast food sector? Stuart Lauchlan hears some contrasting opinions from a couple of industry leaders.

In the short term, those fast food outlets that offer digital experience and delivery may get some degree of competitive advantage by reaching more customers, with greater convenience. Denny Marie Post, CEO at Red Robin Gourmet Burgers, sees the expansion of third-party delivery services as a strategic priority. So from agility to reach.

But Lenny Comma, CEO of Jack in the Box, argues that this advantage will be short-lived. Longer-term competitive advantage will depend on the quality of the brand. So from assurance to richness.

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Stuart Lauchlan, Digital and delivery – which ‘D’ matters most to the fast food industry? Two contrasting views (Diginomica, 16 August 2017)

Related post: Reach, Richness, Agility and Assurance (Aug 2017)

Digital Disruption and Consumer Trust - Resolving the Challenge of GDPR

Presentation given to the "GDPR Making it Real" workshop organized by DAMA UK and BCS DMSG, 12 June 2017.

The presentation refers to two milestones. The second milestone is 25th May 2018, the date that companies will need to comply fully with the new data protection regulations. The first milestone is the agreement of a clear and costed plan to reach the second milestone. Some organizations are now getting close to the first milestone, while others still don't have much idea how much effort and resource will be required, or how this could affect their business. Good luck with that. Let me know if I can help.

Digital Disruption and Consumer Trust - Resolving the Challenge of GDPR from Richard Veryard

Does everyone (except Google) have a platform strategy?

#bizarch The obvious ones - Apple, Amazon, Microsoft

General comments

"The new market disruption is the migration of a large number of demanding customers away from phones-as-voice-products to phones-as-computing-products. The low-end disruption is the migration of a large number of less demanding customers from branded phones to unbranded, commodity phones. ... The new market disruption is evidenced by the shift of fortunes to Apple and Samsung and away from every other device maker." Horace Dediu, The phone market in 2012: a tale of two disruptions (May 2012)

"Apple is the most valuable company in technology (and indeed in the world) because it integrates hardware, software and services. It’s the first, and only, company to do all these three well in service of jobs that the vast majority of consumers want done." Horace Dediu, Which is best: hardware, software or services? (May 2012)

Disney

• John Hagel, Disney, Pixar and Jobs (February 2006)

• Disney, Pixar, Apple and Jobs (February 2006)

Back in 2006, people like Hagel thought that Steve Jobs didn't understand platforms. Maybe he didn't then, but he certainly caught up later. 

eBay

• Dare Obasanjo, eBay Web Services: A Marketplace Platform for Fun and Profit (March 2006)
• Haydn Shaughnessy, eBay's Platform Strategy (Oct 2011)

Elsevier

• Smart Content (Oct 2011)

Nike

• Nick Vitalari, Competition and the Elastic Enterprise: Business Platforms, Personal Biometrics and Strategic Options: Nike and FuelBand (Jan 2012)

• Art Petty, Systems Thinking Meets Platform Strategy and Social Media via Nike+ (March 2012)

Nokia

• Ron Adner, A Sad Lesson in Collaborative Innovation (HBR May 2012)
• The partnership between Nokia and Microsoft "is a clear admission that Nokia's own-platform strategy has faltered," said Ben Wood, an analyst with research firm CCS: Insight. (BBC News, Feb 2011)

Walmart

• Nick Vitalari, Walmart and The Power of the Business Platform (Sept 2011)

and finally Google

• Steve Yegge, “Stevey’s Google Platforms Rant” (Oct 2011)
• Christopher Meyer, Steve Yegge's Google Platform Rant (Oct 2011)

Steve Yegge compares Google with Amazon: Google has a lot of things in its favour, but its platform strategy is not one of them. See my comment Google as a Platform (NOT) (Oct 2011) 

• "Page and his management team have mandated that all Googlers focus on seven business areas, and that they don’t look to expand Google’s reach beyond these core initiatives." Farhad Manjoo, Google's Grand Plan (Slate, March 2012)

• "Page's emphasis on streamlining Google's product line has made the company's thousands of employees focused on how -- and if -- a tool adequately fulfills users' needs." Bianca Bosker, Google's Future (Huffington Post, March 2012)

 That's not a platform strategy, that's a traditional product portfolio strategy!

• Eric Jackson, Google's Paranoid Structure has made it less innovative, not more (Forbes, April 2012)

Internet Services Disruption

Integrated Innovation "There's a strong product pipeline coming through the integrated innovation, and we should be able to show people not only that we correct the things they think are tough about software today, but really bring in scenarios that they never would have expected, that we could solve and make it as efficient as we will." (Bill Gates, July 2003)

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Loose Coupling "... a move from tightly coupled systems to more loosely coupled interconnections" (Ray Ozzie, April 2003)

leaked email courtesy InfoWorld
pictures courtesy PresentationZen

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