How The disruptive Uber Business Model Is Changing the Way Business Owners Think
Tue 8 May 2018 - 10:14 amSmall Business | Strategy
“Uber changed the way business owners think and work in more ways than are instantly noticeable,” says Maria Bellissimo-Magrin, CEO of creative marketing agency Belgrin. Here she examines what business owners can learn from Uber’s actions.
Launched in San Francisco in 2010, Uber quickly became one of the world’s most valued tech companies and widely-known brands and their success is starting to change the way many business owners think.
The ways in which Uber changed the way business owners think and the way we work are crazy when you think about it because it’s taken less than a decade and no-one really seemed to notice it was happening. What Uber did was to completely disrupt a long-established market with a product that no-one knew they needed – that’s insane, right!? And now many say they couldn’t live without Uber and that’s partly why Uber has been such a catalyst for change in business.
What Uber did
Uber is cheaper than traditional taxis, sure, but that’s not what endeared them to millions of users. The greatest advantage Uber had when attempting (and ultimately succeeding) to disrupt an established market was how they looked at the market and their business model.
What Uber did was to simplify a system that didn’t think it could or needed to change. Their strength was understanding the modern consumer’s expectations for a market that some might say took the customer for granted.
The old system was oddly skewed in the favour of the supplier rather than the demander. Let’s paint a picture of getting a cab before Uber:
Depending on your city, you either hailed a cab (hoping they stop), called a local company you knew or, if in a bar or unfamiliar place, asked the barkeep (or someone else) to call one for you. Now here’s where the power transferred to the supplier because if the taxi company said the wait was 40 minutes then you waited 40 minutes or wasted 20 searching for a quicker pickup. And then you best hope to heaven that you had enough cash or a driver patient enough to stop at an ATM – not always a pleasant conversation especially if you’ve been partying hard.
Uber simplified the ordering process, removed the uncertainty of when the taxi would arrive, increased safety for users with driver names and car models, made it a cashless service and ensured a single app would work across cities and nations. And in doing so they created a service that everyone loved but no-one knew they needed.
How it is changing us
Uber has also succeeded in disrupting the wider economy, not just the taxi market. During their inception Uber looked at two problems in underutilised assets and ease of access to the traditional taxi service and sought to apply a thoroughly modern solution.
Uber created software that fixed the latter problem and engaged car-owners looking to make some extra money to address the former – thus causing a huge boom in the supply and demand of gig economy style jobs.
The effect of ‘Uberisation’ is two-fold; firstly, it has increased people’s appetite for the sharing economy as an alternative to traditional markets which is ironically becoming quite mainstream and secondly, it normalised the idea of working as and hiring short-term contractors.
Now we have people in their millions using AirBnB instead of hotels, Uber instead of taxis and hundreds of other sharing companies from parking spaces to grocery shopping (if you’re already heading to the shops why not pick up someone else’s groceries too and get paid for it right?)
What it means for business
You might think traditional small businesses fear on-demand services that are changing the economy as they know it but enterprise thrives on change.
Many owners have found that disruptors are more benefit than threat as they find smart ways to increase the bottom line by conveniently using gig contractors to reduce overheads or to cope with flux.
Businesses are now thinking about how they can disrupt their own markets and simplify their propositions to their customers. So, rather than being put out of business they become their industry’s Uber. And that shift in thinking will pay dividends as customers search for better consumer experiences.
About the author
Maria Bellissimo-Magrin is the CEO of full-service creative marketing agency Belgrin. Her previous contributions for Dynamic Business include Digital Branding: Six ideas to help your SME nail this increasingly complex task, Why potential customers ignore your ads, Social media channels your SME needs to be on, How User Friendly Is Your Business’s Website?, The importance of distinguishing between good management and good leadership and The business leaders taking humanity forward.