The Application of Innovation Strategy in Uber - Case Study Example

INNOVATION: UBER INNOVATIVENESS IN THE TRANSPORTATION INDUSTRY Name Course Professor College State Date INNOVATION: UBER INNOVATIVENESS IN THE TRANSPORTATION INDUSTRY INTRODUCTION Innovativeness is the force that drives companies as it ensures that companies will continue to grow and bring in products that are timely and responsive to the needs of the consumer market. Having an innovation strategy creates alignment of company goals; behaviors with the resources which help run functions such as marketing, operations, and research and development. An innovation strategy signifies a commitment to achieving competitive company goals. Various companies have thus been looking toward establishing innovative approaches essential in driving their development. Among these companies is Uber, a company dedicated to transportation via technology. The following assessment examines the application of innovation strategy in Uber, by applying the company development to offensive, defensive, and imitative strategies in timing to market innovation strategies. UBER The company Uber has revolutionised the way people access taxi services in big cities across the world. Uber service is accessible to anyone at anytime via an application on the mobile phone. The company’s goal is to make it possible for anyone in any city to get a ride at the push of a button within minutes (Uber 2016). The service has an app that connects drivers with riders. Uber will continue to develop its application to even greater possibilities as noted by its CEO Travis Kalanick in the company’s fifth year anniversary. Kalanick noted that if in five years the company has penetrated 300 cities with 58 countries in the world, and is now rumoured to be worth about $50 billion, then how much more can it do in the next five and another five years after that (Kosoff 2015). The CEO imagines a time when traffic in all cities will flow smoothly and quietly even at rush hours, and where space wasted on garages, lots, and meters will be converted into new parks, schools and houses. The achievement of this dream will depend on how Uber can take its current innovation and begin transforming it for a greater future. Such a transformation requires an innovation strategy. INNOVATION STRATEGY Innovation strategy refers to “the sum of strategic choices a firm makes regarding its innovation activity” (Strecker 2009: 18). It represents to a plan to grow market share or profits through product and service innovation, which can be addressed from a job being done view point or that of unmet needs. Through a jobs-to-be-done lens, an effective strategy must correctly inform which job executor, job, and segment to target to achieve the most growth, and throughunmet needs view, it must reflect the target to help customers get the job done better. When it comes to creating the solution, an innovation strategy must also indicate whether a product improvement or a disruptive or breakthrough innovation approach is best. Most innovation strategies fail to take this consideration into effect, which is why innovations fail. The success of the plan occurs within a platform, which represents the goals of the company as well as considers the firm-wide and cross-functional establishment of the company (Conway & Steward, 2009) UBER INNOVATION STRATEGY Achieving a competitive advantage and differentiation are the driving force of choosing an innovation strategy, in which the company choses the right unmet customer needs to target. This denotes that the company must be aware of the unmet needs, and thus formulate a strategy that works around achieving those needs (Strecker 2009). The Uber story tells of how the company came to be, which shows critical understanding of customer needs in the car service industry. The company began as an app that was to request premium black cares in a few metropolitan areas, which began when Kalanick and Garrett Camp had trouble hailing a can in Paris in 2008(Kosoff 2015). The two came up with the idea of hailing a cab through – tap a button. The company created was UberCab in San Francisco, but from there the management was able to recognize the opportunities presented in other places. The company realized that in different cities people were struggling to obtain fast transportation when they needed. This became the platform on which the developers created an app that would allow people to call for a taxi irrespective of their location. The company builds on the mobile technology, in which customers call for cabs using an app downloaded on their iphone and android phones (Kosoff 2015). An important aspect to note is that the company is continuing to develop new options, the current one being uberPOOL, a technology that allows riders going in the same direction to share the trip. A concept that has been in use in the care service industry has been pooling in which people living within the same neighborhood share a car, such as to work or to the city. This helps them to cut costs in the ride and reduce environmental degradation. Carpooling is thus methods that may be preferable to people that are more environmental friendly and conscious (Kosoff 2015). Therefore, developing uberPOOL creates another model of transportation that responds to both the needs and values of the customers. Today, uberPOOL is one of the most popular services within the San Francisco market, because the option lowers the fare and ensures fewer cars. The company estimates that uber POOL is the future of the transportation future. Uber shows critical use of innovation and intellectual capital through its use of human capital, organizational capital and social capital. Human capital refers to the use of knowledge and skills found in people. This is a human resource aspect that reflects the use of people to meet the needs of the company. Uber has been able to critically address this approach through a highly diversified employment network. For example, the Uber drivers form a part of the human resource of the company (Dilk, e al 2008) In 2015, the company has employed at least 1 million drivers, which shows a tremendous growth from the initial four people that worked when the company began. Among the company reported milestones are employing about 3,000 people globally, and the one million drivers, which include both men and women that have worked for Uber in five year. The human capital expansion has been visible in how the company has expanded into the largest population market in China, where it has employed about 46,000 drivers in one city, compared to 26,000 drivers in New York at the same period, and 22,000 in San Francisco, 15,000 in London, and 10,000 in Paris (Kosoff 2015). The company shows a clear indication of being able to realize the places in which it can expand its business then tapping into that market with an array of drivers that can meet the demand. As the CEIO noted in the 5th year anniversary, the company continues to treasure its partners, especially the drivers as the people that make access possible. Another element of Uber innovativeness has been organizational capital, in which the capital has taken its instiutionalised knowledge and experience to create a global phenomenon. As noted by Conway and Steward (2009), organizational capital refers to “the institutionalized knowledge and codified experience residing within and utilized through databases, patents, manuals, structures, systems, and processes.” The as a company has grown in experience which has been evident in achieved connections globally. The company target was to grow its international base, an element it did through broadening its connections, and has gained one billion connections which continue to increase as people realize that the company offers reliable and affordable transport services. Today, people anywhere understand the concept of Uber, and the people behind the app are creating and maintaining Uber connectivity in a way that consumers do not get disappointed (Kosoff, 2015) Furthermore, the company CEO promises to continue developing more innovative approaches to the transportation industry that creates new solutions. For example, as noted in his key notespeech, the management seeks to build the company towards a position in which Uber will become cheaper and efficient alternative to owning a car. This will mean that people will prefer to use the service as the alternative compared to their one vehicles or the public car system. The third innovation aspect that makes Uber technologically assertive is use of social networks. This represents the identification and use of networks and assets that companies can obtain through a network. Uber has been able to achieve this by networking its services, whereby a customer is not calling a certain taxi driver, but instead receives the car within the locality. The networking capability of Uber means that the company can deliver a car within 5 minutes after receiving the notification. This reduces tremendously the time that customers have to wait for taxi services, and is one of the significant competitive factors of the company. The company further continues to expand its networks as it takes on more business opportunities including delivery and logistics. The company sees an added opportunity in being able to bring the same efficiency into package delivery that it has brought into the transportation industry. The goal of this opportunity is to facilitate fast and safe goods and service delivery at the touch of a button ((Remane, et al 2016) The use of the three elements of innovation strategy, human, organizational, and social capital underlies Uber selection and application of first to market innovation strategy or the offensive strategy. As discussed subsequently, companies have recourse to three strategies in timing to market that present possible avenues of innovation. The alignment to one of the model will signify the positioning of the company. UBER MARKET INFLUENCE BASED ON TIMING TO MARKET INNOVATION STRATEGIES Conway and Steward (2009) identify three classifications of timing to market innovation strategies, including first to market or leader strategy / offensive strategy, the second to market or fast followers strategy / defensive strategy, and the later to market or cost minimization strategy / imitative strategy. Each of these strategies signify whether a company is a market leader or a followers, and determines whether a company will obtain the benefits that comes with being the first bring in a unique product that customers also need and appreciate. Uber falls into the category of the market leader, which signifies that the company has been the first to bring in a certain innovation and gain the first advantages, which are representative of a monopoly (Strecker, 2009) The advantages to being the market leader are that the company has an opportunity to invest in research and development to identify ways to improve on its products. The implication of this is that as other companies follow the Uber model or begin imitating, the company will have improved on its services such as by reducing even further the time it takes to respond to a customer’s call (Tham, 2015) . Innovation is an ongoing process meaning that company will have to continue finding new ways to achieve its goals. Uber does this by continuing to look for additional niches in the market, which explains its move toward carpooling (Kosoff 2015). The introduction of a new product does not reflect that the initial product is obsolete but instead shows continued evaluation of the market to understand new consumer needs. The company may also benefit in some way from the defensive strategy, which signifies learning from the mistakes of the first movers and improving on the innovation. Different companies have utilized business models that are reliant on connectivity specifically the app technology. Among the pioneering and most innovative companies has been Amazon, which can provide lessons on the need for continued growth, and tapping into new technologies (Uber 2016) . Amazon has grown from an Internet retailer to a producer of goods such as the kindle and publisher of books. Initially the company sold hard copy books, but has evolved into selling soft copy and then into providing a device specifically designed to read and store books, the Amazon Kindle. Uber can borrow from search innovativeness to realize the power of continued discovery. For example, while the company has been reliant on app technology such as on Android phone, it may need to look into developing online capabilities to ensure that people can order a cab from other devices rather than only from the touch of a button. The company has already showed a commitment to continued innovation based on its plans to expand Uber into service delivery and logistics, but it has the capacity to achieve more through market research and development. CONCLUSION AND RECOMMENDATIONS The Uber illustration of an innovation company shows how companies utilize available technology to respond to the needs of consumers, and then continue to grow to sustain their competitiveness. In the last five year, Uber has grown to become an efficient mode of transportation for people in many countries and cities, providing both convenient and fast movement. Part of the appeal of Uber has been that it uses technology at hand in which consumers download an app to their mobile devices and then can use them to call a drive. The company competitiveness has been built on quick response in which it delivers a car in five minutes, and its ability to provide additional services such as pooling thus reducing fare, or package delivery. Uber signifies a company that has effectively adopted the leadership strategy to innovation, and taken the market leadership position. In the development of the defensive innovation technology the company has made effective use of human capital beginning with the employment of people globally including drivers, and then people to work in app development(Van Geenhuizen and Thissen, 2005) Secondly, it has evolved in its organizational capital as it uses the experiences of the management to build on additional products. As noted in the analysis, the company was born from the CEO having challenges hailing a cab in Paris, and thus the idea of providing a service in which a person could obtain transport by press of a button came up. The idea born in Paris, and executed in San Francisco has become a global phenomenon. The third element evident in pursuing the leadership innovation strategy is the use of social capital, realized through the development of networks through which the company is able to sustain its model of business (Wagner, 2008) . Uber has shown effective use of human capital to build social networks of drivers and employees globally. However, while recognizing the achievements the company has reached through its current innovation strategy, the company needs to consider other attributes that may contribute to its continued relevance in the transportation industry as shown in the following recommendations. The first recommendation is that the company needs establish a clear business strategy that defines its course of growth in the next five to ten years, to ensure that as it continues to expand this will not create conflicting priorities. As the company realized that it has additional opportunities in the delivery and Logistics Company, it is paramount that such expansion does not act in competition with the first goal of the company, especially if the company will continue to develop as a people transportation services. As suggested in the analysis the company will need to continue assessing market opportunities and creating innovations that align to consumer needs. The recommendation is however to ensure clear streamlining at the organizational level to avoid conflict in the company goals. The organizational capital presents a unique area in which the company can effectively streamline its activities. Organizational capital represents knowledge and experience that when utilized well can lead to defining new processes and structures of how to continue the business. Another recommendation is for Uber to realize ways through which it can engage other car services. Currently, Uber has become a regime on its own, and other services may appear as lesser. The suggestion is for Uber to begin working with other services to form ways in which it can streamline the industry. The undisputed element is that Uber has brought in a new element into the market that in the last five years has been instrumental in changing how people use the taxi services in various countries. In the same way as a pioneer, the company can work with others to bring more changes into the industry. This can be possible through working on training models through collaborative efforts or working with other companies towards understanding innovative ways to continue reducing fares for consumers. Collaboration would not be counter effective for Uber but instead would offer an opportunity for greater understanding on the challenges faced by the industry, including those faced by drivers, and consumers, and then begin developing solutions that can effectively respond to such challenges. Working with others is therefore an opportunity for greater learning rather than loosing market autonomy (Wiesenthal et al 2015) Moreover, working with others would make the company become part of the industry rather than the exception of the industry. Increased competition based on services offered by others would push the company toward greater innovation. Therefore, engaging with others would be a way to build greater social capital. References Conway, S & Steward, F 2009.Managing and Shaping Innovation, Oxford University Press, Oxford. Dilk, C., Gleich, R., Wald, A. and Motwani, J., 2008. Innovation networks in the automotive industry: an empirical study in Germany. International Journal of Automotive Technology and Management, 8(3), pp.317-330. Kosoff, M 2015. ‘The Vision Uber’s CEO has for his $50 Billion Company Suggests that Startup is Only Beginning to Scratch the Surface’, Business Insider. Remane, G., Hanelt, A., Hildebrandt, B. and Kolbe, L., 2016. Changes in Digital Business Model Types–A Longitudinal Study of Technology Startups from the Mobility Sector. Strecker, N 2009.Innovation Strategy and Firm Performance: An Empirical Study of Publicly Listed Companies, Springer, Germany. Tham, A., 2015. The ubiquitous tide of Uber: Disruptive innovation in tourism and hospitality. CAUTHE 2015: Rising Tides and Sea Changes: Adaptation and Innovation in Tourism and Hospitality, p.729. Uber 2016.Uber: Innovation and investment in MENA.Uber. Van Geenhuizen, M. and Thissen, W., 2005. A Framework for Identifying and Qualifying Uncertainty in Policy Making. Policy Analysis of Transport Networks. Avebury: Ashgate. Wagner, S.M., 2008. Innovation management in the German transportation industry. Journal of Business Logistics, 29(2), pp.215-231. Wiesenthal, T., Condeço-Melhorado, A. and Leduc, G., 2015. Innovation in the European transport sector: A review. Transport Policy, 42, pp.86-93. Read More