Alexa, how do I Uberize my business model?

Over the last few years if you’ve been remotely involved in the business world (and you haven’t been napping) someone has told you about some fancy new company they’ve seen/used/started that’s going to be the “Uber of X”.

The other thing that’s probably happened to you is that someone (maybe the same someone) has asserted that digital trends will continue to change existing business models all around us.

When these two things have happened to me, no one really bothers to explain to me a) What Uber did that the other company is copying (outside of some generic “disruption” comment, of course), or b) What they mean by “business model” and how said models will change.

Admittedly, the term business model can mean many things to many people. HBR has a great read on the topic that allows for a wide array of definitions, but hovers around the core idea that a business model is a set of assumptions about how the company operates and makes money.

I think it provides for an interesting framework to address the question: What did Uber do to change the existing business models in the industries they entered?

(Given the nature of business models, I’m sure this list isn’t remotely exhaustive, but they were elements I found interesting.)

1. Process Transformation (or, MORE TECHNOLOGY!)

Every stage of the process has been transformed to exploit technology

• Service Acquisition: decentralized via technology compared to historic dispatch model; increases transparency for customer, increases service delivery quality, lowers cost of service delivery
• Delivery of Service: redefined expectation of ride quality through standards and logistics through technology; improves customer experience
• Payment: completely streamlined payment process through technology, elimination of cash and coupons, introduction of multiple profiles for different trip types (e.g., work, personal); simplifies user experience, reduces payment management costs, eliminates ghost rides

2. Consolidation of Differentiated Offerings (or, One Stop Shop)

Uber’s first offering was a luxury car service that wasn’t directly competing with taxis at all. Today, they’ve differentiated across multiple offerings including ride sharing, standard vehicles, larger vehicles (6-8 seats), and luxury vehicles. In the past, all of these options weren’t available through a single provider. It also allows Uber to grow market share in all those areas, as opposed to just one.

3. Redefinition of Structural Elements (or, Building Companies Without Assets or Employees)

Uber completely changed the starting requirements for both human and financial capital to start a ride service organization. As is often pointed out, they own no vehicles, and employ no drivers (though this point is hotly debated). As they continue to invest and develop artificial intelligence powered, self-driving vehicles, they will likely shift those structural elements again, and could end up building a fleet of vehicles, but also eliminating any remaining driver workforce that exists today.

4. Digitization of Experience Management (or, “Bob’s Taxi, hold please…”)

Every element of the customer-provider interaction has been simplified and improved through digitization. Experience management is a core pillar of their platform giving customers and drivers immediate access to provide ratings to each other, which in turn impact both party’s ability to make use of the service.

5. Adjustment of Regulatory Approach (or, The Beg Forgiveness Approach to Regulation)

Conventional wisdom held that if you had a business idea which had questionable regulatory footing, you did the work up front to lobby and convince those in question to alter the regulation. Uber, instead, launched, built a following, and the regulation adapted (in most cases – seriously, Vancouver?)

While you’re probably not in a business who’s facing competition from Uber, I think these elements (and/or the table of analogies at the bottom of the HBR article I linked) raise interesting questions to ask about any business. How could we be disrupted if someone used similar tactics in our industry and/or market?