UBER: the right solution, the wrong strategy

Uber offers an excellent solution but, so far, the company is a strategic failure. The application and the service are great. It really changes the customer experience for anyone who have experienced the Taxis Parisiens. I have spent over 15 years in the Paris area. Therefore, I wasn’t surprised at all that Uber was created after a poor experience with the Paris cabs. The service and the availability were so underwhelming that it wasn’t rare to find, at night, people offering illegal transportation services.

The odd choice of running a fleet

The Uber solution is great on a customer perspective. You can follow your car, chose your itinerary, rate your experience and have the price of your service while ordering it. It is the solution that takes the taxi to the customer experience era and what all taxi fleets should have come up with. I understand the development of the solution. But I don’t really understand Uber’s strategy to go with its own fleet. It would be like having Airbnb to acquire real estate and hotels.

A fleet is changing a software solution and service business into an industry with heavy investments, taxes, salaries, social issues, legal fights and other complications. One can understand Uber’s willingness to disrupt the individual transportation market worldwide but this is an utterly difficult challenge as regulations and customs are different in each country. Tackling such task is a bet against lots of odds and despite high funding and market success. The curse of autonomous vehicle is a medium-term solution as the technology won’t be ready before years and requires the combination of a legal, communication and technological consensus that is not likely to occur before 10 to 15 years in the best-case scenario. Uber must survive until then.

Lack of intelligence on the cab companies’ side

Uber made the choice of a bold and ambitious strategy which could be explained by the cab companies’ apparent lack of intelligence and their inability to renew their service. The taxi industry is at stake. Uber and Lyft changed the customer into a service provider and disrupted the taxi business with unexpected competition. It’s not the price that made Uber instantly successful, it’s the service.

Therefore, I raise the question why Uber didn’t make the choice to revamp the taxi industry by licensing their solution. It would have been a great way to differentiate themselves by refreshing the transportation industry, empowering individual actors and disrupting competition within the industry. It would have made Uber the middleware that rule a major part of individual transportation worldwide with a much lower investment but highly rewarding.

Mobility is all about the data

The growth strategy relying on existing actors would have empowered Uber. It would have made Uber an actor of the mobility data that couldn’t be overlooked. The Mobility as a Service business model is about the need for mobility. By profiling both customers and drivers, Uber would have been in a central position for any business willing to enter the mobility services worldwide.

The current situation provides Uber with transportation and mobility data on people using new solutions often combined with existing mass and individual transportation services. This is interesting but far less complete than data that could have been extracted from the existing flows and movement of population. Of course, habit changes. But the quantity of trips remains far more numerous outside of Uber than within the company’s fleet. Even reasonable market shares in the worldwide taxi business would have provided Uber with a higher number of profiles and trips. It would have avoided all issues the company still faces today. The numerous lawsuits, the fight with well-organized taxi companies. They are sometimes unionized taxi companies and often influential with political ties and strong legislative support.

Uber has wasted lots of money and energy into those fights. This is especially important as the company struggles with scandals and cultural issues that no one usually expects from such a young company. Fast growth need to be addressed with more structural and intelligence management than Uber seem to have done so far. The resignation from Travis Kalanick and the arrival of a new CEO might help renewing the culture. This is highly necessary as the company faces a boycott from part of the customers and the disapproval from several drivers. But, even with young companies, a cultural turnaround requires more than just the departure of the company’s number one.

The new Uber CEO will have to face numerous challenges with a company suffering from a bad culture, impacted by scandals and involved in numerous legal fights. A multilayer strategy is required to put back Uber on track, restore shareholders’ trust and avoid a new crash.

Bertrand Rakoto

+1 313 421 8858, [email protected]

#Uber #Mobility #Taxi #Taxibots #MaaS #Automotive #Lyft #Gett #Psycar