LeWeb: what Uber teaches us about disruption
- Summary:
- Disruption brings with it the antibodies of resistance. How do you challenge that both externally and internally without imploding along the way?
I've been following LeWeb from the cheap seats and found it fascinating. In past years I've felt that the show was far too consumer oriented and far too enamored of Silicon Valley. This year, I've watched a bunch of speakers giving far more practical and real world insights. Among the best (so far) has been Travis Kalanick, CEO of Uber.
If you don't know Uber, they're a new type of cab service that started in San Francisco three years ago and is now in more than 60 cities around the world. They are disrupting the traditional taxi business in several ways. For example:
- They guarantee service levels.
- They guarantee to have a driver with you within a specified period of time.
- It is a cashless service.
- They provide cars you'd want to ride in and not the usual cab fare (sic)
If that sounds different then it is. Several colleagues have used Uber and say good things about it. Uber is disruptive to the point where it has attracted regulatory attention in many US cities. This article from a year ago outlines some of the steps that local governments have taken:
Taxi regulators from 15 cities, including New York, Los Angeles, San Francisco, Washington and Chicago, were on the committee that drafted the guidelines on new rules. One rule would forbid luxury car services from using a GPS device as a meter for calculating fares based on time and distance, which is the method that Uber uses.
Another rule would forbid any driver from accepting an electronic hail through a smartphone while driving. And one says limousines may not accept a request for a ride that is made less than 30 minutes in advance, which would impede Uber’s primary business model of connecting luxury car drivers with passengers immediately.
“They’re clearly designed to shut down Uber,” Mr. Kalanick said of the proposed rules. “This is taxi protection at its finest. How are you supposed to tell somebody in a city that if they want a town car, they can’t get one in less than 30 minutes, and that’s illegal and it’s bad for them to do that?”
In Korea, the government is happy for Uber to operate as long as it doesn't pick up local Koreans. How mad is that? As I listened to Kalanick I recognized something I see time and again: incumbent antibodies trying to wipe out innovation. It is not restricted to corrupt local officials trying to keep their snouts in the trough or protectionist organizations lobbying to hold back competition.
In the cloud accounting world for example I have watched as incumbents pretend that the new breed of SaaS player are unimportant. Then I've seen how some incumbent vendors try to engage in whispering campaigns designed to smear reputations or undermine competitors' business model. Even inside some companies I see resistance to innovation that manifests itself in passive-aggressive behaviors like ignoring emails, ignoring meeting requests or trying to undermine relatively unimportant assumptions on the grounds that 'We don't roll that way.'
What about internal disruption?
While some may see these tactics as distasteful I welcome them. They are a sure fire indication that the innovation is on the right track. The problem comes - how do you instantiate innovation inside any organization that's been around for more than five minutes? The usual response goes something like: 'We are a large organization, moving is hard, it's complicated.'
I used to kinda buy that argument but don't anymore. Why? Take the examples of Google and Apple. These are large organizations by any standard yet they still manage to out innovate their competition.
Apple is an interesting example. When Steve Jobs passed away, many people thought that the inspiration behind the company had gone and that the company would go into terminal decline. I don't see that. Reports suggest that the latest iteration of the iPhone show how Apple has adjusted its business model to reach a broader market. This from CITEWorld:
It's always a tricky proposition trying to figure out why Apple does anything, but it's fair to say that when they introduced the candy-colored iPhone 5C earlier this fall, the goal was to expand its market beyond the typical high-end iPhone buyer. If some recent research from Kantar, a UK data analysis firm is correct, the strategy is working.
A lot of writers have focused on the fact that the 5S is selling much better than the 5C. If you think that its lower price should have given Android a run for its low-end money, you might reasonably think 5C is failing out of the gate. In fact, the Telegraph, citing Kantar's numbers, claims the iPhone 5S is outselling the 5C 3 to 1 in England.
Having catalogued a number of examples where customer service has been sub par, I've come to the conclusion that not only are the problems of instantiating change based in corporate culture, but that even well intentioned businesses are failing to rethink what it is like to be a customer. While many claim to innovation and using social channels as examples of what they're doing to innovate, the reality seems to be exactly the opposite.
Twitter for example has proven to be a highly disruptive force in the world of news gathering but its customer service is arguably worse than some of the worst we see in the established world of telco and banking.
What can be done?
I sense that a big part of the answer comes from 'tone at the top.' Here I like what Gary Vaynerchuk, CEO Vayner Media has to say when talking about how his business is built: "I am CEO and head of HR - we don't have an HR officer, I'm it...I probably spend two hours each day making sure my people know how we do things and what's expected of them."
I don't know how that scales but I do recall tales of how Hewlett Packard built a culture of excellence, in part with a technique of 'managing by wandering around.' That was some 40 years ago and has long been lost inside the company. Yet as an innovation it still holds good. You could almost consider it disruptive in today's world because it is so rare to see in action and yet is proven as a method for building and sustaining the environment needed to continually disrupt.
As for Uber? It continues to skirt around incumbency and the legislators that try to push back and in so doing is building a loyal fan base that speaks on its behalf. That's hard to ignore.
What do you think? Sound right?