Excellent Example of Disruption – Uber
Clayton Christensen has very specific definitions of sustaining and disruptive innovation. I really like these, and when you start being pedantic about the use of those terms, you start to understand more fully the power of disruption. I was really excited to read a recent post by Elad Gill, serial entrepreneur and investor/adviser to startups. Elad is an investor in Airbnb, Pinterest, Square and Stripe. In his post, Elad talk about how Uber and Lyft are eating away at the taxi industry. Certainly in Australia, the taxi industry has been pretty conservative, with a relatively complex model of brokers, plate holders, drivers and credit card managers. There is a complex funding and payment structure that operates between all of these, resulting in layer upon layer of charges and fees, avenue down to a very significant surcharge on the use of credit cards. If you asked the average taxi user what they would like better from the taxi industry, they would probably have said cleaner cabs, more of them, and no surcharge on the use of credit cards. Enter Uber. Elad maintains that more taxi drivers are switching to Uber, which means that more people use Uber than taxis, which means more drivers will continue to switch to Uber. While the service was little known some time ago, it has really taken off. The ability to order a car from your mobile, rate the driver, pay for it, and be certain as to when you will be picked up are features that, under sustaining innovation, were probably not in demand from the average taxi user, but certainly appreciated now. From the driver’s perspective, the San Francisco Cab Drivers Association (SFCDA), an association for registered taxi drivers that promotes fair working conditions and business practice, reports that one-third of the 8,500 or so taxi drivers in San Francisco — over 2,800 — have ditched driving a registered cab in the last 12 months to drive for a private transportation startup like Uber, Lyft, or Sidecar instead. Many cab drivers who still drive registered taxis are seeing income drop. And that income drop is, in turn, causing them to turn to startup solutions. Disruptive or sustaining innovation? Your call.
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