What Uber is Doing Right

The ride-sharing company Uber has been generating plenty of upset and controversy lately as they’re boldly disrupting the transportation industry.

For instance, both Spain and Thailand have recently banned Uber services because they deemed Uber “unlawful and unfair competition to traditional taxi services.”

I don’t know about you, but I’m glad I don’t live in Spain or Thailand. Excellent service to consumers thrives on competition, and disruptive competition is always “unfair” to the old guard that’s stuck in the past.

In the United States, traditional taxi services work fairly well in big cities like Los Angeles or New York where potential riders can just hail a cab on the street. In smaller cities, though, would-be cab passengers have to call the taxi service and then endure long waits for expensive cabs that may or may not show up. Uber’s clever app eliminated the slow dispatching process that taxis undergo in smaller cities, and dramatically increased the convenience of getting a ride.

Uber’s success at meeting the needs of its market means that it’s currently valued at $41 billion based on its recent fundraising of over $1.8 billion. This mean that it’s become more valuable more quickly than any other start-up in recent years – faster that Facebook, Google, Amazon, or Salesforce. Its service has continued to grow despite the string of controversies that Uber keeps falling into, which would sink a lesser company (including a very public and ugly tug-of-war with its rival Lyft, and less-than-wholesome suggestions from the Uber CEO that he might dig up dirt on journalists).

Uber’s amazing success illustrates a key innovation principle: you need to render your cash cow obsolete before someone else does.

The Bottom Line Question of Service vs. Attachment to Old Solutions

Uber, of course, is not the only sharing-oriented disruptor in the game. AirBnB, for example, has single-handedly revolutionized the hospitality industry and made hotel owners everywhere nervous.

The success of Uber and AirBnB underscores another key principle of innovation: it’s important to Think in Opposites. Success comes from pursuing the least likely, most improbable ideas: “People letting strangers stay in their home? Really? Why would they do that when they could just check into a hotel?”

We’re usually so busy protecting our habitual way of doing things that we don’t see change coming. This hard-headedness can cause us not only to fail to react to changes in the market fast enough, but even worse, we can fail to anticipate what those changes will be. Failure is the steep price of staying stuck in the false comfort of the past and old ways of doing business.

Here are some questions to ponder: Why didn’t a cabbie think of Uber? Why didn’t a hotel chain think of AirBnB?

Here’s the answer: by clinging to the habit and false comfort of their old-style business models, cab companies and hotel chains hung themselves out to dry.

Rather than thinking in terms of their bottom line question of service, cab companies and hotel chains attached to the old-fashioned “how” of their old solutions. The bottom line questions of service is this: how can we better provide the service that our target market needs and wants right now?

Cab companies and hotel companies got blinded by their old solutions (cabs and hotels) to their bottom line question of service rather than seeking fresh answers (“How do we provide fast and fun and easy rides for people who want to get around town?” “How do we provide beautiful and affordable places to stay for people who want to travel?”)

Uber, AirBnB and other sharing-economy companies are fantastic examples of companies changing the way we think of cabs, hotels, and thereby changing the fundamental ideas of their industries.

In Conclusion

Don’t get stuck in the past. Think in Opposites. Embrace the contrary. Don’t be so attached to your businesses’ old solutions for serving your market that you lose the ability to serve your market the way it wants to be served now.

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DANIEL BURRUS is considered one of the world’s leading technology forecasters and innovation experts, and is the founder and CEO of Burrus Research, a research and consulting firm that monitors global advancements in technology driven trends to help clients understand how technological, social and business forces are converging to create enormous untapped opportunities. He is the author of six books including The New York Times best seller Flash Foresight.