According to the World Economic Forum, a disruptive innovation is a theory that “a smaller company with fewer resources can unseat an established, successful business by targeting segments of the market that have been neglected by the incumbent, typically because it is focusing more on profitable areas.” However, there has been controversial discussion over whether Uber is actually a disruptive innovation or technology that is improving our overall economy.
While in class on Tuesday, our professor asked us to give examples of disruptive innovation. My partner and I believed that Uber was a disruptive innovation because it has had great impacts on the taxi-cab industry. More and more people are paying for Ubers through the simple and efficient app rather than paying for a more expensive taxi. Young adolescents and college students are using Uber to get to places faster, and ultimately, save more money.
An article posted on World Economic Forum caught my eye. According to the site, Uber is not a disruptive innovation and the reasons are as follows:
- Uber has not moved up from the low end of the market – the company targets customers that have already been cab users multiple times
- Uber has been determined as cheaper than taxis, but it’s not considered “inferior” to cab or taxi services
Christensen and co-authors Michael Raynor and Rory McDonald wrote a 2015 article for the Harvard Business Reviewand explained how Uber is the complete opposite of a disruptive innovation. They said, “Disrupters start by appealing to low-end or unserved customers and then migrate to the mainstream market. Uber has gone exactly in the opposite direction: building a position in the mainstream market first and subsequently appealing to historically overlooked segments.”
Uber has not originated from a low end of the market and did not target nonconsumers. Uber was launched in San Fransisco that already had a powerful and successful taxi transportation service. When Uber was invented in March 2009, daily taxi-cab customers that were already in the habit of using transportation services used Uber as well. Havard Business Review supports the idea that Uber cannot be a disruptive innovation because the company achieves the opposite of disruptive innovations: “Uber has quite arguably been increasing demand – that’s what happens when you develop a better, less expensive solution to a widespread customer need.”
The Harvard Business Business Review points out a key concept: When new technology is developed, disruptive innovations can lead to strategic and highly successful ideas and products.
After reading over both these articles, my perspective on Uber being a disruptive innovation has altered. I see how some individuals can see Uber as disrupting the norms of society, but I can also see how Uber has enhanced the taxi-cab business. Currently, I see Uber as a strategic innovation, not a disruptive innovation. Although more and more people are using Uber for its cheaper prices and its wider availability, it has only highlighted the importance of transportation services throughout the country. It shows how efficient and widespread the use of taxis and cabs are to the daily lives of human beings.
Disruption theories cannot explain all present and future innovations. Innovations coming into play may be disruptive, but also strategic.
Here is a link to a YouTube video on the idea of Uber being a disruptive innovation and its impact on daily society:
