Is Uber a Disruptive or Strategic Innovation ?

The other day I was listening to an HBR podcast by Alexander MacKay, faculty member from Harvard Business School describing Uber's global strategy (click here). 

Uber the ride sharing app introduced by Travis Kalanick in 2009, has now changed to become the world's largest ridesharing app with 2020 revenues of $10 billion and offering 6.2 billion rides annually, ie. 17 million rides daily. It has a market cap of $60 billion presently.

Prof. Clayton Christensen, from Harvard Business School coined the term Disruptive Innovation around 1995 through his book The Innovator's Dilemma.

To qualify as a Disruptive Innovation,  an innovation should 

• start as a low quality product or service at the low end of the market and move slowly over time, disrupting established players at different levels by offering progressively higher quality and satisfaction to the customers
• be offered initially as a cheaper alternative to the existing products or service at the lower end of the market, gradually improving over time in quality and performance dislodging established players.

Uber is not a low quality product and it is not an initial cheaper alternative. Both these reasons disqualify the Uber phenomenon being classified as a disruptive innovation. (click here).

My earlier writing in this area has made the situation very clear. (click here) Taking the case of the Indian Space research programme. Starting in 1961, it started growing, slowly disrupting the launch of low earth orbit (LEO) satellite launch market dominated by ESA etc and then in 2007, through Chandrayaan 1 to the moon disrupted major players like ESA and China Aerospace, and then in 2013 with the launch of Mangalyaan to the planet Mars disrupted NASA in terms of cost and reliable technology. ISRO has not been able to do any major space disruptions of late, but it has come to be globally recognised as a space power to be reckoned by other space powers. The cost disruption initiated by ISRO at one tenth the cost of similar missions from NASA or ESA, in the planetary missions market is indeed laudable.

Tesla has been slowly disrupting the transportation scene through the launch of their electric cars. The Kochi international airport running on solar energy is slowly started disrupting the 10 million annual traffic airports, slowly building to 50 million annual traffic and then to 95 million, slowly disrupting the Jacksonville airport in US.

This article from medium (click here) explains the salient features of disruptive innovation, even though it says Uber is a disruptive innovation. Developments in AI, self driving cars, IoT applications are all going to disrupt the world in the coming days in ways humanity has not even dreamt before.

I have come up with a question set to decide whether an innovation is disruptive or strategic . Try to answer the following questions. 

1. Is there a large unmet, untapped market in need of the product or service because available goods and service are priced high for the uptrend markets ?
2. Is your product or service lesser priced than the market leaders ?
3. Is your product or service now able to meet the demand from the low quality segment of the market ?
4. Is there potential for the product or process to grow to satisfy higher end needs customers ?
5. Can the market leader drop or stoop down to your level and kick you out of the market by offering a similar low cost product or service ?

If the answers to the first four questions are YES and to the last question is NO, then your product or service is in line for a disruptive innovation. Finally we see, it is the reach, acceptance and the cost of the product or service that plays an important role to disrupt the leader and topple the apple cart. 

George..