People who seek to understand the success and notoriety of the top dogs in the digital marketplace, companies like Uber and AirBnB, often place a significant amount of attention on its almost anarchic vision of free enterprise.“These are companies who don’t play by the rules,” is often heard.
Indeed, the taxi industry, reeling from the broad frontal attack made by Uber, Lyft, and others, has responded in ways that reveal a mindset firmly focused on the past. Rather than aggressively reproducing the model of crowd-sourced car-hailing, taxi industry representatives highlight the discrepancy in regulations, specifically that taxi companies must pay higher fees to their host cities.
In the meantime, taxi riders are voting with their feet. App-based cars are generally cleaner, cheaper, and their arrival can be tracked in real time. Payment is almost virtual. Like eBay, Facebook, and Google Earth, people flock to these services by choice, not because they are told to do so.
In an ironic twist, the taxi industry might actually be “collateral damage” rather than the intended victim of this digital transformation. At a recent meeting of corporate counsel in Alberta, Canada, Uber legal director Jeremy Millard confirmed that taxis are not Uber’s main competition. Private car ownership is.
This reveals a fascinating twist on the digital revolution. Uber’s model is aiming squarely at a quickly growing segment of the population that is forsaking private car ownership.
Understanding the customer
Millennials are not buying cars like their parents did. It doesn’t mean they have stopped buying, but they are doing so in a much more nuanced way. Cars must be more than just a mode of transport and status. They must feature the latest and greatest in communications, efficiency, and environmental responsibility. In many cases, millennials are waiting until a later point in their life, specifically when the kids arrive, to make the purchase.
This evolved level of customer demand, paired with transport companies like Uber and per-hour car sharing companies, means that automakers find themselves in the same leaky boat as taxi companies. A century of marketing and delivering their respective products is becoming less and less relevant to their customers. Senior management is starting to realize just how little they understand them.
Both industries are held in check by regulations. Their argument would be that even if they wanted to go head-to-head with Uber, they are hamstrung by rules that Uber seems to avoid. Yet Uber still exists. So does AirBnB, whose maverick approach to property sharing is causing the same types of waves not only in the hospitality industry but also in residential properties. The same applies to Facebook, a social media platform that in addition to being a social meeting place, has suddenly become a news organization of sorts, reflecting a growing trend among people who prefer to get their news online as opposed to watching it on TV.
Digital transformation from the top down
We talk a great deal about digital transformation. We state that it must start from the top – the executive – and filter down and across to all areas of an organization that once were comfortably siloed. We also point out that digital transformation represents a mindset change that must fully align the business around the customer.
Examples like Uber reveal that this mindset change applies to much more than rebranding a product or creating an innovative new one. It shows that the change must also address much larger vistas, including relationships with government regulators and financial partners, and most important of all, a wider peripheral vision that considers seemingly unrelated, or at least distant industry streams.
The car industry, for example, must start to recognize that beating Uber at its own game might require a greater focus on “non-car” conveniences, such as relationships with highway rest stops and entertainment providers like Spotify, to deliver experiential conveniences to match the expectations of its new customer base. They might even review the upstart approach to rules and regulations, to create a spinoff brand that matches and exceeds the brash “so what” approach of these digital upstarts.
A top-down vision is the catalyst for digital transformation. The view is pretty good from up there, and not a single perspective should be wasted.
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