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:
FAQs
According to disruption theory, Uber is an outlier, and we do not have a universal way to account for such atypical outcomes. In Uber's case, we believe that the regulated nature of the taxi business is a large part of the answer. Market entry and prices are closely controlled in many jurisdictions.
Is Uber a disruptive innovation or not? ›
Uber: Transformative, not disruptive
Uber improved upon existing services rather than offering a lower-end alternative that moved upmarket, differentiating its transformative impact from Netflix's disruptive path.
Is UberEATS a disruptive innovation? ›
Disruption of Conventional Models
Traditional delivery services have been significantly disrupted by the emergence of Uber Eats.
Is Uber an example of a disruptive model? ›
Explanation: Uber created a peer-to-peer Disruptive Business Model that allowed users to provide trips for money using their own automobiles.
Is Uber an innovation or invention? ›
3. Technological Innovation: Uber is known for its technological innovations, including dynamic pricing (surge pricing) that optimizes fares based on demand, as well as a user-friendly mobile app with features like real-time tracking and seamless payment options. These innovations enhance the overall user experience.
Why Uber is not a disruptor? ›
Disruption occurs when a small company with comparatively few resources is able to successfully challenge incumbent players. Successful disruptors begin in, low-end market segments or new market segments. (Uber didn't begin in either of these market segments.) Over time, they improve product quality and move upmarket.
What are three examples of disruptive innovation? ›
The wheel, the light bulb, and the cellphone are three examples of disruptive technologies. At the time, these innovations caused a profound break with previous patterns, bringing about major changes in people's lives.
Are Uber and Airbnb examples of creative destruction or disruptive innovation? ›
Extant literature on the subject has shown that sharing-economy platforms such as Uber in the personal transportation sector and Airbnb in the accommodation sector have invoked processes of creative destruction (Matzler et al., 2015) while also potentially transforming the labor market (Friedman, 2014; Sundararajan, ...
Is food delivery a disruptive innovation? ›
The Rapid Growth of Food Delivery Apps Before Covid-19
It's little surprise that restaurants were next on the menu for digital disruption. People have been getting food delivered since Ancient Rome.
What is not an example of a disruptive innovation? ›
Not all innovations are disruptive, even if they are revolutionary. For example, the first automobiles in the late 19th century were not a disruptive innovation, because early automobiles were expensive luxury items that did not disrupt the market for horse-drawn vehicles.
Uber Ride-Hailing
Uber's model challenged the need for traditional taxi services, offering a more flexible and user-friendly alternative. As with the iPhone and many other radical innovation examples, this is also an example of disruptive innovation.
What industry did Uber disrupt? ›
The term "disruptive" has frequently been attributed to Uber's ascendancy in the transportation sector.
Is Uber an example of business model innovation? ›
1 – Disruptive Innovation
To achieve this, you must identify a market that is underserved or overlooked by current players and develop a new way of delivering value that meets the needs of that market. Uber, for example, disrupted the traditional taxi industry by offering a more convenient and accessible alternative.
Why Uber is a disruptive innovation? ›
Moreover, Uber's embrace of unconventional strategies, such as surge pricing and guerrilla marketing tactics, further solidified its reputation as a disruptor willing to break the rules in pursuit of innovation and growth. Innovation: At the heart of Uber's disruptive success lies a relentless commitment to innovation.
What is the meaning of disruptive innovation? ›
What Is Disruptive Innovation? Disruptive innovation refers to the innovation that transforms expensive or highly sophisticated products or services—previously accessible to a high-end or more-skilled segment of consumers—to those that are more affordable and accessible to a broader population.
What are the strengths of Uber? ›
Uber has become a prime example of the gig economy at work. Uber's advantages include door-to-door convenience, safety, and reliable quality. Uber's disadvantages include its surge pricing and the negative effects of replacing steady jobs with gig work.
Is Uber an example of radical innovation? ›
A successful example of disruptive radical innovation is Uber's ride-hailing app which changed how people get around cities by offering an easy-to-use platform for booking taxi rides with just one tap on their smartphone screens.
Is Uber a business model innovation? ›
Understanding the Uber Business Model
At its core, Uber operates as a technology platform, connecting drivers and riders through its innovative app. This model has revolutionized the transportation industry, providing a convenient and reliable alternative to traditional taxis.
