Friday, 21 April 2017

Breaking Down the Meaning of Disruptive Innovation: Is Uber Truly Disruptive?




Whilst engaging with Chapter 3: Risk-Taking State from ‘De-Risking’ to ‘Bring it On’ from the academic book called, The Entrepreneurial State – it describes the term ‘entrepreneurship’ as “a new product, or a new process, or a new market for an existing product or process” (Mazzucato, 2015, 64). Through this description, it relates this back towards the topic of innovation, as most entrepreneurs seek to convert ideas and inventions into a successful, innovative final product. Although these innovations can provide society with numerous benefits – the individual who benefits the most is often its inventor, through profitable returns. The question is… are these innovations disruptive to society?

In an article called, “What is Disruptive Innovation?” From the Harvard Business Review – they break down the true meaning of disruptive technologies, by examining Uber’s emergence within the transportation service industry. Uber, is a transportation company provided on a mobile application within the smartphone industry. It connects consumers with drivers on a needed basis, and is often accused of transforming the US taxi business in disruptive ways. 

Through application of disruption theory, the article argues that Uber is not considered a disruptive innovation. One of the reasons used to support this argument is that, “disruptive innovations don’t catch on with mainstream customers until quality catches up to their standards” (Christensen , Raynor, & McDonald , 2015).  Uber is seen as a ‘sustaining innovation.’ rather than disruptive one, because Uber has made good products better in the eyes of current customers i.e. fifth blade in a razor.

In contrast, disruptive innovations are initially considered inferior by most consumers. This is an interesting point, as Uber has rarely been described as inferior to existing taxis; “in fact, many would say it is better” (Christensen , Raynor, & McDonald , 2015). In addition, most customers are hesitant to use disruptive innovations, despite lower price offerings. In the case of Uber, pricing is usually competitive or lower than that of established taxi services, depending on surge prices.  
In a quote by Mazzacuto, she states “each major new technology leads to creative destruction” (Mazzucato, 2015, p. 64). In addition, she uses the steam engine, the railway, electricity, electronics, the car, the computer and the Internet as prime example of disruptive technologies. In other words, each of these products/services were radically new inventions, which dramatically altered the consumer market, as well as daily societal activities. In contrast, Uber was a sustaining innovation over taxi-cabs, rather than a revolutionary new service. 


What are your thoughts? Do you think Uber is a disruptive technology? 

References 

Christensen , C. M., Raynor, M. E., & McDonald , R. (2015, December). What Is Disruptive Innovation? Retrieved from Harvard Business Review: https://hbr.org/2015/12/what-is-disruptive-innovation
Mazzucato, M. (2015 ). Chapter 3: Risk-Taking State: From 'De-risking' to 'Bring it on!'. In M. Mazzucato, The Entrepreneurial State (pp. 63-77). UK: Anthem Press.

 

 

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