Yet more challenges for Uber…

Michael Porter’s 5 Force analysis is inescapable in the study of business and provides an essential starting point for understanding an industry.  The challenge for any student or manager is finding time to thoroughly understand industry players, boundaries and possible developments. This is particularly true in industries experiencing rapid change; a case in point is the taxi industry -, or is that the urban transport industry, or the travel technology platform industry?

Three different perspectives of Uber caught my attention recently.  The first was a story in the London Evening Standard that began as follows:

Private hire firm Uber was today accused of being a seedy backstreet minicab firm by a senior MP. Business Committee chair Iain Wright said a promotion in France offering passengers the chance to book a“hot chick”driver meant Uber was running a  “carry on cabbie” service. The firm has already apologised for the promotion from its Lyon office’s website which began with the question who said women don’t know how to drive?”

The same edition the Standard also featured a complaint from an outraged female passenger (a PAX in Uber speak) over comments made by the driver about her dress sense.  Outspoken black cab drivers are still part of London life, but their monopoly days are done and the customer with the app is now in charge.

If you see Uber as competing to be a global taxi service provider then these stories are concerning, and we should be asking more about what Uber is doing to improve their customer service. If Uber is really all about the platform, then service just has to be adequate as it builds its strength and market position. My suspicion is that Uber’s focus is on “adequate”, but it will face increasing pressure to do better as providers of taxi services fight back with alternative propositions through platforms/services like Lyft and Hailo.

The second thread was on uberpeople.net, a forum for Uber drivers. Comments on the forum suggest that this is not a happy group; the 5 Force model would point to the imbalance of power between Uber and its drivers as a possible root cause.  Here’s one driver’s slightly edited perspective of life as an Uber driver:

New Driver: “You mean tell me I can make $1500/wk just by driving people around?! That’s not hard at all. Sign me up! I’m going to be the best Uber driver ever!”

3 Month Driver: “Uhhh….why are my ratings still dropping? Am I doing something wrong? I gave out water, and snacks like Uber told me to. Guess I’ll just have to try harder next time.”

6 Month Driver: “WOW another rate cut?! How are we supposed to make money with all these new drivers on the road? And they’re raising SRF too? Man….these Pax are really starting to get on my last nerve. Oh look…another water bottle/candy wrapper left on the floor!”

Veteran Driver: “What! My only job is to get the Pax from point A to point B. To hell with Uber and their stupid Pax! And why the hell do they keep calling my damn phone? Learn how to drop a freaking pin people! I’m going to start giving more priority to Lyft from now on.”

Ex Driver: “Just found a job as a pizza delivery guy. I’m out!”

At least there is more of a future in Pizza delivery – someone is going to have to make the walk to the door from the driverless vehicle, whereas I suspect that Uber ultimately will not need or want drivers.

The other internet thread concerns the response of the car manufacturers, in particular Daimler, which makes Mercedes Benz and Smart cars, along with Daimler Trucks and Buses. Daimler has a car sharing service car2go in the US, another way of providing urban rides without the need for car ownership.  Once cars become driverless then the problem of partying and then getting home will no longer be an issue for such services.  Daimler also has a service boostbybenz.com for shared rides for children, a niche offering for busy parents that would not trust their children to an unknown taxi driver. Finally, along with Audi and BMW, Daimler is now an owner of the mapping system “Here”.  These all represent experiments in areas critical for future success.

Daimler is facing up to a potential future with lower rates of car ownership, more sharing, driverless cars and the vital necessity of a technology platform to connect cars, drivers and service providers.  This challenge for the car makers will bring them into competition, or in some cases collaboration with Uber or other platform providers, if they have not developed their own solution.

5 Force analysis on a Postcard please.

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