Innovation Case Study

A case study of Rubicon Global

Introduction

Cloud-based technology is providing the opportunity for innovation in service

delivery within many industries (Shah, 2014). The platform provides the opportunity for new
entrants into industries leveraged on innovative service models (Kavitha, 2014). One such
example of a company that leveraged the cloud to innovate service delivery and enter an
industry is Rubicon Global (2018). The case study of Rubicon Global provides an
opportunity to evaluate service innovation and the role that it plays in the successful business
development of a start-up. The case study is an example of a new entrant into a duopoly that
would have the same impact on an industry as Uber had on the taxi industry. The analysis
presents an overview of the service followed by an analysis of its innovation based on
innovation concepts. The case analysis finishes with a set of recommendations for the
company moving forward. The case study provides a little known example of how innovation
can cause a positive disruption in an industry that can fundamentally change the business
fundamentals of an industry. The case study stands beside other industry changing
innovations such as Uber, Airbnb and Dell.

Service Information

In 2008, two entrepreneurs, Nate Morris and Lane Moore, formed Rubicon Global
(2018). The company was formed on the idea of creating a “cloud-based, full service waste
management company providing low-cost, highly efficient and environmentally friendly
service anywhere in the country” (Sahlman & Ashmore, 2015, p. 1). The waste management
industry in the United States was dominated by two major companies that operated a duopoly
preventing smaller businesses to operate profitably in the market. Waste management had

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traditionally involved the dumping of waste into landfill sites rather than recycling (Bulc et al.,
2014). Less than 34% of all waste is recycled (EPA, 2015). The issue of increasing the level of
recycling in the waste management industry has become an important global issue (United
Nations Environment Programme, 2011; U.S. Global Change Research Program, 2014). The
mission of Rubicon Global was to create a business model that would increase the level of
waste recycling and reduce landfill.

The business model developed by Morris and Moore arose out of the observation of
the way that Uber and Airbnb had disrupted the transportation and accommodation industry
respectively (Sahlman & Ashmore, 2015). The entrepreneurs developed a cloud-based
platform that integrated customers, recyclers, haulers and landfills (Sahlman & Ashmore,
2015). Each of the four stakeholders could access the platform in order to have their needs
met (Sahlman & Ashmore, 2015). Each of the stakeholders paid an annual subscription fee to
access the platform (Rubicon Global, 2018). The fee was based on the level and nature of the
waste, the business services provided on the platform and the level of waste that was diverted
from landfill and into recycling (Sahlman & Ashmore, 2015). Use of the service produced
savings of over 20% for stakeholders (Sahlman & Ashmore, 2015).

Initially developed as a prototype, the platform evolved until by 2014 it was providing
efficient and effective service to over 22,000 locations to large organisations. Rubicon Global
had failed to achieve market penetration for small and medium businesses (Sahlman &
Ashmore, 2015). The cloud service meant that the company had the means to compete for
waste management contracts in its own right by leveraging the online network that it had
created. The company now faces the challenge of a lack of capital for investment in growth
and development and the strategic issue of whether the company should diversify its reach
into new markets and services (Sahlman & Ashmore, 2015).

Evaluation

The success of Rubicon Global (2018) is due to the capability of the cloud-based service
to deliver across the four innovative service dimensions as identified by Berry et al. (2008).
The flexibility and capability of the cloud to deliver a needs-based solution to a range of issues
was leveraged by Morris and Moore to enter the market. Rubicon Global (2018) was able to
deliver a flexible solution, controllable convenience, corporate gains and respectful access by
offering a range of services that a consumer could package to their needs. The cloud provided
the company with the capacity to allow users to build their own service profile based on the

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type of service that they required and the benefit that was sought. By tapering the costs of the
services to the mission of Rubicon Global, the company was able to influence the actions of
the operators in the industry in order to shift them from landfill towards the more cost-effective
approach of recycling. This provided the company with leverage in future negotiations with
governments.

In order to manage digital innovation effectively, three primary considerations are

required (Nylen & Holmstrom, 2015). Firstly, the innovation needs to consider the user
experience and provide a genuine value proposition (Nylen & Holmstrom, 2015). The founders
of Rubicon Global achieved this through the needs identification of large customers and
factoring this into the design of the service interface so that it provided both user satisfaction
and added value to the business (Sahlman & Ashmore, 2015). Secondly, the innovation needs
to provide information that is important to the customer and assists them in their decision-
making (Nylen & Holmstrom, 2015). Morris and Moore did this by incorporating business
services within the cloud-based service so that the operational costs of the customer could be
reduced through the use of the platform (Sahlman & Ashmore, 2015). This was in addition to
the cost savings that could be achieved through the networking capabilities of the service
(Rubicon Global, 2018). Thirdly, the company needs to access the skills necessary to deliver
the innovation (Nylen & Holmstrom, 2015). The technological skills had to be sourced
externally as the founders lacked the knowledge to capture their innovative idea within the
coding required (Sahlman & Ashmore, 2015). Moving forward the company has to make the
decision as to whether it creates its own digital capabilities or outsources the technological
capability.

The founders of Rubicon Global knew that effective innovation must achieve a certain
tipping point in order that it can deliver value and benefit in the market (Anthony et al., 2008;
Furseth & Cuthbertson, 2016). Morris and Moore sought to achieve this by focusing on
customer needs rather than the technology (Sahlman & Ashmore, 2015). The focus was on
simplifying the process so that customer’s operating costs were reduced while providing
greater transparency (Sahlman & Ashmore, 2015). The promise was made to a key client in
the pizza industry before the technology was developed (Sahlman & Ashmore, 2015).
Responding to this need opened up the market to Rubicon Global as each new customer added
developed the services and capability of the system. The income stream enabled the addition
of new features and services that met identified needs that therefore guaranteed a market for
the service. This meant that as new customers were added the functionality of the service
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application evolved opening up more markets. Hence innovation founded on identified needs
shifted the tipping point making the application more attractive to more users and providing
benefits to existing users.

The growth strategy of the business was linked to incremental innovation that ensure
sustainability. Effective innovation requires the careful management of capital and a
sustainable growth strategy (Anthony et al., 2008). The service innovation arose out of needs
identification and the organisational model was designed to facilitate this innovation
(Randhawa & Scerri, 2015). This meant that the focus was on the core business of innovation
through customer needs identification. The technological development needed to meet those
needs was outsourced. The approach was innovative and transformational in respect to the
traditional business processes used to develop technological applications. This demonstrates
that innovation permeated into the business model of the company (Skarzynski & Gibson,
2008).

Finally, the case study of Rubicon Global demonstrates the success factors for effective
service innovation as presented by Storey et al. (2015). The first is that service innovation must
be driven by customer needs. This is at the forefront of the business processes of Rubicon
Global. The second is that the service innovation must leverage the knowledge that is generated
by the innovation. This is the current shortfall of the current approach that has been adopted by
Rubicon Global. Their focus on the customer has meant that they have overlooked the
information and knowledge that can drive future innovation within the cloud-based application.
The company has failed to develop a system that can leverage the large quantity of codified
knowledge resident within the cloud that can be used to drive more innovation. The degree of
skill level and synergy needed to do this is outside of the skill basis of the founders. The third
success factor is that the service innovation needs to be targeted at specific markets such that a
competitive advantage is achieved. The company has been able to achieve this effectively and
is currently looking at the expansion of the service into new markets. The danger is that the
resources of the company are applied to this market expansion rather than furthering the
innovation of existing customers.

Recommendations

Moving forward, the company should consider leveraging the data that it collects on
customer behavior to develop further innovations in the cloud. Service blueprinting can assist
in the ongoing innovation process (Bitner et al., 2008). The untapped strength of the cloud-

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based service is the information that can be collected on the decision-making process of the
customer (Den Hertog, 2000). The process of service blueprinting involves assessing the
customer actions and the support processes provided by the cloud-based service to support
those actions (Bitner et al., 2008). The company needs to be careful that a focus on growth
through the acquisition of new customers and the need to access capital investment to achieve
this growth shifts attention away from ongoing innovation. The company built its current
competitive position on listening to the needs of the customer and developing a platform that
could meet those needs. Service blueprinting, in conjunction with an assessment of the
transactional data captured by the cloud, can provide the organisation with the ongoing service
innovation that is needed to stay ahead of the competition.

The company needs to separate out its functions through the functionalisation of the
business model into two strands. Both strands need to be drive by innovation. The first strand
should be a continuation of new market identification, customer needs identification and then
the incorporation of the customer needs into the cloud-service platform. This provides
satisfaction for new customers, expands the market and provides a trickle-down effect of
providing new service features to existing customers. The second strand is the internal
development of a technological team that can innovate based on a close analysis of the current
usage of the cloud-based service by users. Staff need to be selected based on their capability to
analyse the codified information and to be able to translate that code into new service
functionalities. This is a specific skill that will further advance innovation in the organisation.
In order to be able to perform these two strands effectively, the company will need to seek
capital investment.

Conclusion

The case study demonstrates the effectiveness of service innovation that uses new
technologies to provide a service solution to the voiced needs of customers. A new entrant,
such as Rubicon Global, can design and deliver a completely new service blueprint because it
is unencumbered by existing processes and structures. This innovation brings with it new
challenges as the organisation is faced with the need to grow its market share while leveraging
the potential innovation resident within the knowledge captured by the digital platform. To be
able to achieve this simultaneously requires capital investment and the development of
functional structures in the organisation that are orientated to innovation.

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