Uber’s Disruptive Organisational Model

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 Uber’s Disruptive Organisational Model

In the modern society, technology is irrefutably one of the most significant tools and this

is as a result of its overall revitalization of processes. From such an approach, an industry like

Uber is notable because of its incorporation of technology in its operation and operating

perceivably one of the largest digital platforms. Uber describes the demand on transportation that

has happened to revolutionize the taxi industry (Meyer, 2016). Apparently, Uber’s revitalization

of taxi industry has been in the sense that people can now comfortably tap their smartphones and

have a cab drive to their pickup location. Such an occurrence makes Uber one of the most

fancied modes of transport in the contemporary society. In fact, this is evident with the company

being valued to be over &70 billion, which is as a result of its sizeable global market. The

company’s global market is that by 2015, it was operating in more than 330 cities, and this has

significantly increased based on the fact that the people in these locations love its services

(Moon, 2015). The indubitable aspect that continues to make Uber one of the most successful

companies is its disruptive organization model that uses collaborative consumption platforms to

increase its operation’s efficiency.

Uber’s Disruptive Organisational Model

The taxi industry has been there for centuries but Uber services have proved to be whole

new levels of cab transportation and this is arguably because of its disruptive model. A critical

analysis of market operations, specifically, market disruptions show that such an occurrence is

either caused by institutional disruption or technological disruption (Laurell & Sandström, 2016).

Arguing from a general perspective, Uber’s disruption model is perceivably a technological

disruption. This is purportedly so considering that the Uber services have revitalized taxi
industry as a result of improved Information and Communication Technologies (ICT). That is, as

a result of ICT new forms of value creation, aspects such as collaborative consumption have

been born and have considerably gained momentum in the present society. An affirmation of this

is that entrant organizations such as Uber and Airbnb have been on the frontline in terms of their

rapid growth and threatening the already established brands in their pertinent fields. The

threatening from such organizations is instigated by their collaborative consumption that creates

lower prices, introduces new performance parameters, and enhances new heights of scalability.

In most of the cities that Uber is operational, the taxi industry is no longer the same since

this firm ruthlessly eats into the existing taxi market and rendering the already operational firms

in that sector futile (McLaren & Agyeman, 2015). Competition in industries such as Taxi

segment is not new but unlike the past rivalry, the kind of disruption witnessed with Uber is on

whole new levels. Such an exceptional occurrence is sure to cause disputes regarding what could

have caused such transformations. It is on this ground that some analysts have purported that the

Uber’s disruption in the taxi industry is as a technological disruption, while others argue that

Uber’s continued success is as a result of its pricing model (Schneider, 2017). Apparently, such

suppositions have sizeable degrees of truth; only that they do not depict the full picture of what

could have caused such a massive transformation. For example, it cannot be technology since

this tool was not born with Uber since there is nothing new that Uber has done. Moreover, in the

different nations, the taxi industry has already been using mobile phone applications in the

booking of its services but still Uber manages to be that successful. According to Teece (2017),

an overall insight into this shows that irrespective of Uber’s success being supposed to be as a

result of innovative digital technology that disrupted the taxi industry, the real reasons behind
this success are more than technological revitalization since standard technology has been around

for several years.

As of the aforementioned argument, Uber’s technological incorporation or reduced prices

are not the organization’s most crucial operational models. If so, then, what are the specific

attributes that make Uber this successful? An answer to this is that Uber continues to be

successful and disruptive in the taxi industry because of its peer-to-peer business model that

happens to be running on digital platforms. The peer-to-peer operation model means that Uber

actually makes sure that it connects people in need of service and those who need it in its online

platform (Meyer, 2016). Through this connection, prices are not actually an issue; more so,

because Uber services enjoy rapid price uptake since the cost per transit is dependent on the

traffic and distance among other crucial factors used by other taxi drivers. Uber’s business

model, which proves to be more than pricing tactic and technology, is the one reason that the

company continues to command such a market segment amidst competition with other taxi

services (Zakaria & Kaushal, 2017). What Uber business model does is that it focuses on the

capitalization of its attributes to withstand rivalry from taxi firms and make sure that its

competitiveness is on point.

Uber’s peer-to-peer business model, also known as the sharing economy, is typically

based on the overall concept of collaborative consumption. The specifics of a sharing economy is

that this business model focuses on making sure that it stands on the maxim, and this means that

instead of acquiring a product it would rather share it but at a given fee (Hamari, Sjöklint, &

Ukkonen, 2016). A good illustration for this is with the women’s obsessive buying habits where

they can opt to create an online platform some of their fancied goods such as designer bags

instead of having to spend a fortune in acquiring them. As such, it is irrefutably clear that the
women will still maintain their class like attending a wedding party with a designer bag.

Moreover, this helps them avoid buying these designer bags for so much only for them to lie in

the closet despite them being of great value. This example is typically a replica of what Uber has

done. That is, Uber does not own any of the vehicles but plays the role of pooling cars together

and bringing the people to these cars for their desired services. The peer-to-peer sharing is thus

conducted online and enhances the concept of not owning a product but being able to maximally

utilize it (Heinrichs, 2013). Based on this particular business model, that is how Uber manages to

continue experiencing explosive growth, which in return forces the other taxi companies to try

and revitalize their operation to match its operations. Hence, Uber may be argued to have not

only managed to revitalize the taxi industry but also managed to enhance the consumers’

experience with these other taxi companies.

Considering that Uber utilizes collaborative consumption model, it is arguably right that

it functions on the basis of introducing a service that causes disruption to the existing

organizations (Schneider, 2017). Such products and services are exceptional considering that

they are created in novel ways and they end up actually introducing a whole new performance

parameter that is unsurpassed by the already existing trends (Meyer, 2016). Uber’s disruption

innovation is typically in the form of creating institutional turbulence that happens to circumvent

the existing operations in a given field, including the rules and regulations. Arguing on this basis,

since Uber may not be categorized as being purely disruptive, its actions and approaches in the

taxi industry are perceivably institutional entrepreneurship. Such a supposition is founded on the

basis that Uber does not necessarily compete on the basis of rules and regulations that govern the

taxi industry.
 With the conception of Uber’s collaborative consumption being an institutional

entrepreneurship, focus on technological disruption is unmistakably the best way to understand

this organization’s functions (Laurell & Sandström, 2016). The reason for such a focus attributes

to the fact that the performance measures may be best understood on the basis of previous

occurrences, such as the services, prices, and trustworthiness in the overall dealings. Uber is

therefore purported to have been created as a result of price preferences since its services are

considerably cheaper and more convenient compared to the taxi services. The cheapness and

effectiveness of Uber are categorically as a result of being a new technology solution to some of

the problems facing the taxi industry. By being a solution to the prevailing problems, Uber is

irrefutably perceived to have some disruptive properties to the taxi industry as of its creation of

simpler and cheaper services. Moreover, for a solution to be embraced in a market situation, it is

obligatory that it reaches specific performance levels. The old taxi industry may, therefore, be

argued to have reached its performance limits and the introduction of Uber services only proves

to be a tradeoff as a result of its convenience and reliability. The peer-to-peer business model is,

therefore, the key aspect that has continued to make Uber a successful company; specifically,

because the collaborative consumption allows it to introduce new offers and at relatively low

prices.

Factors And Capabilities Enhancing Uber’s Success

Apart from the collaborative consumption model, Uber’s success is also enhanced by

various factors that are pertinent to its disruptive organization model (Schneider, 2017). One of

the major factors that have enabled Uber’s success is its benefit to the consumers. Uber, from an

overall analysis, is a problem solver for most riders since it happens to offer them with cab

services at lowered prices and conveniently. Evidence for this is that Uber is now an
international company and is being utilized by millions of people. The reason why people prefer

Uber for ride services is also that its overall revitalized processes have helped fix some of the

problems witnessed with the cab industry. Mitigation of these problems is primarily in the sense

that the Uber provides the customers with exceptional services; for instance, accepting different

modes of payment convenient with the customer. The exceptional services to the customers like

tracking their requested cab on their route to them makes Uber services more consumer-oriented

and this helps it progress a mile further.

From an organisational point of explanation, for a company to be successful, all the

stakeholders ought to be satisfied with the company’s process. Thus, the customers are not the

only ones enjoying Uber’s exceptional and positive services since the drivers of these cabs are

also beneficiaries. As such, the drivers’ satisfaction is one of the key issues that also play great

roles in making sure that Uber continues being successful. Apparently, the drivers are benefiting

in the sense that Uber is creating jobs for them and also making sure that some of the cars such

as limo get their desired target consumers irrespective of the difficulties of finding work in the

urban town. The benefit in all this is that Uber does not primarily employ the drivers nor buy the

cars but makes sure that it connects the drivers with the customers needing their ride services;

more so, based on their geographical proximity. This connection is irrefutably beneficial to the

drivers and this happens to contribute towards the company’s overall success.

Question 2

Possible Weaknesses of Uber’s Organisational Model

Despite Uber’s disruptive organisational model being irrefutably the tool behind its

success, it is also notably clear that this model has its weaknesses. First, Uber is criticized often
because of its price surges; specifically, when the demands are higher than the supply. What

Uber does is that once it identifies that there are more riders than the drivers, it automatically

increases the cost and this is argued to be a motivating factor to bring drivers to a given location

that may be experiencing a shortage. From the riders’ perspective, increasing the price at such

times, irrespective of the motive behind it is perceived with outrage since it costs them more.

A critical approach as to why Uber may be criticized on the basis of its operations

construes to its collaborative consumption or sharing economy model. First, as of the

aforementioned concept, the model is unmistakably Uber’s most disruptive approach that has

helped it continue being successful as well as threaten already established cab services in the

different nations. However, the detriments of this model are that it has various drawbacks

associated with it and this affects Uber services in the sense that are safety concerns, there are

negative effects on the local communities, and it increases regulations.

Safety Concerns

With the sharing economy, which involves linking the users and suppliers, operations are

basically predicated on trust. That is, like in the Airbnb case, the trust in its operations is as a

result of the expectations that there will not be fraudulent or misinterpreted listings and the

bigger picture of following the laid rules is attained (Slee, 2017). Apparently, since Uber also

operates on such basis, its collaborative consumption model also exposes it to trust concerns with

its riders and the drivers. This is perceivably of great concern considering that in a business

world, more so, where people meet virtually online before transacting thereafter the possibilities

of fraudulent activities is considerably high. A good illustration is that there are reported cases of

drivers mishandling their clients. On the same issue of safety concerns, Uber’s sharing economy
approach is questionable on the basis whether its cars meet the pertinent insurance and safety

measures imposed on taxis. This is questionable based on the fact that these vehicles have no

particular location and the connection only takes place after their services are needed, which

means that some may be having issues with insurance and other safety regulations; hence

endangering the clients’ safety. Therefore, Uber’s failure to identify such occurrence and

mitigate the detriments associated with it are some of the reasons that make this sharing

economy model disastrous since identifying the real motives of either of the involved parties is

quite cumbersome.

Effects on Local Communities

In most case scenarios, the sharing economy model is considerably disastrous to the

pertinent societies where these organizations operate. This is purportedly evident with Airbnb’s

case since most are the times when it is said to be negatively affecting the local neighbourhoods

(Zervas, Proserpio, & Byers, 2017). With Uber being also an organization utilizing the sharing

economy model, its effects on the local neighbourhoods is also unmistakable. The growing

concern about Uber’s operational model is in the sense that the investors in this industry may be

taking advantage of the situation and focusing on oppressing other taxi industries. An affirmation

of this is that in most neighbourhoods, there are the regulations that restrict the number of cabs in

a given location as a way of ensuring that the drivers in that given location can at least earn

specific low wages. However, with the Uber’s sharing economy model, it violates these

regulations since the Uber cabs tend to flock the specific markets and this destabilizes the

economy of that given location through the disrupted drivers’ earnings.

Failed Regulations

Businesses ought to be regulated for assured quality among other aspects. However, with

the operations of an organization such as Uber, the sharing economy model almost exempts it

from this. That is, with Uber being a third-party beneficiary in the cab industry, its online

booking actions are occasionally not government regulated and this opens avenues for a lot of

issues. For example, this poses risk in the sense of lost potential taxes (Lansley, 2016).

Moreover, this also opens up channels for foreigners to also provide the same services, rendering

the locals jobless. This typically means that failed regulations in the shared economy does not

only affect the involved parties but also causes deleterious effects to the pertinent societies.

An overall overview of Uber’s shared economy model shows that it is quite beneficial but

its detriments cannot be ignored. This is specifically so because this model’s greatest weakness is

lack of secure services. The supposition is clear with the fact that individuals blindly get into

transactions with an unknown person and this increases their susceptibility to unsafe conditions

(Schneider, 2017). Moreover, with reduced regulations, there are higher possibilities that Uber’s

operational model will entertain drivers and vehicles that do not conform to the basic safety and

insurance standards set for taxi operators.

Risks of Uber’s Organisational Model

As of contemporary world, the shared economy model is quite significant and

speculations show that it will continue to grow and establish itself accordingly. The supposed

growth of shared economy model shows that people have a high appetite for it but the one thing

about it is that it exposes them to sizeable exposures and risk (Ranchordás, 2016). On this

conception, Uber’s sharing economy disruptive model has its pros but the risks are not to be
ignored. From a critical analysis of the overall occurrence, it is irrefutably clear that collaborative

consumption model has been beneficial to those hired by this system and the people served by it,

which means that it is both beneficial to the drivers and the consumers. However, irrespective of

these benefits, there is a sizeable shortage of skilled people for the growing workforce

(Ranchordás, 2016). The outcome of this is that involved parties are forced to hire individuals

who might not be professionals in this field. Other than this, from an economist’s point of

perception, the collaborative consumption model is disastrous based on the fact that it leads to

degradation of wages.

The very basic risk of sharing economy is that it causes profound shifts in the economic

power and the outcome of this is that it increases conventional regulatory mechanism

regulations. In the conception of this model; more so, in Uber’s operations was meant to increase

economic liberation, reduce bureaucracy, and enhance flexibility. However, this was not the case

since in reality this model poses greater risks of replacing the traditional regulations in the

specific operational fields (Malhotra & Van Alstyne, 2014). The other risk of Uber’s Peer-to-

peer model as a disruptive model in the taxi industry is that it is quite problematic to the financial

sector. The risks in this sector are in the form that the investors and lenders in this business

transform the traditional banking system and this ends up disrupting the financial regulations.

Digital Technologies to Mitigate Risks

From the above mentioned weaknesses and risks, the overall conveyed message is that

Uber is synonymous with poor public relations. Reasons for such an occurrence are that most of

the drivers are a risk to the clients and this is clear with the various reported cases of sexual

assault or other forms of harassment. The risks are also replicated in the financial sector and this
is as a result of failed regulations. As such, the sure way to mitigate such occurrences is to make

sure that there is a technology that regulates and scrutinizes the online booking of cabs (Schor,

2016). Basically, such a technological system is sure to mitigate possibilities of violated

regulations like the number of cab drivers in a given location as well as ensure that fraudulent

activities are monitored and safety is enhanced.

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