There is this fear syndrome that has been running for a few months amongst the leaders of every single market in the western world: are we going to get uberized? As they are asking themselves this question, you’ll probably detect a hint of a smile in their eyes. Not many corporations believe that someone will just “walk in”, and steal their market away from them overnight.
Cashing in for as long you can?
Playing at getting scared hits a weird, but clear, pleasure zone in our brain. Once the horror movie is finished playing, we consider our boring everyday life with a kind of new appreciation. Except that, many of these corporations don’t get what kind of trouble they are facing. And I can mostly agree that no, there’s no Uber-like bogeyman in the cards for them. If they fail, it won’t be under the attacks of a small, psychotic killer rabbit. They’ll die because they suck.
Now, now, I know. Saying “they suck” is probably too terse. I should explain further: how many major national or multinational corporations can you name, that have been abusing their customers for several years in a shameless manner? Yes, I’m speaking of banks, insurances, telecoms, drug companies, and many other businesses that feel somehow like a monopoly. Such companies that in any customers’ satisfaction survey, are widely mistrusted, if not plainly hated by their own market.
The obvious reason for such despise is that most of them have been cashing in position revenues.
These positions were often created after the last world war, to protect conglomerates ready to invest massively in rebuilding infrastructures. Others came from regulated businesses that were too important for national sovereignty to mess with, like energy. A few, like undoubtedly the cab business, or hotel resorts, just stem from efficient corporatist lobbying that managed to endure through the years with much endogamy, and build up an unreasonable amount of threats to our weak political system.
Fast forward to now.
Innovation hasn’t accelerated so much. It took about fifteen years to push a mobile phone in the hand of the vast majority of northern America and Europe — the radio or the fridge succeeded to achieve the same market penetration in less than twenty years, although electricity wasn’t yet a commodity platform. Then, it took about ten more years, for the phone to be called smart. Every single one of us has now more computing power, and global connectivity than the NASA would have dreamt of to send a crew to the moon and back.
In more than twenty-five years, essentially none of these businesses have felt that they should, or so slightly adapt to the fact that 98% of their customers could communicate whenever they wanted to third parties; have access to every kind of information on the fly; precisely map their way or locate anything; and most of all, pay anyone to do (pretty much) anything. Even with basic 1970’s BCG strategy, you’re supposed to milk the cash cow for so long, then jump to another market cycle.
But that’s a core problem for a position revenues businesses. Why would you abandon an asymmetrical offer, that you have been artificially entrusted to provide (or, that you have successfully built for yourself over the years)? My point is that this question has now slowly evolved to “How are you supposed to maintain a paywall between your asymmetrical offer and customers that have regained by themselves, asymmetry of information and bargaining power?”
Let’s take a minute to be sympathetic there. Done? OK, let’s move on then. Because most position revenues business have had plenty of time to reconsider and adapt to their ever-evolving market.
And truth be told, it’s hard to consider sympathetically say, a retail bank. Or, when was the last time you enjoyed the experience of a “simple” three-star hotel downtown in any city on the planet? How did you feel the last time you had to review your family insurance options?
Uber story is not about technology taking over your mainstream average Joe businesses overnight.
Uberization is a slow burn, a twenty years momentum that has built up to the point of no return. There is no conspiracy of Y-gen kids on steroids destabilizing global finance through Twitter or WeChat.
How many emperors have no clothes?
When people speak about uberization, they should ask a simple question: what is the company / trade having been so wrong for so long, that they end up being ganked with the full support of their customer base?
In France, none would think Blablacar as a case of uberization. Quite the contrary actually. And, you would spontaneously invoke many differences: they are nice guys (?), this is a C2C disintermediation, it’s a sharing economy model, drivers don’t make a living like that, they don’t actually steal jobsforetc.
Yes, maybe. But that’s not the point.
Blablacar is a national success because our holy cow of national train company sucked enough to push eventually away millions of people into ridesharing, to travel from city to city (don’t fret too much, we are still living in a dream world compared to the medieval state of the US rail business). They are starting to be a much better option at solving inter-city transportations in France. When for many, many years, our railway systems have been mainly reinforced to be active on a single vertical axis (Marseille – Lyon – Paris), any horizontal inter-city travel by rail is now a nightmare for most customers. New solutions had to arise.
This is crazy, and slightly frightening if you think about it, that individuals would rather rely on each other instead of using public transportation systems (in a country, that is — was? — rightfully famous for the quality of its public services). Now, if you want to find a difference between Blablacar and Uber, it’s probably that Uber got access to better funding early on, ramped up its business in a cohesive 350 million people market, before sprouting in Europe and god knows where else right now. On the other hand, Blablacar has been struggling in a risk-adverse, 60 million-something under-capitalized market, and — if it wasn’t enough — trying to “sell” non-technological innovation in the country of Eiffel and Pointcarré.
In the end, it took about ten years for Blablacar to demonstrate through painstaking startup acquisitions, that it could start to uberize the French National Society of Railways (SNCF). But because it’s been a slow burn, no-one would think of them as a uberization case. Why? If you think about it, this is showing how unconscious and inconsequent we can be, when it comes to understanding innovation…
And, what is even more fascinating, about SNCF is that we can see how it is attacked on so many fronts…
Even if you’re not French, you can trust that a public service weakest point will be its “user experience”. You’d be right. The very same, national train company is also attacked purely on the way you can book tickets online. A 2009 startup, named Captain Train, is managing to redirect about 2 million transactions on their website (out of 75 million a year) by using SNCF’s very own API. Their only added value is that they don’t suck at helping you buy your seat online.
Their motto is simple: “You’ll love to buy your train tickets”.
And of course they have a killer feature (besides just being plain decent at web and mobile UX): if need be, real people will answer your mail.
And no-one thinks of them has a Uber-like company? Because it’s not a consumer-to-consumer model? Let’s. Be. Serious.
Uberization is not about Uber
But anyway, in such cases, you should realize nonetheless that it’s not Uber. It’s you.
I don’t want to add insult to injury regarding the train company in France, but I’m writing this article in a Paris-Marseille TGV high-speed train, in a first class wagon that (not so) faintly smells of urine because it’s late evening, and the toilets at the end of the car haven’t been cleaned for many hours. I’m sitting in a seat that I haven’t been able to select specifically with an electric outlet (that would have been a window seat, then you can request, but without a reliable way to select it), and on this trip, the bar is not accepting credit cards for technical reasons of their own.
The fact is that at the end of 2015, as consumers, we now have numerous platforms at our disposal to shortcut many businesses. We don’t need permission to innovate anymore.
We can decide to do it on our own, or most probably, someone will see the problems we’ve been facing for so long. They will find that the incumbent company is stuck in its culture, and won’t be moving so much. I mean, when you see a business that is hated by its own consumers for many years, it’s a safe bet to invest in their immobilism. Like with many things in innovation, people tend to think that it happens abruptly, as a sudden disruption of an old paradigm. Most of the time, this is not the case. What will prepare disruption often happens over an extended period of time; we just choose to ignore the signals.
Before Uber became the poster child of aggressive startups trying to take giants out of their misery, I was speaking of killer rabbits. It was a long time ago… in 2014.
— Slava Polonski (@slavacm) February 5, 2014
The key point of this discussion was about the culture inversion that is witnessed between a typical company and one that is keeping a short-term mean and lean posture on the market.
When conventional companies think that no-one is going to topple them in the next 3 to 5 years, because they are too big to fail, their only vision is about sustaining the inflow of money, steadily, quarter after quarter. They have a short-term view because they think they’ll survive no matter what on the long term. Companies with position revenues, or some monopoly on a market being the worst. On the contrary, “killer rabbits” have a vision of the future, 10 or 25 years from now. But they also understand their structural frailty, which builds up their market aggressiveness and their focus.
In a nutshell, some are living in a building on fire and keep on watching TV; while others live each day as if it was the last.
This latest perspective may be felt in China quite often. Because more than anywhere else on the planet, they have their share of complacent, monopolistic businesses, they also nurture this aggressive short-termism, pushing and challenging anything too stable. I already wrote many times about WeChat and their 100+ million actives, dematerialized credit cards; or about the 20 million electric vehicles in Shanghai (yes, ugly scooters)… China is one of the rare places where I heard the phrase “Company X has PK company Y last quarter“… And again, get me right, this is not only dumb opportunism. When giants don’t deliver for so long, it should be expected that many available technology platforms, allow anyone to enter the market and build up a solution.
Which brings us back to Uber: they are not a special breed, a special culture, or a sign of times. They’re just the logical outcome of long-lasting laziness and complacency.
Why don’t you uberize yourself?
If you connect with what I see in this “uberization” craze of late, we should eventually discuss briefly two points:
The first one is: why don’t you step in their shoes?
I’ve done this game for many years with numerous companies: get your executives in a room and play a business game where they would be all fired overnight, without compensation, and — this is important — without any non-competing restraint. Then ask them, “As payback, how would you build a business to crush us into the ground?”. We call that the Nemesis game. This is thinking like a killer rabbit, or Uber to some extent. The beauty of it is that we all have a part of us that loves destroying our toys. In only a few minutes, you will see your team using every dirty truth that you never speak of, and use it against your business. Now, this is your choice, but I’ll recommend that you’ll start using that knowledge before anyone else does…
The second one: do you realize that no matter what, a few companies only will be winning?
And these companies are not the new aggressive ones or the old ones on the verge of destruction, finally waking up. No, for the foreseeable future, these steady winners are the ones building the platforms that facilitate uberization. And they are only a few: Google, Facebook, Amazon, and to some extent Apple as well. They are the platforms that bring disintermediation to all markets. The real danger is that such platforms are all controlled from the US, and yes China is now bringing its own to the global table. Except that… Where’s Europe?
I can live with many huge companies becoming complacent and being uberized. This is the course of things, and quite frequently my job is to help topple them down. Schumpeter’s creative destruction has a lot of virtues, even if it’s frightening for many…
But these virtues only exist if the creation is completed where destruction has been waged.