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The Real Fear In Business Is Fear Of Being Uber-rized

Why your operating model is probably not doing your business any favours

5Apr

Don’t just sit there do something. It is going to happen at some point.

It is not UBER per say, but the operating principles of businesses like UBER that will put you and your business out of business.

They will attract your customers because they help join the dots easily and deliver an experience your organization cannot match, today anyway… If you own a business, are a shareholder or part of the leadership team then you should be feeling very uncomfortable… Remember dinosaurs didn’t know they were going extinct

If you didn't already know UBER own no taxis. They connect people with vehicles with those who need a ride, Airbnb owns no bed & breakfast or hotel accommodation (although once they apparently owned an inflatable bed), they simply connect people with space/rooms available with those who tend to travel a lot and move around. Like many other businesses like them, these businesses own no assets, don't have massive infrastructure, corporate HQ/overheads and bloated layers of management. And they move faster than you.

What they do is connect the dots for customers in a seamless, frictionless way making life that little bit easier, more convenient at the right pricing point. They think about what you need before you do, offering the ultimate convenience through simple user interfaces.

Then there is We Work, delivering convenience for the ‘workspace’ somewhere to work from. Called a Co - Working start up now valued at $5bn. They are collapsing a market where landlords want to rent available space and people, startups and small businesses need access to affordable workspace, sometimes all at once and together.

I would argue they create supply (supply that is already there and making it available) matching with demand (again demand that is already there).

Do customers know what they want? They do when they see it…

But here is the thing, you should be worried about these businesses, because they are able to reach the entire market (all layers), where conventional business models cannot reach it at the right pricing point.

The essence of what they do for me is they are able to achieve a sense of community, (albeit online to begin with) connecting people, which is after all, the central theme of what any public or private enterprise should be about.

Their essential DNA IS…

The DNA comes from their ability to repackage total market capacity to fit the entire (addressable) market. Whether knowingly or unknowingly the impact is changing the business landscape. But more so, they re-invent our behaviours, set new expectations, in a sense take the brakes off our lives, allowing us to cope with the fast pace of life and for all of us to get more out than we put in.

You think not

These businesses increase your available time by stripping out the non-essential, collapsing markets and eliminating the non-value add. Speed, simplicity and affordability follows. When one looks further at these business models, they all use some form of Growth Model discussed in other articles, it is easy to understand why they are so successful.

These new super fast moving businesses are preying on the inadequacies of conventional business operating models all of whom now struggle to deliver for customers, employees and shareholders. Models that are so inflexible, expensive to run and slow, they are always behind the pace of change outside the business.

In many industries the search for growth is mistaken by extended M&A activities where management believe economies of scale matter, driving consolidation and buying market share is the way to stay ahead. WRONG! It is, in fact, the way to seal an organization, and sector’s doom by making change even more difficult.

Utter madness is everywhere in business today when the premise and starting point is the issue. Whether you pay attention to Keynes, Hayek, Smith and all the early business and economic theories all of whom support conventional business models, conventional supply chains and market structures. It is time for a re-think.

It is time to question everything. With the pace of technology advancements there are no rules… You think Uberization is the threat to your business, your sector? Think again. Heard of Ethereum? You will do.

Ethereum will deliver an even greater change to business, regulation and market structures. It is already redefining the fundamentals of how the Internet works and is used. Its impact will be profound, I will discuss it further in another article later this week.

Does Market Share matter? Really, if you are still banging on about share and addressable markets, time to think again. Do you think the founders of Airbnb thought about market share when they started, or the 34-year-old founder of We Work. No, they thought about how to offer a service for everyone who wants it, direct to source. Changing people's perceptions of the art of the possible. Offering the entire addressable market, which is defined by those that have money to spend and access to Wi-Fi or smartphone with a browser.

Why do you think the valuations are so big despite the Unicorn status? Yes, there is some hype and VC ego priced in, but these businesses deliver a service model that has reach beyond traditional competitors and markets, they do not intentionally discriminate based on some obscure demographic or the inefficiency of the business model. Their goal is to feed the customer/human experience, not to rely on being able to sell things at inflated values to feed an operating model that is too expensive to run.

Their reach is based on the idea that anyone can have access to their services, not a pre-defined set of organizational or marketing rules that disguise the inefficiencies and inevitable discrimination a conventional business model hands out.

So you don’t want to be Uberized?

The answer: Get rid of your conventional business operating model as it is killing your business…and read my next article on Ethereum as this matters more.

Sources

© Digital BOOM 2016

Nick Ayton

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