When we consider innovation, it is easy to focus only on the life-changing, world-altering developments that shake industries and become the stuff of legend. You know what I mean. Man harnesses gunpowder. Ford perfects the assembly line. Apple combines .mp3 player and cell phone.
There are, however, other breakthroughs. In order to be successful, you don’t need to revolutionize the way that people live. Some of the most interesting and profitable businesses don’t have to do anything new at all – they just have to do the old thing better
Old rides
One example of a company that is successfully mastering an old trade is Uber. A quickly growing national (and international) ridesharing service, Uber connects riders in moderate-to-large-sized cities with drivers who can shuttle them around.
The basic premise of the company is the same as every taxi, car, and limousine rental service already in existence. It rests on three key points:
People need to move around
They don’t always have the means to do so
Most will pay in order to get where they’re going
Just like your traditional taxicab companies, Uber services are found primarily in cities that are large enough to support them.
New rides
Just because Uber hasn’t changed the fundamental structure of a for-hire car service doesn’t mean it’s the same old taxi service. After all, Uber isn’t one of those reality-modifying breakthroughs. They’re not doing something new, they’re doing something better.
You see, Uber CEO Travis Kalanick identified a shortcoming in the traditional car-for-hire business models. In most major cities, both taxis and private sedans (such as those commonly used by business people) are heavily regulated services that create a fuzzy gray area: taxis generally can’t be scheduled and sedans cannot pick up impromptu fares. Uber operates in the middle.
By using a smartphone app to schedule private drivers minutes – or even seconds – before pickup, Uber drivers can circumvent the car services laws of most cities. It’s a basic exploitation of an existing inefficiency.
Uber crowdsources its fleet by allowing (almost) anyone to sign up as a driver. Because the vehicles are privately owned, Uber doesn’t have to pay to purchase or maintain them. In fact, they don’t have to pay for anything except the upkeep of their website and app technologies, which eliminate cash and process all transactions by credit card. Uber simply skims a bit off the top of each transaction and stows away the profits.
Why it works
The success of Uber has depended heavily upon the success of the tech industry overall. Thanks to behemoths like Facebook, Twitter, and Craigslist, everyone knows about Uber. Thanks to other industry giants like Apple, everyone can use it.
A cash-free, on-demand car service is cool, but it also satisfies all the desires of its users.
It’s convenient – Uber users don’t need to wait outside in the elements to hail a cab. Nor do they need to stick to the tight deadlines of scheduled pickups.
There are options – A user can summon a basic, an upscale, or a luxury vehicle sedan or SUV to suit their needs.
It’s easy – Getting a ride is as easy as playing Angry Birds, and payment is handled automatically.
There’s nothing about Uber that screams “breakthrough.” All that the company did was compile different little things that work, and put them together. And if Google’s 2013 quarter-billion dollar investment any indicator, then sometimes that’s all you need to do.