Analysis of UBER sharing economy as part of Harvard managing organization and service design project

1. UBER: Evolution of
the sharing economyAaron Satish
MGMT 5061 - Managing Service Design and Operation | Professor Ramiro Jara

2. Evolution To A Sharing Economy
Economy Stage 1
According to Adam Smith (1876)
the market was the ‘invisible
hand’ connecting producers to
consumers
Economy Stage 2
The Firm Economy:
The producers organized into firms as a
means of increasing production and metering
of labor
MGMT 5061 - Managing Service Design and Operation | Professor Ramiro Jara | Team II: Aaron, Devang, Jack, and Satish 2
Economy Stage 3
• The Sharing economy
where businesses provide
platforms for P2P sharing of
underutilized assets
I Need You Have
Service woven in
TRUST & EFFICIECY
WE ARE HERE
Group 2 Crystal Ball:
Economy Stage n
Trekonomics?
“[service and]…the
acquisition of wealth is no
longer the driving force of our
lives. We work to better
ourselves and the rest of
humanity,“
Captain John Luc Picard

3. Launched in 2010, Uber is the largest cab company
but doesn’t own any car – first global transportation brand
UBER: Market Cap $66 B | Employees: 7K BMW: Market Cap $53 B | Employees: 116K
Shared
Economy
- Zero cost to start vs. high
cost medallion taxi
- Shared revenue (70 –
80% of the fare)
- Rewards with discounts
- 40% more $ compare to
cab drivers
- Helping to improve
earnings and reduce
unemployment
- Pay for different
service level
- Rush hours vs.
off-peak rates
- Comfort of auto
pay through the app
- No capital investment for
cars, high margin, less
liability
- 20 to 30% of the fare, plus
advertisement revenue
- Lean operation, Average
three people per city
- Scalable crowd sourcing
(variability - arrival)
- Adoption through local
competition
Flexibility
Drivers Customers Uber/Employees
Part Time, Full Time,
Be your own boss
UberBlack, UberX,
UberPool (variability-
request)
Effort: Only digital customer
touch points (app, email,
text), no CSR employed
MGMT 5061 - Managing Service Design and Operation | Professor Ramiro Jara | Team II: Aaron, Devang, Jack, and Satish 3

4. Million rides a day (2 Billion rides till date), 400 cities, 70 countries,
160,000 drivers in US alone
Normative
Control
- Rate passengers
- Car quality inspection for
new drivers
- Community Trust
- Customer picture/name
shared to create the
personal connection
- Rate drivers
- Community Trust
- Safety: ability to
share ride in real time
- Driver picture/name
shared to create the
personal connection
- Customers doing most
of the work to schedule
ride using technology
platform
- Community based
foundation for trust
Drivers Customers Uber/Employees
MGMT 5061 - Managing Service Design and Operation | Professor Ramiro Jara | Team II: Aaron, Devang, Jack, and Satish 4
Community - New economy engine
influenced by the Uber
model.
- Pulling part timers
back into workforce
- Reduction in
unemployment
- 24/7 driver support
and insurance coverage
- Safety: reduced
number of drink and
drive incidents
- Environment friendly
(Uber Pool)
- Can reach assigned
driver via text or phone
- Pride of brand
association
- The dispatch
software/algorithm links
the passengers to drivers
- Leverages data analysis
to translate data into
dynamic pricing

5. Mapping To The Service Value Chain
• Normative
Customer ratings
• Standards of
vehicles
• Categorization of
vehicles
• Efficient App/
Platform
• Drivers are
masters of their
own schedules
• Drivers are rated
by many
customers as an
appraisal system
• Riders shared
prosperity model
with Uber
• Riders rate the
service based on
parameters.
• Drivers who
consistently get
low ratings are
dropped from the
service.
• On the App
customer
satisfaction is
gathered
• Incentives to
customers and
promos are
provided to
enhance
customer
satisfaction
• Uber is reaping
inherent ‘trust’
in the new
economy
• Convenience
and level of
service drives
customer loyalty
Employee
Satisfactio
n
• Costs of Driver
retention are
low
• Customer loyalty
is driving more
use of the
service and
customer
advocacy to
other potential
customers
• Under Uber’s shared prosperity
model, drivers are incentivized to
keep riders satisfied which drives
more volume and bottom line
MGMT 5061 - Managing Service Design and Operation | Professor Ramiro Jara | Team II: Aaron, Devang, Jack, and Satish 5

6. Successfully Evolving with the Shared Economy
Drivers of Success Internal
Service
Quality
Employee
Satisfaction
External
Service Value
Customer
Loyalty
Customer
Satisfaction
The nature of the shared economy ensures that
changing competitive, customer, and technical
dynamics in the ecosystem will greatly speed the
evolution of service design operations
Analogs of the Past and Future
Competitive Considerations
Customer Considerations
Technical Considerations
Relationship status? “it is complicated”
• Rapidly Changing Environment
• Nimble and Modular
• Leading a shared economy
• Improving the crystal ball
• Driverless vehicles
• Tech and Functional
Architecture
• Uber and Waze
• Uber and Google
• Napster and iTunes
• Uber and ….
MGMT 5061 - Managing Service Design and Operation | Professor Ramiro Jara | Team II: Aaron, Devang, Jack, and Satish 6

7. ?
Thank You – QUESTIONS?
MGMT 5061 - Managing Service Design and Operation | Professor Ramiro Jara | Team II: Aaron, Devang, Jack, and Satish 7

8. 8
MGMT 5061 - Managing Service Design and Operation | Professor Ramiro Jara | Team II: Aaron, Devang, Jack, and Satish 8
APPENDIX

9. MGMT 5061 - Managing Service Design and Operation | Professor Ramiro Jara | Team II: Aaron, Devang, Jack, and Satish
http://expandedramblings.com/index.php/uber-statistics/
How it works
9
9

10. 40% more earning
10
MGMT 5061 - Managing Service Design and Operation | Professor Ramiro Jara | Team II: Aaron, Devang, Jack, and Satish 10

11. MGMT 5061 - Managing Service Design and Operation | Professor Ramiro Jara | Team II: Aaron, Devang, Jack, and Satish
http://www.businessinsider.com/uber-
doubles-its-drivers-in-2015-2015-10
11
11
http://www.bizjournals.com/