Disruptive Strategy, Not Technology

Über came to be in 2009, and, by that fateful year, many cab companies offered applications with similar features and performance to the one that Über boasts today. Furthermore, there were many rent-a-car businesses, both with and without drivers, that had strong online presences, fixed rates, and, for some, multi-trip rates at lower costs.

This amounts to Über not being an innovative precursor or the harbinger of disruptive technology. They didn’t invent the tech. What they did do, however, was find a new kind of innovation that would eventually skyrocket them into the number one rank in their sector. They created a distinctive and exclusive space in which to establish the business. They founded, or rather they created a “blue ocean.”

In the business world, a blue ocean strategy is one that “creates new demand,” according to W. Chan Kim and Renee Mauborgne. While companies in a red ocean compete for existing market space, blue oceans are “unexplored and untainted by competition, [they] are vast, deep and powerful in terms of opportunity and growth.”

Über’s blue ocean strategy was not caused by inventing a disruptive technology but rather by the driver’s need for extra money, the lack of regulation for shared economy platforms, and the consumer’s need for a cheaper service. All these factors granted success to a new and, yes, disruptive business model. Still, remember that it was the model and not the technology that caused the disruption.

A similar story played out with Airbnb’s launch in August of 2008. Just like with Über, the web already hosted thousands of web pages for hotels and apartments where customers could search for and purchase accommodations. Airbnb didn’t innovate in any technology. It was the exact same technology that hotels around the world were already using. Therefore, Airbnb’s disruption was assuredly not a technological one.

Rather, we ought to attribute Airbnb’s success to their creating a blue ocean strategy; the technology was a necessary companion, a crucial component to enable the strategy, but it was not the driving force of the disruption. Of course, we hardly need to mention that Netflix was not a new, ground-breaking technology. Years before this company ever saw the light of laptop screens around the world, hundreds of programs already existed that were capable of downloading and streaming video files. As you may recall, many were closed because of intellectual property laws. Again, regulations are usually way behind technologies and, in some cases, could stop or delay the enabling of technical life improvement solutions.

I may sound like a video that you accidentally left on repeat, but please let me hammer in this point one last time: it was NOT the technology that was responsible for their success. Netflix uses video streaming and eCommerce technologies. Both these existed and were extensively used prior to its founding. However, because their strategy sought out the “blue ocean” within the entertainment market, they were able to achieve monumental success. Using technology, including exploiting social media, only facilitates the strategies implemented by these revolutionary companies. It is the strategies that these companies applied that enable them to stand out from or ignore their existing competitors. This means that technology is not the thing to beat. On the contrary, they are but the facilitators of strategies that allow both new and established companies to sail towards “blue oceans” of profitability.