How Uber and Airbnb Won

https://www.wsj.com/articles/how-uber-and-airbnb-won-1485821086?mod=djem_jiewr_ES_domainid

1.Product versus Process Innovation

Uber and Airbnb are Process Innovation. No real products come out of these two companies. But what they have is a new kind of sharing economy platform that allow service providers as well as consumers to get in. This is a new way to conduct business.

2.Radical versus Incremental Innovation

According to the articles, they have pretty radical innovation. Because at that time radical uncertainty has lessons for how we should regulate innovation. Regulators often subscribe to the “precautionary principle,” the notion that any new product with unknown effects should be introduced slowly. But these things can’t be slow. All people with common sense at that time won’t think it’s a good idea to get in a stranger’s car or live in a stranger’s house, until they really use it. It’s just like what Steve Jobs said: people don’ know what they want until you show them. So this radical innovation is vital and smart.

3.Competence-Enhancing versus Competence-Destroying Innovation

From the firm’s perspective, they are competence-enhancing innovation because it’s built on the firm’s algorithm and makes it work to earn profit. But from the whole industry’s perspective, they are competence-destroying innovation, for destroying the existing hotel industry or taxi industry.

4.Architectural versus Component Innovation

They are architectural innovations. Nothing within the product is changed, cars are still those cars and rooms are still those rooms. What has changed is how the whole new system works. Ordinary people can now share their rides or rooms with others through the platform, which can’t be done by them before.

Take a look at the technology s-curve, at first they improved slowly because the sharing economy mode is new to customers. Most people are cautious about it and only few people are willing to try it. After the first group of customers tried the new thing and tell it to their friends, more and more people are willing to try and find it cheaper and more convenient than the old service before. So it accelerated as understanding increased. Now it’s near the limit of technology. But take Uber as example, it’s trying hard to develop driver-less cars. If they succeed, this will be another great innovation that helps them break through the limit and start another s-curve again.