Uberization of business, taxization of customer relationship

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Uberization and taxization

Uberization is the word of year 2015 and, considering recent events, it’s not close to disappear. If we could thank Maurice Levy for having started the debate through this neologism, the word imperfectly describes the situation.

Uberization is the consequence, not the cause

“Being uberized” let people assume that businesses were attacked from the outside while that’s not often true. Uber did uberize no one : there was an unatisfied demand, a free room, and Uber settled there. There’s a difference between taking a fortress by force and coming in because doors were wide open with a sign saying “free lunch inside”. Former leaders uberized themselves by refusing to pay attention to new customers expectations. If they had done their job nothing would have happened. Moreover the failure of uber in Japan shows that when local players operate in accordance with customers expectations, there is no room for new competitors.

Second, uberization is not an even paradigm and does not always come from startups. Last, uberization is not a fate : a traditional player can unuberize itslef.

So if Maurice Levy perfectly named the symptom, he did name neither the disease nor its causes.

The disease has two main causes : one internal, the other external to the business. One relates to its own functioning, the other to how it deals with customers.

Kodakization or the refusal to exploit an asset

A business can have everything in hand to be successful but refuse to exploit its assets. That’s the case of Kodak, following a logic Manuel Diaz once called Kodakization (post in French). Kodak did not miss the digital revolution : they were even among the first to develop digital cameras. Pretty good ones in fact. But they failed on two things : going all in required a new business model and a new distribution network and they did not dare going this way.

Companies know what they leave, not what they will find. So Kodak decided to stay in its comfort zone rather than starting a journey with no way back. We know what happened. But contrary to common beliefs, Kodak got the digital thing but refused to pursue it to the end. Same for Sony than was harmed by iPod+iTunes not because of a lack of innovation, not because they did not have the products but because they did not want to disrupt their own business lines and have a new offering with a new business model threatening the revenue of their existing lines.

Taxization or the illusion that supply prevails over demand

The second disease is can be called Taxization and the sham we’ve recently seen in France is a perfect example (hence the name). What’s the difference between Uber and traditional taxi companies ? Nothing unbearable. Nothing that can’t be copied, duplicated. Excepted one thing : the vision of the market.

On the one side we have a customer centric approach : there’s a market of people wanting to move in such a way and it’s addressed. On the other side we have a product-centric vision : there’s a product that has been succesful in the past and the goal is to keep imposing it even if customers want something else now.

Taxization is a supply-centric policy that says that customers must do with what they’re being offered and don’t have a word to say. It’s the opposite of a customer-centric policy that aligns the supply with what the market requests. The taxization of business and customer relationship is to believe that the mediocrity of an offering once succesful but outdated today can be established as a legitimate model provided barriers provide new competitors to enter the market.

Strategy is not lead by the search of a competitive advantage in terms of experience but the desire to make the lowest standard prevail.

Uberization = lack of courage + contempt for customers

Uberization has two deep causes : the lack of courage and contempt for customers. It can’t be avoided through technology but new behaviors and corporate cultures.

Image Credit : Taxis Paris by P.Burghardt via Shutterstock