Disruptor, Disrupted

Disruptor, Disrupted

How Uber went from a buzzy global darling to the disruptor everyone loves to hate.

Having a disruptive technology or business model should be a good thing and oftentimes it is. Having a real point of differentiation or unique selling proposition is what all marketers hope for, but sometimes even having a game changer can backfire. And even though the term “game changer” is used way too frequently in business today, there are instances when in truly does apply, like in the case of Uber.

Everybody is familiar with Uber, the smartphone-based car service started by Silicon Valley’s latest bad boy, Travis Kalanick. Now valued at more than $18 billion, the idea for Uber came about, as many new ideas do, when Kalanick and his friend Garrett Camp channeled their frustration at not being able to find a cab on a snowy night in Paris. Wouldn’t it be great to push a button on your smartphone for an app that would utilize GPS to contact a car in your immediate vicinity and have it pick you up? And for entrepreneurial drivers—who can make upwards of $90,000 annually in some cities—it beats driving a regular cab.

Some people are even using the company name as a verb, like “I Ubered back and forth to the party Friday night.” Pretty much one of the great marketing success stories of the decade, right? Well, not so fast.

Uber is also destined to be one of the great public relations case histories of the decade as well—in terms of what not to do. It’s an example of a terrific disruption strategy that is being poorly executed, and—in the era of instantaneous communication via social media—how a company can go from hero to zero overnight.

Take, for example, the recent tactics of Uber in Sydney, Australia. Back in December the service jacked up prices during a hostage crisis in downtown Sydney, so-called “surge pricing.” The company actually tweeted, “We are all concerned with events in CBD (central business district). Fares have increased to encourage drivers to come online & pick up passengers in the area.”

How companies think they can get away with capitalizing on human tragedy is beyond me, but they do, and in this case it evoked a predictable response—people were outraged and Uber’s already tattered reputation took a hit.

The company responded by offering free rides, but the damage had already been done and added to the list of missteps.

On the same day as the Sydney disaster, the French government banned Uber’s discount UberPop service because its drivers do not have professional licenses and now face a fine of more than $350,000 and two years in prison if they operate without one.

In the arrogance that the company has been come to be known for, Uber said it would continue to operate the business until a formal ruling was issued by a judge explicitly stating that the law applied to them.

In India, Uber was banned from doing business when a driver was accused of raping a passenger. In New York City, an Uber driver took a passenger on a ride three times the distance it should have been and charged the passenger $293, which the rider didn’t discover until the next day, since Uber charges your credit card after you use the service. Also in New York, an Uber driver told a cancer patient that she deserved to be sick when she cancelled a ride after she left a personal item in the treatment facility and had to retrieve it.

It’s not only drivers getting Uber in hot water. One executive was publicly outed over his plan to dig up dirt on journalists who generated negative publicity for the company—which of course just generated more negative publicity.

Things have gotten so bad that the company hired the guy credited with the masterful 2008 Obama campaign, David Plouffe, who unbelievably stated that he didn’t think Uber had an image problem.

One thing Plouffe said that did make sense was his comment “When you are a disruptor you’re going to have a lot of people throwing arrows.” True. But when you’re a disruptor that is also aggressively arrogant, you’re ultimately going to lose trust and share of market.

There was a quote on the wall of an agency I once worked for that said something like, “Man may dream in a universe of strategies, but he awakes to a world that turns on tactics.” That’s a great reminder that the most creative and disruptive marketing ideas can backfire if they’re poorly executed, and the business landscape is littered with examples. Marketers make über-errors falling in love with a disruptive idea and not paying enough attention to what happens after the disruption. It’s a mistake made at their own peril.

Glenn Karwoski (g.karwoski@creativepr.com) is founder and managing director of Karwoski & Courage, a marketing communications agency. He also teaches in the graduate school at the Opus College of Business at the University of St. Thomas.

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