Managing Innovation in Business

This report explores the importance of managing innovation in business and focuses on the case of Uber. It examines the innovation history of the company, its existing innovation performance and capabilities, and the future of the transportation industry. The report highlights the challenges and opportunities faced by Uber and emphasizes the need for constant innovation to build a successful and profitable business.

Managing Innovation in
Business

Executive Summary
Innovation Management has become an important aspect for all companies operating in
different industries if they want to be successful and profitable. Transportation industry has
transformed drastically over the last 10 years and has changed the way in which used to travel
from one place to another. Uber is an international company that offers ride services to the
customers thereby helping towards securing the environment. The company has overcome many
challenges and issues by innovative its products and services according to the situation. It
continues to do so and aims to build a business that is sustainable as well as profitable.

Contents
Executive Summary...................................................................................................................................2
INTRODUCTION.....................................................................................................................................4
The Organization & Industry Overview..................................................................................................4
The Organization and its Innovation History...........................................................................................4
The Organizations existing Innovation Performance and Capabilities.....................................................5
The Industry in Future.............................................................................................................................7
CONCLUSION..........................................................................................................................................8
REFERENCES..........................................................................................................................................9
Appendix..................................................................................................................................................10

INTRODUCTION
Managing innovation can be defined as a process which is an integration of change
management and management of innovation processes. It is advantageous for a company as it
creates a sense of productivity as well as creativity within the organization (Aas, Jentoft and
Vasstrøm, 2016). Organization chosen for this report is Uber, which is an American international
company that offers services like ride-sharing, ride service, food delivery etc. The purpose of this
report is to examine the innovation history of the company, its present level of innovation
activities and innovation requirements for the future. The report provides an overview of the
company as well as the industry in which it operates.
The Organization & Industry Overview
The Organization and its Innovation History
Uber is an American international ride service provider that offers ride-sharing services,
food delivery etc. The company was founded in the year 2009 by Garrett Camp and Travis
Kalanick. The company has operations in nearly 785 metropolitan cities across the world and can
be accessed via its mobile applications and online website. Uber Technologies is headquartered
in San Francisco, California. The customers can connect with the drivers near to them and book a
ride. Uber offers rides in different kinds of vehicles like cars, motorbikes, auto rickshaws etc.
Uber was an innovative idea that was converted to business wherein people could easily book
rides through their smartphones (Biemans, 2018). The innovation history of the company is
explained below with the help of PESTEL analysis, which a tool used to identify the macro
environmental forces that act on an organization.
Political Factors – The United Kingdom is one of the powerful countries in the world
and is also politically stable. But Brexit created different uncertainties and other issues. It caused
an increase in the overall prices of the fuel as well as cars that impacted the operations of Uber
(How Brexit could affect the average UK driver and what it means for the motoring industry,
2020). The company coped up with this factor by continuing to serve the people through mobile
apps and targeting millennials.

Economic Factors – The UK is also economically stable is compared to other countries
and also has a high GDP. But the nation took a lot of time to recover from the 2008 recession.
The company was launched in 2009 to help people save money by booking rides and not
spending a lot of money. Since UK has a large population, the company was able to build a
profitable business even in the smaller markets.
Social Factors – Social factors are important and can impact any organization and people
living in the United Kingdom have high standards of living. And over the years Uber has
constantly innovated its products and services so as to cater to their needs in a more effective
manner (de Vasconcelos Gomes and et. al., 2018). The country has a high ratio of people in old
age group; thus, Uber came up with the innovation of partnering up with third party operators
who help senior citizens in booking their rides.
Technological Factors – The technological development in the UK is slow as compared
to the United States. To overcome the impact of these factors, Uber innovated its services by
offering customers an option to book their rides offline, i.e., without an internet connection.
Environmental Factors – Pollution from vehicles cause harm to the environment as
carbon is emitted. Thus, for this Uber innovated its technology and came up with the launch of
electric cabs in some parts of the world.
Legal Factors – While innovating its products, Uber has always followed all the legal
legislation and laws in order to carry out carry out its operations in an effective manner. Laws for
employee safety and usage laws are also followed.
The Organizations existing Innovation Performance and Capabilities
Uber has evolved very much from the time it was founded and a rapid growth in its
services has made the company gain a competitive advantage over its competitors today. The
company keeps innovating its products and services from time to time. Its greatest innovations
till date have been providing a superior experience to its users as well as a rating system wherein
the customers can rate their ride, the drivers and vice versa (Johnson, 2016). By innovating its
products and services to provide a seamless and hassle-free experience to the customers has led
to the company gaining the position of market leader. The existing innovation performance and
capabilities of the company are explained below with the help of SWOT analysis. SWOT is a

strategic tool that can be used by organizations as well as individuals to get an understanding
about their strengths, weaknesses, available opportunities as well as potential threats that can
impact their overall performance and productivity.
Strengths – Uber is a widely recognized company around the world and delivers a high
standard of service wherein the drivers as well as the cars are verified. The prices that are offered
are comparatively cheaper as compared to other taxi companies. The company values its
customers the most and thus keeps on innovating features of its products and services so as to
provide them a seamless experience. The riders have an option of either paying through cash or
effortlessly through their smartphones (Mir, Casadesús and Petnji, 2016). Uber Technologies is
presently considered one of the most innovative companies in terms of offering ride-sharing
services and providing the users an option of rating their experience with the driver. There is a
dual rating system to ensure safety which means that the driver can also rate the rider. Also, the
company has launched electric uber cars in some areas of its operation to enhance environment
awareness as well as making sure that the overall carbon emissions are reduced.
Weaknesses – Although the existing performance of the company is highly innovative,
there are still chances of its products and services getting imitated. This is because the business
model of the company is very appealing and the new entrants might copy the same. Therefore,
the company should come up with new features and other innovative ideas in its products. There
are privacy concerns as the company records where does a rider gets his/her uber from and where
do they go with it. Also, the company is heavily dependent on its employees and internet has not
been very advantageous for it because the behavior of drivers is not predictable (Möller and
Halinen, 2017). Other weakness of the company is that it is not connected with the customers as
they only book a ride and travel to their destination. The company does not make any extra
efforts to enhance relationship with the customers. Lastly, Uber Technologies also does not share
a very healthy bond with its drivers.
Opportunities – It is often seen that the customers have to wait for a long time when
they book a cab and the prices charged by the drivers are also high. Thus, Uber has an
opportunity to lower its prices as well as reduce the waiting time so that they are satisfied. The
company can also use electric cars that are cheap and can help in reducing overall costs as well
as the profit margin for the drivers can be increased (SWOT analysis for UBER, 2020). It can

also increase its service portfolio by adding services like transporting children to schools and
universities, patients to the hospitals etc. There is another opportunity to reduce the amount of
manual labor by introducing cars that are driverless that will have the company to gain a
competitive advantage against other players in the market. The company can also launch its
innovative logistics services for the convenience of the public as it does not have a shortage in
resources.
Threats – One of the potential threats that Uber Technologies can face is high pressure
from the competitors like Lyft, Curb etc. Due to increase in the competition, the customers have
an access to better options for rides that are priced less (Tidd and Bessant, 2018). This can pose a
threat as the customers might switch brands. As new drivers join the company, the threat of
scandals and fraud is also increasing which can impact the brand adversely. If self-driving cars
are launched, it will eliminate the people’s need for Uber cabs. Also, the drivers are not paid very
good salary, this can lead to dissatisfaction among them and they can switch to the competitors.
This will lead to a decline in the overall profitability and productivity of the company. Lastly, the
company also faces serious threat from small businesses that are new in the market and can copy
its business model by offering similar services to the customers at more affordable prices.
The Industry in Future
The transportation industry has enhanced overtime in a very fascinating way and it can be
said that the future of the industry is almost here. There have been major developments over the
last few years that have completely changed the way in which the industry functions. Self-
driving cars are one of the major developments that can enhance the way transportation take
place. Another innovation within the industry is that of autonomous vehicles etc. All such
innovations are contributing to the industry in a positive manner (Tsaih and Han, 2016). Uber
Technologies has grown as one of the market leaders in the industry by constantly innovating its
products and services. This has also contributed to its overall success in the market. The future
innovation requirements of the industry are described below with the help of Porter’s Five Forces
Model.
Threat of New Entrants – Although, Uber has been making profits in the industry, there
is still a threat of new entrants entering the market and offering similar services to the customers
at cheap and affordable rates. Also, it is not possible for uber to secure each and every

information about its business models from getting imitated. Therefore, the company can face a
huge threat from small businesses entering the market. This is a high degree force.
Threat of Substitutes – Ubers services have a threat of getting substituted by the
common transport industry. This is because cab/taxi services are common in all towns and cities.
Therefore, the company will have to adopt strategies and incorporate innovations in such a way
that this threat can be eliminated. This is because if there is a rise in the prices of uber, the
customers will switch to other transportation modes. This is a relatively weak force.
Bargaining Power of Suppliers – Uber Technologies is highly dependent upon suppliers
because it does not own any of the vehicles that are used by the drivers (Van Lancker, Wauters
and Van Huylenbroeck, 2016). The company outsources its cars and motorbikes from different
suppliers which means that the suppliers have a high power to bargain. This makes it a strong
force and the company should take care and maintain healthy relations with its suppliers at all
times so that any such threat can be eliminated in the future.
Bargaining Power of Buyers – The buyers are not permanent until and unless they
become loyal to the company. Also, with the number of options of transportation available to
them increasing day by day gives them an upper hand upon the company which means that this
is also a strong force.
Competitive Rivalry – Uber operates in a highly competitive market as there are many
businesses that provide similar services to the customers like Lyft, Grab, Ola etc. Different
competitors of the company compete of different aspects (Winterhalter, Zeschky and Gassmann,
2016). This is a strong force and thus Uber should come up with strategies to overcome the same
in the future.
CONCLUSION
From the above report, it can be concluded that innovation plays an important role in
helping an organization in overcoming various challenges and gaining a competitive edge against
other brands in the market. Transportation industry has completely enhanced in a fascinating way
through various developments and constant innovations. Although, companies that operate in
this industry face a lot of challenges, they still keep on innovating their products and services so
as to retain their customers and provide them with a seamless experience so that they do not

switch to their competitors. Therefore, innovation should be kept constant to build a business that
is profitable and successful.

REFERENCES
Books & Journals
Aas, T. H., Jentoft, N. and Vasstrøm, M., 2016. Managing innovation of care services: An
exploration of Norwegian municipalities. Cogent Business & Management. 3(1).
p.1215762.
Biemans, W., 2018. Managing innovation within networks (Vol. 7). Routledge.
de Vasconcelos Gomes, L. A. and et. al., 2018. Unpacking the innovation ecosystem construct:
Evolution, gaps and trends. Technological Forecasting and Social Change. 136. pp.30-
48.
Johnson, G., 2016. Exploring strategy: text and cases. Pearson Education.
Mir, M., Casadesús, M. and Petnji, L. H., 2016. The impact of standardized innovation
management systems on innovation capability and business performance: An empirical
study. Journal of Engineering and Technology Management. 41. pp.26-44.
Möller, K. and Halinen, A., 2017. Managing business and innovation networks—From strategic
nets to business fields and ecosystems. Industrial Marketing Management. 67. pp.5-22.
Tidd, J. and Bessant, J. R., 2018. Managing innovation: integrating technological, market and
organizational change. John Wiley & Sons.
Tsaih, R. H. and Han, T. S. eds., 2016. Managing Innovation and Cultural Management in the
Digital Era: The Case of the National Palace Museum. Routledge.
Van Lancker, J., Wauters, E. and Van Huylenbroeck, G., 2016. Managing innovation in the
bioeconomy: An open innovation perspective. Biomass and Bioenergy. 90. pp.60-69.
Winterhalter, S., Zeschky, M. B. and Gassmann, O., 2016. Managing dual business models in
emerging markets: an ambidexterity perspective. R&D Management. 46(3). pp.464-479.
Online
How Brexit could affect the average UK driver and what it means for the motoring industry.
2020. [Online]. Available through:< https://www.thesun.co.uk/motors/3213635/how-
brexit-could-affect-the-average-uk-driver-and-what-it-means-for-the-motoring-industry/
>.
SWOT analysis for UBER. 2020. [Online]. Available through:< https://pestleanalysis.com/swot-
analysis-for-uber/ >.

Appendix
Strengths
 Widely recognized company
 High standard of service
 Prices are comparatively cheaper
 Company values its customers
 Option of either paying through cash
or smartphones
 Dual rating system
 Launch of electric cars
Weaknesses
 Imitation of products and services
 Privacy concerns
 Heavily dependent on its employees
and internet
 Poor connection with the customers
and the drivers
Opportunities
 Reduce prices and the waiting time
 Usage of cheap electric
 Enhance service portfolio
 Introduce driverless cars
 Launch innovative logistics services
Threats
 Intense competition
 Customers have an access to better
options
 Threat of scandals and fraud
 self-driving cars will eliminate the
people’s need for Uber cabs
 Dissatisfaction among drivers
 Threat from small businesses