Lessons learned from Uber’s latest power play
When Uber rolled out UberEATS, its newest offering, my project manager and I had to try it out, to be “early adopters” of this cool, new thing. The premise is straightforward: you can now have an Uber driver deliver lunch to your office for a $3 fee via the simple, cashless platform of the Uber app. But unlike other food ordering apps out there, UberEATS is offered only to limited parts of three cities – LA, Chicago and New York – and you can only order one pre-determined menu item from one of two restaurants. Even though we each had a positive first experience, we immediately started arguing about the controversial start-up’s intentions:
“Why would they start with such a limited menu?”
“What kind of value are they adding over GrubHub or Seamless?”
“Who would ever prefer to deliver food over driving people?!!!”
What we could agree on, however, was that Uber clearly would not settle for such limited magnitude – this could eventually be a huge part of their business! …And we immediately thought of our client, a leading US distributor of lubricant and petroleum products. The client, who has been actively acquiring smaller competitors over the past few years, is in the midst of a massive ERP integration project across its ‘legacy’ organizations. The critical decision they face at the moment is whether to roll out this new ERP instance in a ‘big bang’ – in other words, go live at the same time at every facility – or in a ‘phased’ approach, splitting up deployments by region over time.
Although the context is completely different, perhaps they can learn something from the ride-sharing / now-also-food-delivery app, which went with its version of a phased approach for its new big project1. The common denominator, however, is that before making the phased or big bang decision, you need to understand the business strategy that drives the decision.
After several years of aggressive M&A activity, our client envisions a future state in which core functions and processes are standardized and centralized across the greater organization. A robust, integrated ERP environment certainly validates this vision, since centralization is an inherent idea behind ERP. This integration project will ultimately provide a base for scalability in future acquisitions, setting the stage for continued growth.
Uber’s overarching strategy behind UberEATS appears to be market entry. Having an established infrastructure (i.e., drivers in cities all over the world and a single user interface) and being the leader of a fairly young, non-hyper-competitive taxi-replacement space, it decided to go with a pilot in three proven markets. If things go well, UberEATS will be available to other cities over time; if it fails, the company can quietly pull out of the market without too many battle wounds. On the flip side, had Uber gone with a big bang approach and failed, these wounds would have been deeper, both to its image and its investment budget.
So the question for our client is not really “phased or big bang?” – it’s really, “is the extra big bang effort worth the benefits of being centralized earlier, and more importantly, is it consistent with our overall strategy?” After all, a phased approach will also position the client to eventually centralize everything, but would be a calmer, less resource-intensive effort. It’s easy to say, “take it easy and go slow”,
but most companies can’t afford to take their time when there’s pressure to complete transformational initiatives or if competitive threats loom. Clearly, these types of decisions are not as simple as they seem on the surface.
So whether you’re a fast-moving mobile app getting its feet wet in a new market or an established market leader entering a new stratosphere of functional scalability, it’s important to step back and ask yourself, “what is really driving our project?”
Hint: No, it won’t be driving a Caesar Salad to the office. And no, it certainly won’t cost $3.
1This assume Uber plans to roll out UberEATS to other cities if successful