Why Uber is the “Domino’s Pizza” of the Taxi industry

A lot has been said about Uber’s success, the company that swiftly became the dominant force in the global taxi and car service industry, raising over billions in capital and earning a staggering valuation of US$50 Billion. A great success story. But really, what’s so special about Uber?

Well, for one thing, Uber didn’t “disrupt” the taxi industry.

Say who?
Professor Clayton Christensen of the Harvard Business School and author of “The Innovator’s Dilemma”, who conceived the widely used (and often misused) concept of “disruptive innovation”. He explains that since Disruptive innovations originate in low-end or new-market footholds. Uber was launched in San Francisco (a well-served taxi market), and Uber’s customers were generally people already in the habit of hiring rides. Hence, Uber is not a “disruptive innovation”. 
 (For the full article: https://hbr.org/2015/12/what-is-disruptive-innovation).

So what explains Uber’s success? Perhaps an analogy, albeit an incomplete one.

The world most successful pizza delivery company, Domino’s Pizza, has started, similarly to Uber, in a well-served market (Chicago). It focused on just one element of the Pizza market — the delivery, which most pizza restaurant considered another way of making some extra profit by leveraging existing resources.

The product delivered by Domino’s Pizza was typically inferior in quality, because the founder, Tom Monaghan, found out while delivering pizza himself, that the certainty that the pizza will arrive within 30 minutes to the customer, is far more important than making a great pizza with the best (and expensive) ingredients. By the time people receive their pizza, they are so hungry that almost anything will taste good.
This is why a company that sells a mediocre pizza, with a very low food cost, while charging premium prices can still be the market leader.

Both Uber and Domino’s Pizza show us that great companies do not have to be the ones with the best product or the lowest prices. You do not have to have the best customer journey or experience, either. 
 While Domino’s gave customers certainty that their pizza will arrive within 30 minutes, Uber gave customers the certainty that the taxi will arrive on time, and that it won’t smell funky and the driver will be courteous.

Understanding the true emotional need of the customers was a key success factor, in this case certainty.

In both cases, this certainty enabled Uber and Dominos to control the access to the resources (Taxi cabs and Domino’s Franchises) and leverage their resources for explosive growth.

Neither Uber nor Domino’s disrupted their industries — but they became the dominant forces in them, nevertheless.