Emerging Transport Technologies

1.2.1.What is, and is not ‘disruptive innovation’?

In a recent article published in the Harvard Business Review, Christensen, Raynor, & McDonald (2015) note that Uber in its current form, which is very frequently held up as a disruptive technology in fact, at least according to the authors, falls outside Christensen’s original definition. One of the reasons why Uber does not meet the formal criteria to be classed as disruptive innovation is because it began as a more convenient alternative to a traditional taxi (disrupters usually begin as less convenient) and because, at least according to Christensen et al. (2015), Uber customers previously used traditional taxis. An important criterion for a disruptive innovation is that it creates a new market for a product or service. However, Christensen et al. do acknowledge that Uber represents a grey area and there are interpretations in which such technology could be seen as meeting the classical definition. Indeed Christensen has come under criticism recently for failing to modernise his theory to be able to grasp the fact that disrupters are emerging not from just other companies within the same sector, but completely different industries, with Uber and Tesla being cited as examples (e.g. see Wadhwa, 2015)

While there is some debate as to whether Uber strictly meets the criteria of a disruptive innovator for the traditional taxi industry, UberBlack², according to Christensen et al. (2015) does meet the criteria in relation to the limousine industry. This is because UberBlack provides a cheaper limousine-like service, and people use this service who were not previously regular limousine customers. Moreover, UberBlack does not provide advanced booking (i.e. less convenient), which the established limousine industry does. One could argue however that the same situation applies to UberX (low cost option), in the sense that it too does not provide advanced booking but traditional taxis do.

The taxi industry is highly regulated and Christensen et al. (2015) describe how this regulation has hampered innovation, which created fertile ground for Uber. This is pertinent to the Melbourne context:

Uber’s strong performance therefore warrants explanation. According to disruption theory, Uber is an outlier, and we do not have a universal way to account for such atypical outcomes. In Uber’s case, we believe that the regulated nature of the taxi business is a large part of the answer. Market entry and prices are closely controlled in many jurisdictions. Consequently, taxi companies have rarely innovated. Individual drivers have few ways to innovate, except to defect to Uber. So Uber is in a unique situation relative to taxis: It can offer better quality and the competition will find it hard to respond, at least in the short term.

In summary, it has become common for a broad range of transport technologies (i.e. App-based ride sourcing, electric vehicles etc.) to be labelled disruptive innovation but very often do not meet the definition according to the originator of the term. However, to best meet the aims of this report, a broader definition of disruptive innovation will be used, which includes ride sourcing services (e.g. Uber), autonomous vehicles, shared transport, app based multimodal journey planners, dynamic car pricing technology and peer-2-peer car parking technology platforms.

Therefore the term ‘disruptive’ in a wider sense and ‘emerging’ can be used interchangeably throughout this report, unless specifically defined.

1.2.2.Disruptive transport technologies (DTT)