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Uber protests teach lean

Uber protest

The Uber protests teach lean lessons to us all. The moves and waves that Uber is making with their disruptive innovation are important to learn from in our own change initiatives.

Capacity shifting

The idea of shifting capacity is one that happens all the time in order to improve a process. When you see a part of a process that is limited (a bottleneck) you work to either make it more efficient or add capacity. Adding a technology improvement may do both, which is the alluring part of buying new technology. In the case of Uber, their innovation opens up a ton of capacity that is less expensive. It is natural that shifting capacity to the more available and less expensive option is the first pick for most decisions to fulfill the need, in this case getting a cab.

How often have do we hobble our own change initiatives imposing control and regulation to keep the status quo?

Uber’s move in particular is a great solution to highly variable processes. Many goods and services, especially those of small and medium firms, offer more options to their customers. This tends to make lean manufacturing difficult to execute because the value transforming work tends to become uneven (mura – unevenness). Basic lean implementations focus on waste (muda) which is a good start but the assumption is that demand is stable and repeatable. Most firms today make this assumption and wonder why lean is so hard or doesn’t work, when their base assumption is invalid.

Free capacity equals profits

So if the time it takes to deliver value (make the good or deliver the service) is highly variable (greater than 40% is the rule of thumb) for each deliverable, then your use of lean has to be more sophisticated to deliver on it’s promise of making things more efficient and better. The limit here is a limit on FREE capacity. Most firms want to have high utilization of assets and staff (low free capacity) as a measure of efficiency because the assets are being used to make money as much of the time as possible. This is the same as the taxi system: on-demand, highly variable duration of service, and high utilization of assets (cabs and drivers) to make money. Uber disrupts this by adding a ton of capacity to the system which greatly increases the free capacity AND total capacity. On demand value creation for the customer increases and the customers are willing to pay for the on-demand aspect.

Uber is only successful at the moment as long as they bypass the expensive regulation. How often have do we hobble our own change initiatives imposing control and regulation to keep the status quo? Why do we impose the old rules on something new trying to make it conform? What use is it to have something new while trying to make it behave like the current state? Frankly, management all too often looks like the governments that are against Uber on the basis of current regulations while at the same time wanting tax revenue (sales or income) from the explosion of a successful innovation. This need not be. With a little insight and additional sophistication, much of the pain can be bypassed or at least lessened.

Russell Lindquist

Author Russell Lindquist

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