What is the innovative business model of Uber?

It has determined apps for both riders and drivers following an 'X' algorithm to connect both of them. Uber doesn't own any vehicles; instead, it charges a 25% commission from each booking. It also has a dynamic pricing structure based on the supply and demand during bookings.



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By developing a mobile app that directly connects riders with drivers, Uber created a new business model that leveraged technology to disrupt the pre-existing market.

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Business model innovation, then, describes the process in which an organization adjusts its business model. Often, this innovation reflects a fundamental change in how a company delivers value to its customers, whether that's through the development of new revenue streams or distribution channels.

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But Uber, true to its nature as a sustaining innovation, has focused on expanding its network and functionality in ways that make it better than traditional taxis. Apple, on the other hand, has followed a disruptive path by building its ecosystem of app developers so as to make the iPhone more like a personal computer.

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In order for this theory to have power and be used as an analytical and predictive model, it needs to be precisely defined. Christensen, for example, argued that Uber is not a disruptive innovator according to his definition. It fails to meet two requirements, in that it did not start in a low-end or new market.

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The Uber example, provided above, is an excellent case of a disruptive innovation strategy that payed off big. Since it's generally a complex, lengthy process, with big ups and downs, the criteria used to evaluate a radical idea should not be the same as those applied to incremental innovations.

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