Five Billion Uber Rides Reached In 2017

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(Preet) #1

Uber reached a total of 5 billion rides in 2017, of which 1 billion was performed just in 2017. Uber COO, Barney Hartford, wants to go beyond a billion rides a year and reduce the overheads while streamlining operations.

Harford is Uber's first COO and was until recently CEO of Orbitz. He faces a great challenge as he prepares Uber for their 2019 IPO. To do that, Harford has to increase productivity while reducing waste and overheads. Working together with Uber's executive team, Harford is no stranger to change and challenge.

Uber's CEO, Dara Khosrowshahi brought Harford in based on a working relationship they had at Expedia. His first task is to tackle the management mess and create a more efficient executive delivery model. This means matching expectancy to demand and making all the executive offices work together in synchronicity. It's not enough to market Uber into global domination if you cannot back up the promises with results. This means that Harford has to balance the marketing budget between global marketing, driver incentives, and customer support. His challenge is even more interesting when considering the growth in losses alongside the increase in productivity. Uber posted net losses of $1.36bn for the third quarter, which is a significant increase from their $1.06bn in the second quarter last year.

Harford is not into making false promises, and stated: "I think you should expect to see over the course of the next 12 months that we'll evolve that mix and the strategy that we use within the way we allocate those investments for sure."

What Harford is telling us is that unlike before, when money was shunted about like sacks of sand, he intends to analyze the efficiency of every dollar spent. He has to find the balance between efficient passenger fee's and driver payment schemes that will keep drivers and customers happy, and maintain a market edge over their competition. At the end of the day, Uber is facing Lyft, Didi Grab, Ola and Taxify and the only reason each company is successful are due to their cost-efficient service that will make their customers dedicated and loyal.

With driver incentives under review, Harford must also look at standard marketing costs that include TV, internet, and paper. Uber has to retain market image dominance and must also convert their bad image into a new one. The extra costs needed to persuade millions of customers that Uber is different and is being led by Ubers Chief Brand Officer, Bozoma Saint John. We expect that Harford and Saint John will be working closely together to find the right marketing mix for maximum dollar spend efficiency.

Harford's told the press that "What I want to focus on is creating a culture of efficiency, a zero-defect culture," he said, "because it solves multiple things. One, it reduces costs. Two, it creates a much more enhanced experience for our customers — for our riders, our drivers, for our restaurants."

If you thought customer support services were hard for an average sized company, then consider how vast and efficient it has to be when handling 75 million rides a month given by 3 million drivers. It means that they handle 15 million rides a day! Customer support has to be prepared to deal with potentially, millions of complaints each day.

Reaching zero-defects means that Harford has to address critical mass issues and he has to create a competent preventative system that will generate minimum complaints. It is an impossible task since you will always have a complaint filed when dealing with large numbers. However, the closer you reach zero complaints the less hassle you have to handle and the more efficient and enjoyable your service becomes. Risk management and operations go hand in hand to develop what-if scenes and then create alternatives that will negate the what if. By performing millions of what ifs, and adjusting the operations accordingly, Harford will be able to reduce handling times of issues as well a raise overall efficiency that in turn reduces cost. This cost reduction frees up funds that would usually be swallowed up in an inefficient system.

As Harford stated "Nobody wants to have to chat with an agent or talk to an agent. They'd prefer the problem not happen in the first place." Apart from customer support, one of Uber's main issues was dealing with irate drivers. With a 50% turnover of new drivers replacing old ones on a yearly basis, Uber's handling of drivers was less than satisfactory. The main reason is the "independent contractor" status that drivers have since the rideshare industry was built. Upon the concept of car owners driving part-time for Uber, the model does not allow for employee status. This is why Harford is expected to concentrate on the rideshare side of the business, trying to streamline it and create a better relationship between driver and rider so that it can be presented as an efficient model for the 2019 IPO.

For other operational excellence, Harford told the press that "At Eats, we have a great leader in Jason, he has full-stack responsibility for both business but also product and engineering. My goal here is to make sure we don't distract that business; it's in a phenomenal hyper-growth mode right now." Which means he won't fix something that isn't broken.