I had previously written a blog post called ‘How to be strategic’. I think when executives ask PMs to be more strategic, they are mostly referring to the content mentioned in the post.

Let’s talk about how to be strategic when it comes to building a moat by doing things that are hard for competitors to copy.

For a ride-hailing company, being strategic means:

  1. Structurally lower prices that can’t be easily copied by competitors. A good example of this is electric vehicles. Let’s say you have a way of producing bespoke electric vehicles for ride-hailing that cuts operating costs by 10%. And you lock those suppliers into long-term contracts and your competitors can’t buy those vehicles. This means that instead of relying on demand spending (through vouchers or subscriptions). You have a way of offering rides that is far more attractive to your customers. And the only way they can match your price is by subsidising rides and cutting into their margins.
  2. Every time you can reduce prices (say by 5, 10, 20%), you unlock the next level of economy customers. A good strategy exercise is to ask yourself which new customer segment you are attracting with each 5% price reduction. Eventually, you will even be able to compete with public transport.
  3. Winning public transport. The office commute is one of the biggest use cases for ride-hailing. A commute has 3 legs: First mile, middle mile, last mile. What if there was a way to bundle all the legs into a single booking? This is what a South East Asian Super App (SEASA) offers. They are the only company in the world that lets you book your first mile (bike), middle mile (train) and last mile (bike). As a user, you can choose which service you want for each stage. In this way, the app is top of mind for users with long commutes. This requires long-term thinking. The process needs to be seamless. You need parking near transit stations. You need brand visibility on the ground. You need directions to the car park. You need queuing systems if you want to have instant booking (like Bengaluru airport).
  4. Partnerships. A good long term bet is to partner exclusively with all middle mile providers, so that SEASA would win the commute and the competition can’t follow. Over time, they would also win inter-city use cases. If you travel inter-city and book the middle mile with SEASA, then you would probably book the first and last mile too if you get a good bundled price.
  5. Dominating popular locations. If weekdays are for commuting to the office, then weekends are for going to the mall. Do you have relationships with shopping centres so you can own parking spaces? Do you have instant booking where a customer can simply queue and get into the next available car by sharing an OTP?
  6. Locking supply. Namma and Rapido showed that in a supply-constrained market, demand follows supply, not the other way around. The conventional wisdom has always been that the most important thing in a market is to capture demand. That is why Uber and Ola spent years marketing to users (demand). While Namma and Rapido just decided to disrupt the market by changing the business model of ride-hailing (instead of a fixed commission structure, a flat fee per trip or a daily/monthly subscription). Uber, being a public company and having spent years acquiring demand and supply, find it hard to get go of it’s margins.
  7. Moving fast. It used to take 6 months to launch a new product at SEASA. Then someone (guess who) led a year-long project to reduce the launch time to 2 weeks. Instead of treating every new launch as a big mega-project, launching a new service became a small experiment. Need a new service for electric cars only? Sure, just tag relevant vehicles as electric and launch it. Responding to competition and experimenting with new services became trivial over time. Sometimes you have to go slow to go fast.
  8. Owning maps. You can have the best location data. Data on all points of interest (POIs), and also gates at POIs. If a customer wants to go to Nexus Mall, can they choose the right gate? Can you provide detailed directions with pictures.
  9. Locking key user segments. A price-conscious commuter would probably want more reliability on pricing. Lyft now has price lock, which locks prices on pre-defined routes at fixed times. A dual-apper (a person who uses both Lyft and Uber) used to compare both apps and make a trade-off between price and ETA. Price lock ensures they don’t even open Uber. A business user, once onboarded with a ride-hailing app for business trips, would also use it for personal trips. They have more money overall, but even better: for the business rides, they are price insensitive because the company pays for the ride. They would earn points that they could also use for their personal journeys. This means that all ride-hailing apps must also have a B2B business. Forget ride-hailing, you can see how Zomato has launched its B2B product. Lyft has a service that connects women riders with women drivers.
  10. Ability to try multiple allocation strategy. Haggling, boosting/tipping, nearest driver, optimal driver, sequential allocation, multi blast to a wide pool of drivers, pooling: A ride-hailing app needs to be able to play around with allocation strategies and run multiple strategies based on segment and region.
  11. Establising overnment relationships. Uber works with airport authorities around the world to provide the best airport experience. For ride-hailing companies, airport trips represent a significant percentage of their GTV (high AOV trips). Uber has even started offering flight bookings in the UK to win multi-modal (all legs) trips.

A few other points: Could Zomato or Swiggy have acquired Yulu and locked in this type of vehicle for short term deliveries? Can Rapido build a relationship with transit stations to allow their bikes to be parked near stations? Can they work with the government to get friendlier regulations for 2W?