Short Answer Questions Derived From RIDE Case

Question:

Imagine you are part of the Business Development team at RIDE assigned the task of making a recommendation to Senior Management regarding moving to an autonomous (driverless) car model. As a veteran of Z596 you know well that many new venture initiatives fail -- and often because of biased decision making. Drawing on your decision- making simulation and class debrief, identify how one of the biases surfaced in that simulation could significantly affect the decisions of your team at RIDE and describe how might you try to mitigate or counteract the effects of that bias.

Appendix

RIDE: A STAKEHOLDER ANALYSIS IN THE AGE OF DRIVERLESS CARS.

You are an entrepreneur, and about 6 years ago you launched your most successful business venture: a ride-sharing service called Ride that is currently available in more than 400 cities across the United States. Two years ago the company went public amidst much fanfare, but share prices have leveled-off. Ride contracts with over 35,000 drivers each month. Drivers work as often as they wish and set their own hours. Drivers use their own cars and decide their own hours. Passengers use a smart phone application (the Ride app) to request a ride and Ride drivers in the area use the same app to accept their request.

Typically, drivers make $20 an hour in fares. With maintenance, insurance, and gas factored in, most drivers net $10 an hour. According to Rides internal records, 40% of its drivers are driving as a second job to help make ends meet, while 27% rely on Ride as their primary income. Approximately 33% of Rides drivers are working to finance their education. Rides drivers are extremely loyal and most stay with the company for many years.

One example of a Ride driver is Amelia Maher, a single mother of two who began driving when she was laid off from her job during the recession. Driving for Ride was one of the few jobs that could allow her to work during the hours her children were in school so that she would not have to pay for daycare and could stay home when they were sick. She has been with the company for nearly five years now and her loyalty has not wavered.

Another such driver is William Bednarz. William drives for a few hours each day before his night shift as a janitor at the local high school begins. He first began driving when his daughter was applying to college and he realized how expensive the next few years would be. Driving for Ride helped William pay for her college experience and even after she graduated, he continued to drive because he enjoys meeting new and interesting people.

To stay ahead of competition from Uber, Lyft, and other upstarts, Ride needs a new path to guarantee its success, growth, and competitive edge into the future. Shareholders seem restless. You must think long term. Recently you learned that the Institute of Electrical and Electronics Engineers predicts that by 2040, 75% of the vehicles on the road will be autonomous. You are wondering about the pros and cons of Ride moving to a driver-less business model. On one hand, it would require an enormous amount of capital to purchase fleets of autonomous vehicles, but after the initial major expense the cars would only require routine maintenance and could work 24/7/365 without ever taking bathroom breaks. Plus, such a bold move would remove the most expensive element of Rides current cost structure: drivers. Furthermore, in the transitionary period, to avoid capital expenditures on autonomous vehicles, you are cautiously optimistic that an autonomous vehicle rental option may develop in the market, avoiding the need for Ride to buy the vehicles.

Currently, there are a few major autonomous vehicle manufacturers competing with each other to control the marketplace. Most of the manufacturers compete on production efficiency to be able to supply the market in the most cost-competitive way. Because these cars are completely autonomous, these companies have had to make difficult decisions concerning how the car is programmed to deal with potentially dangerous situations. For example, some companies are programming their cars to protect the passengers as a first priority, even if it means risking the lives of those outside of the car; while other manufacturers are taking the opposite approach and programming their cars to protect those outside the car, even at the expense of the passengers. New laws havent been passed to address all these issues, so first movers are taking significant legal and ethical risks with regard to allocation of potentially deadly accidental harm. Where you choose to focus your operations may impact your choice over programmed safety features: for example urban center versus suburban service. This target customer may impact your ride-service pricing model as well. You are getting very sophisticated in your data collection and analytics, and are spotting more and more opportunities for customizing prices across customer segments. Clearly some riders have willingness to pay for your services that exceeds the willingness to pay from others.

You must develop a plan to ensure the long-term growth, competitive strength, and continued success of Ride, including a decision about whether Ride should adopt an autonomous car strategy. Your plan requires consideration of a variety of business factors, technological challenges, legal concerns, ethical values, public policy implications, and other corporate responsibilities. This is going to be tough.