{"id":17251,"date":"2016-11-18T01:17:54","date_gmt":"2016-11-18T06:17:54","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/hbs-grad-reinvents-uber-indonesia-style\/"},"modified":"2016-11-18T01:23:39","modified_gmt":"2016-11-18T06:23:39","slug":"hbs-grad-reinvents-uber-indonesia-style","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/hbs-grad-reinvents-uber-indonesia-style\/","title":{"rendered":"HBS grad reinvents Uber, \u2018Indonesia-style\u2019"},"content":{"rendered":"<p>In 2015, Jakarta, Indonesia topped the list of the world\u2019s worst traffic. Problems with congestion are nothing new for the nation\u2019s capital \u2013 the city has suffered from frequent gridlock ever since the nation\u2019s founding president, Sukarno, paved over the city\u2019s tracks with asphalt (the tracks were seen as an unwanted remnant from Dutch-era colonialism) [1,2].\u00a0 Since that time, traffic has caused a number of logistical and economic problems for the city. In fact, studies show traffic jams create upwards of Rp 65 trillion (US$5 billion) in losses each year [3].<\/p>\n<p>Enter Nadiem Makarim (HBS 2011). During business school, the Indonesian native recalled the troubling, 3-4 hour commutes that he would often endure in and around the city.\u00a0When\u00a0Nadiem wanted to cut traffic time substantially, his best option was to take a motorcycle taxi, called an \u201cojek.\u201d These two-wheelers are the preferred form of travel throughout the entire nation, and were particularly desirable in Jakarta, where the ability to weave in and out of traffic could safe hours. The services are\u00a0so popular that there are more motorcycle taxis in Jakarta than taxis [4].<\/p>\n<p>Nadiem reasoned that the current ojek market, while ubiquitous, was plagued by three main problems. First, ojek supply and demand were nearly impossible to match \u2013 not only because customers often had no idea where drivers sat idly parked, but also because drivers had little information about where and when passenger demand was highest. Second, there was extremely high idle time for drivers &#8211; according to later studies conducted by Makarim, 75% of an ojek driver\u2019s time was spent waiting with large crowds of fellow ojek drivers, taking turns driving passengers on an \u201chonor system.\u201d Third, many riders expressed a sense of mistrust of ojek drivers. Numerous instances of \u201cbait and switch\u201d pricing had been reported. Driver credibility was often impossible to establish, as was price fairness and general safety [4].<\/p>\n<p><a href=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/2a-1.png\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-17260 aligncenter\" src=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/2a-1-300x144.png\" alt=\"2a\" width=\"352\" height=\"169\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/2a-1-300x144.png 300w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/2a-1-768x369.png 768w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/2a-1-600x288.png 600w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/2a-1.png 824w\" sizes=\"auto, (max-width: 352px) 100vw, 352px\" \/><\/a><\/p>\n<p style=\"text-align: center\">Fig 1: Rush-hour in Jakarta<\/p>\n<p style=\"text-align: left\"><em><span style=\"text-decoration: underline\"><strong>GoJek is Value Creation<\/strong><\/span><\/em><\/p>\n<p>The solution to this problem was a \u201cmobile app with a social mission\u201d [5]. GoJek (which was first prototyped at HBS) connects reliable ojek drivers with a network of users. These users can request drivers not only for transport, but also for courier and delivery services.\u00a0 At its core, this operating model is similar to most other ride-sharing apps\u2013 a robust technology platform connects pre-screened drivers with passengers in a manner that best matches supply and demand, leads to better price transparency, and recognizes synergies through the network effect. However, GoJek deserves special recognition for two main reasons \u2013 the first is that his is one of the two ride-sharing apps on <em>two wheels<\/em> \u2013 in Indonesia\u2019s congested cities, two wheels are simply faster than four.\u00a0 Second, there are even fewer two-wheeled ride-sharing apps that are based in Indonesia. In a country with lots of national pride, this fact is particularly important, and is something that Makarim has leveraged in numerous marketing pitches [4,5].<\/p>\n<p>As a business model, these efficiencies led to genuine value creation. Perhaps the most significant example is the increase in women passengers. While many women reported that they were previously wary of motorcycle taxis due to trust issues surrounding price and driver behavior, GoJek offered a more \u2018official,\u2019 legitimized option. In this sense, GoJek did not need to steal customers from competitors to recognize value \u2013 instead, it created demand where none previously existed [3].<\/p>\n<p>&nbsp;<\/p>\n<p><a href=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/2-18.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-17264 aligncenter\" src=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/2-18.png\" alt=\"2\" width=\"574\" height=\"319\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/2-18.png 758w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/2-18-300x167.png 300w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/2-18-600x333.png 600w\" sizes=\"auto, (max-width: 574px) 100vw, 574px\" \/><\/a><\/p>\n<p style=\"text-align: center\">Fig 2: GoJek User Interface<\/p>\n<p>&nbsp;<\/p>\n<p><strong><em><u>Future challenges:<\/u><\/em><\/strong><\/p>\n<p><strong><em>Competition<\/em><\/strong>: \u00a0This is the primary challenge GoJek faces moving forward. While the mode of transportation certainly differentiates GoJek from Uber, the technology platform does not. Domestic competition is heavy as well &#8211; competitor companies like Grab Bike (started by Nadiem\u2019s close friend at HBS, Anthony Tan) have made it difficult for Go-Jek to maintain a consistently competitive market share [6].<\/p>\n<p><strong><em>Pushback from traditional \u201cojeks\u201d and leading taxi companies: <\/em><\/strong>Since GoJek\u2019s inception, reports have emerged about bad blood between ojek \u2018loyalists\u2019 and traditional taxi services on one side and GoJek \u2018converts\u2019 on the other. Street protests against ride-sharing apps have grown\u00a0common, and occasionally, things have turned violent. However, in May 2016, GoJek announced a strategic partnership with the nation\u2019s largest taxi company (BlueBird), suggesting that new synergies are possible [7].<\/p>\n<p><a href=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/3-13.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-17265 aligncenter\" src=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/3-13.png\" alt=\"3\" width=\"669\" height=\"376\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/3-13.png 975w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/3-13-300x169.png 300w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/3-13-768x432.png 768w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/3-13-600x337.png 600w\" sizes=\"auto, (max-width: 669px) 100vw, 669px\" \/><\/a><\/p>\n<p style=\"text-align: center\">Fig 3: From HBS Friends to\u00a0Rival Competitors<\/p>\n<p><strong><em><u>A Step in the Right Direction<\/u><\/em><\/strong><\/p>\n<p>Armed with an operational model that creates real value and a brand that is uniquely \u201cIndonesian,\u201d Makarim\u2019s GoJek looks determined to win the battle his government cannot. And although adding motorcycles to the road is far from the long-term, infrastructure-based solution the country needs, one cannot deny the incredible cost and time savings that this simple ride sharing app has gifted Jakarta in its short lifetime.<\/p>\n<p>[783 Words]<\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"text-decoration: underline\"><strong>Works Cited<\/strong><\/span><\/p>\n<p>[1] Cochrane, Joe. \u201cGridlocked Jakarta Becomes Even Worse at Least for a Week.\u201d http:\/\/www.nytimes.com\/2016\/04\/11\/world\/asia\/gridlocked-jakarta-becomes-even-worse-at-least-for-a-week.html. \u00a0The New York Times, 11 Apr 2016. [Accessed 17 November 2016].<\/p>\n<p>[2] Time Magazine, \u201cWorst Cities Traffic Jams\u201d [ONLINE] Available at http:\/\/time.com\/3695068\/worst-cities-traffic-jams\/ [Accessed 17 November 2016].<\/p>\n<p>[3] The Jakarta Post, 05\/23\/2015: \u201cJakarta Traffic Jams Cause Rp 65 Trillion Losses\u201d [ONLINE] Available at: http:\/\/www.thejakartapost.com\/news\/2015\/05\/23\/greater-jakarta-jakarta-traffic-jams-cause-rp-65-trillion-losses.html [Accessed 17 November 2016].<\/p>\n<p>[4] TechinAsia. 2016. Go Jek in the Ride Hailing War. [ONLINE] Available at: https:\/\/www.techinasia.com\/go-jek-in-the-ride-hailing-war. [Accessed 17 November 2016].<\/p>\n<p>[5] TechinAsia. 2016. Go Jek Go Car. [ONLINE] Available at: https:\/\/www.techinasia.com\/go-jek-go-car [Accessed 17 November 2016].<\/p>\n<p>[6] HBS Alumni Stories: \u201cThe Taxi Wars of Jakarta\u201d [ONLINE] Available at: https:\/\/www.alumni.hbs.edu\/stories\/Pages\/story-impact.aspx?num=5779 [Accessed 17 November 2016].<\/p>\n<p>[7] TechinAsia. 2016. Go Jek Teams up with Bluebird. [ONLINE] Available at: https:\/\/www.techinasia.com\/go-jek-teams-up-with-blue-bird [Accessed 17 November 2016].<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>How does ride-sharing survive in the world\u2019s worst traffic? On two wheels!<\/p>\n","protected":false},"author":2203,"featured_media":17252,"comment_status":"open","ping_status":"closed","template":"","categories":[1030,1281,2476,2274,2221],"class_list":["post-17251","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-gojek","category-indonesia","category-jakarta","category-ride-sharing-uncategorized","category-traffic"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/digitization-challenge-2016\/","yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>HBS grad reinvents Uber, \u2018Indonesia-style\u2019 - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/hbs-grad-reinvents-uber-indonesia-style\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"HBS grad reinvents Uber, \u2018Indonesia-style\u2019 - Technology and Operations Management\" \/>\n<meta property=\"og:description\" content=\"How does ride-sharing survive in the world\u2019s worst traffic? 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