Embracing Solutions-Driven Innovation to Address Institutional Voids: The Case of Uber and the Middle of the Pyramid

The Nature of Disruptive versus Solutions-Driven Innovation

The term “disruptive innovation” was first coined by Clayton Christensen in his seminal work The Innovator’s Dilemma in 1997. ¹⁴ He defined disruptive innovation as “an innovation that transforms an existing market or sector by introducing simplicity, convenience, accessibility and affordability where complication and high cost have become the status quo—eventually redefining the industry.” ¹⁵ Disruptive innovations are therefore simple adaptations to existing technologies that appeal to new customers.

Bohnsack and Pinkse assert that disruptive technologies have the ability to reinvent a product or service by initiating new attributes that become a key basis for competitive advantage. They argue that disruptive technologies can be made more attractive for mainstream customers by reconfiguring value propositions and combining these with an inventive business model. ¹⁶ Further extensions suggest that disruptive innovation is explained by an offering that has a technology enabler that can convey its value proposition of convenience, affordability, and simplicity and allow for improvement, and that is paired with a business model innovation that enables it to exist alongside its new value proposition. ¹⁷

In the African context, innovations need to create scalable new markets by addressing the underlying realities of institutional voids—inadequate infrastructure, ineffective sociopolitical governance and regulation, chronic shortages of resources and income, and market heterogeneity. ¹⁸ Christensen’s disruptive innovation does not extend far enough, for our purposes, to confront developing and emerging markets’ heterogeneity and inadequacies. African countries are largely characterized by very high levels of inequality, resulting in highly skewed markets where large numbers of people operate at the bottom of the pyramid (BoP) and the middle of the pyramid (MoP). ¹⁹ To address the needs of this market requires a solutions-based approach to innovation that addresses the very nature of the institutional voids and the existing insufficiencies—what we call solutions-driven innovation. Such innovation creates solutions directly connected to the inadequacies of the status quo related to underdevelopment, targeting nonconsumers who have been neglected by existing offerings.

Disruptive versus Solutions-Driven Innovation in Emerging Markets

Disruptive innovation is regarded as a competitive strategy and a market theory. Hart and Christensen introduced the link between disruptive innovation and emerging markets and refer to innovation at the BoP. ²⁰ They identify emerging markets as a potential source of significant profit through the serving of the poor and argue that the BoP is unsaturated and the next growth frontier, since it is filled with consumers who have been ignored. Disruptive innovators compete against nonconsumption, offering services or products to those who have been poorly served or excluded entirely, and thus the model will work well in developing countries. While emerging markets are well suited for disruptive innovation as they have large populations with high levels of economic mobility and low mean income levels, and these two factors provide great prospects for reaching unserved potential customers, ²¹ we demonstrate that the MoP also has significant opportunities in emerging markets for solutions-driven innovations and that these should not be discounted. In African countries, the MoP is estimated to make up between 35% and 50% of the market (350 million to 500 million people) and is composed of a rapidly growing middle class that is upwardly mobile with aspirant consumption and lifestyle patterns. ²²

Corsi and Di Minin delve into the differences that arise between developed and emerging markets and state that within a developed country market, the segment that is initially served by an innovation is characterized as “early adopters” (a small market of ignored consumers). ²³ By contrast, in an emerging economy, the early market is not small and is often represented by a large portion of the population who have less access to established technologies or product offerings as these are too complex or too expensive. They suggest that the size of the early market will determine the actors that are involved in an innovation. In a developed market context, as the early market is small, it leads to the tendency to think that this is only viable for startups and small spin-offs to profitably service this market. In an emerging economy, as the market can be a large portion of the population and of a vast size, the opportunity allows for foreign MNE subsidiaries, local startups, and large local firms to profitably service this market by exploiting economies of scale. These differences affect the rate of expansion and the very basis for successful competition and the formulation of appropriate value propositions. ²⁴ Furthermore, the peculiarities of context ²⁵ in emerging markets should provide the basis for successful solutions-driven innovation.

Institutional Voids, Solutions-Driven Innovation, and Emerging Markets

Emerging economies often have large untapped markets and can present new growth opportunities for firms looking to expand into foreign territories. While the challenges in the emerging markets are significant, they present an opportunity for MNEs to diversify from often saturated and stagnant developed countries. The question arises as to how best to tap into these market opportunities. The global economy does not hold a one-size-fits-all model, and thus it is argued that MNEs need to look to different models to appeal to emerging markets.

Firms may be capable of creating viable products for emerging markets without entirely adapting their offerings, but they cannot go in with an unchanged product and wholly unchanged operating model. ²⁶ There are two particular dimensions relevant to the emerging market context that affect competitive strategies by MNEs—namely, consumer income distribution and the institutional environment.

As regards the first dimension, Christensen, Ojomo, and Van Bever argue for a market-creating innovation model, which uses a pull strategy instead of the usual push strategy in emerging markets. They define a push strategy or push investment as something that is driven by the priorities of the creator, where the solutions that are generated are imposed or pushed on consumers and markets. On the contrary, pull strategies respond to the needs characterized in the struggles of everyday consumers. They believe that the strategies that are successful within emerging markets are the ones that diverge from the conventional push strategies’ approach. Markets are created when innovators develop products that consumers want to “pull” into their lives, and these markets function as a base for prosperity and growth. ²⁷ To be effective, pull strategies should not only be characterized by investments and models that are led by a desire to increase accessibility and affordability but must also address the unmet needs of the everyday consumer, expanding and creating markets by targeting nonconsumption and solving real problems associated with underdevelopment in these markets—in other words, solutions-driven innovation.

A strong argument and view within the strategy literature is that the best way to tap into emerging markets is through the BoP by addressing the needs of the aspiring poor, since there is a vast opportunity represented by nonconsumption. Others contend that it is not just the BoP market that holds the opportunity for MNEs, but also the vast middle where there are unmet needs. ²⁸ The aim should be to target consumers defined as those whose needs are poorly serviced by existing products with low-end solutions but who cannot afford the high-end solutions. ²⁹ We argue that there is vast scope for innovation in emerging markets aimed not only at the BoP but also at the MoP—particularly that which focuses on solutions directly related to the emerging market setting.

The second dimension of the challenges provided by emerging market contexts is that of the institutional environment, which has often been characterized as one of voids. Institutional weakness or voids exist where the rules of business are ambiguous, infrastructure is lacking, transaction costs are high, and market counterparts have to find ways of transacting without the supporting institutions and the inefficiencies. ³⁰ Innovation can help address these voids in various ways. Govindarajan and Euchner postulate that due to institutional voids within emerging markets, further innovations may be necessary in the way a product is financed, sold, and distributed, and that success in these markets requires products to be adapted innovatively to suit local conditions. ³¹ Furthermore, emerging markets often face inappropriate regulation, which can facilitate innovation to create markets that operate outside of the reach of regulators. ³² Regulation can be circumvented by the innovation’s existence in a regulatory gray area, and then, as the mainstream uptake occurs and the number of customers increase or accumulate to a sufficient number, regulators cave to the new reality of the disruption as they become aware of the market need for this. This appears to have been the case with M-Pesa, where mobile operators in East Africa started providing banking-type services without banking licenses because regulation struggled to keep up with technological advances. As a result, innovation can mitigate the effects of institutional voids.

Distance constitutes one of the most important tests facing MNEs entering new cross-border markets, and it manifests along many dimensions, including cultural, administrative, geographic, and economic differences. ³³ In the African context, where institutions are weak, the challenges of distance are particularly important because of the often-extreme dissimilarity between developed economies and the continent. Institutional distance poses challenges to corporations’ ability to capitalize upon their capabilities and competencies within the foreign business environment due to the absence of institutional arrangements and the complementarities essential for transfer of these competencies. ³⁴

Uber Overview

Uber was founded in San Francisco in 2009 by Travis Kalanick. Uber is a technology platform and is a smartphone-enabled ride-hailing application. Initially, the mobile app catered for top-end vehicles, promoting the notion of “your own driver.” Within three months of launching the app, Uber cab went live in San Francisco. At the core of the business was matching riders with drivers. By adopting an aggressive expansion policy, and where necessary localizing the product to meet specific needs, the business expanded into six continents within seven years. The Uber network is now available in 475 cities in 75 countries. ³⁶

Table 2 highlights the aggressive expansion and internationalization of the company. Uber ventured into sub-Saharan Africa in 2013 and is in 12 cities in sub-Saharan Africa (as of the beginning of 2018)—Cape Town, Durban, Johannesburg, Pretoria, Port Elizabeth, Nairobi, Mombasa, Lagos, Abuja, Kampala, Accra, and Dar es Salaam. Across the wider Africa, it is present in 16 cities and involves approximately 60,000 drivers. Table 3 reflects the number of active riders and drivers in sub-Saharan Africa over three months (as of October 2017).

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Table 2.

Uber’s International Expansion—Key Moments.

Year	Month	Details
2009	March	UBER founded as UBERCab
2010	July	UBER goes live for the first time in San Francisco
2011	May	UBER goes live in New York City
2011	December	UBER expands beyond the United States, starting by expanding into Paris, France
2012	July	UBER launches in London, United Kingdom
2013	June	UBER launches in Mexico City, Mexico
2013	July	UBER expands to Asia launches in Taiwan, starting in Taipei
2013	August	UBER expands to Africa, launches its first product in Johannesburg, South Africa
2013	August	UBER expands to India, launching its first product in Bangalore
2014	July	UBER officially launches in China, starting with Beijing
2014	July	UBER officially launches in Lagos, Nigeria, expanding its presence to Western Africa
2015	January	UBER launches its first product in East Africa, in Nairobi, Kenya
2016	April	UBER launches in Buenos Aires, Argentina, amid claims of illegality and taxi protests
2016	June	UBER launches in Kiev, Ukraine

Source: Uber (2017).

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Table 3.

Active Riders and Drivers in Sub-Saharan Africa, October 2017.

Area	Active riders	Active drivers
Sub-Saharan Africa	1.8 million	29,000
South Africa	969,000	12,000
Nigeria	267,000	7,000
Ghana	140,000	3,000
Kenya	363,000	5,000
Uganda	48,000	1,000
Tanzania	53,000	10,000

Source: Uber (2017).

Uber’s Solutions-Driven Innovation in Africa: Positioning and Value Proposition

In African markets, Uber has targeted the middle-to-higher income bracket that was not being served appropriately by existing players in the transport market. ³⁷ Uber positioned itself as more affordable than the local metered taxis, and the latter were not ubiquitous the way they exist in many developed markets. It offered an alternative transportation service where there was not an efficient one, and it has completely transformed the existing transportation market.

Figure 1 provides a stylized illustration of the transport market in African markets and highlights three distinct consumer segments. First is the BoP serving low-income households and the transport options that are largely related to the urban public train system, buses, and minibus taxis (these operate more like shuttle buses but with a capacity of 14 independent passengers—that is, shared transport). These alternatives are often unreliable and unsafe and do not provide door-to-door transport options. Second, at the top end are comparatively high-income households that rely on their own vehicles and metered taxis. Metered taxis are relatively scarce, expensive, and generally need to be booked in advance or secured at limited taxi ranks. Third, the MoP represents increasingly large numbers of middle-income households that do not yet have the means to purchase their own car or would be stretched in such a purchase. These consumers are frustrated by the lack of alternatives and are often forced to rely on the options available at the BoP, but do so unwillingly. Uber in Africa is providing a viable substitute to middle-income households and is allowing them to opt out of BoP options. It also provides complementary options for high-income households by giving them an additional alternative that may free up time and provide convenience. At the BoP, Uber is starting to reach those households on the cusp of transitioning into middle-income status.

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Figure 1.

Stylized account of the transport options in African markets and Uber’s positioning.

Uber has impacted African markets in three primary ways: on riders, drivers, and the existing public transportation system. As far as riders are concerned, it has created a new market for middle-income households and provided additional options for high-income households and aspirant consumers at the BoP. It tapped into a market of a rapidly emerging middle class that has not yet had the opportunity to build up more expensive tangible assets such as cars. That segment now has a transport option that caters to point-to-point transfers. As far as drivers are concerned, Uber created an economic opportunity for them, which had a low entry barrier and was scalable through technology. As regards the existing public transportation system, Uber created a transportation alternative for a certain segment of the population, which they had not had before.

Although Uber’s core product may be similar in all markets, its value proposition changes between markets. In developed economies, Uber represents an additional option, but in Africa it is creating a new market for the MoP where vehicle ownership is still in its infancy and where public transport does not provide a reliable, safe prospect.

One of the gaps to be filled by Uber within African markets involves the transportation infrastructure, and specifically the absence of efficient transport solutions. Resoundingly, the respondents all identified this as being the biggest gap within African markets. Although there may be transportation systems in place within these countries, they are neither efficient nor reliable, and often not safe. Uber fills a gap in an inefficient transport system; using Uber is an option to something that was not in existence. As stated by one of the respondents,

In more developed markets, you’ve got more developed infrastructure. More developed public transport services, so you’ve got tubes, buses, trams, trains, taxis. There’s a thought process; if you take London, for example, how many different ways you can move around your city. And as consumers you have adapted to taking the tram, taking the train, taking a tube, then taking the bus. Look at San Francisco, very similar, Los Angeles even. In New York there’s the yellow cab culture. In Africa, you kind of drove your own car or you took whatever transport was available and it wasn’t necessarily safe. (Respondent 3)

Another respondent further expanded on the difference:

In Africa, it also started that way as a peer-to-peer service, but it was a peer-to-peer service that was replacing a transportation industry, which didn’t really exist at the time. When this existed in the U.S., it was just relegated to economic inefficiency so we’re taking advantage of economic inefficiency. Whereas here, it didn’t really exist, especially not in any sort of way that it was considered economically viable or impactful. So, Uber in Africa is still developing that transportation market. (Respondent 6)

Uber in African markets is a solutions-driven innovation that has changed the landscape of the urban transportation industry. Uber not only disrupted the existing metered taxi industry and minibus taxi industry, but it also caused them to improve their offerings, thereby improving the standard of the industry:

There’s disruption in the taxis, but that’s not a unique thing. I don’t think the disruption is unique, I think the taxi industry hasn’t always had a customer first outset, so what Uber has done has forced the industry to improve its standards. I don’t think it’s there to improve the industry, it’s there to create more options. I think there are a bunch of alternatives, taxis have come up with their own apps, taxis have improved their fleets like Zebra cabs and Taxify. Things like this didn’t exist and all of a sudden there’s a fresh fleet of vehicles and increased customer service. (Respondent 1)

Uber has adapted to the emerging market context, and this has opened up markets. Depending on what is available in the market for Uber to partner with and what the market allows, it has varied its offerings. In Pakistan, Uber launched with a rickshaw product. In some Western cities, UberPOOL is available, and in parts of Asia, it offers UberMOTO, a two-wheeled motorbike. The product assortments all depend on what is available in the market, and then Uber has adapted to what the market wants. In emerging markets, Uber concentrated on lower cost products, such as UberX and UberGO, and the cost of an average fare is lower than in Western countries.

But perhaps the most important internal innovation that Uber has introduced in its adaptation to the realities of African markets is the payment method. Emerging markets needed multiple payment methods compared with only credit or debit cards since a large proportion of the population is unbanked—and this affects both drivers and riders. The adaptation to the payment options was a turning point for Uber in African markets and went against one of Uber’s core characteristics of being a cashless system. Uber adapted their payment methods to accepting cash and debit cards, which was the prevalent payment method in the region. The adaptation was born out of a need to grow the market, and a similar need exists in other emerging markets:

In order to grow the business, there had to be a cash option. So I think what was really different about how we disrupted the African market was that we launched a highly tech product with a cash pay option, that was super different. The U.S. still don’t know why we do it, but if we look at markets—such as Egypt, Nigeria, Ghana, Kenya—without cash, the business would not have gotten to the point where it is now. In South Africa, since launching cash, there has been a distinct bump in the business. We are a 65% cash payment economy, meaning 65% of transactions are done in cash. You can’t grow a business if you don’t take cash, so that was a big disruption as a sub-region in the company. (Respondent 3)

One of the core differentiations, which has actually changed now is the method of payment. I do think there is room to change that even further. . . . In the African context specifically, we introduced cash. Some are fans of it, some are not. There’s a lot of perception attached to it, but what cash does for the emerging or African market is that now you can give access to the service to everyone. Where previously you could not get access to it, because [you were] not in that social elite that had a credit card. (Respondent 12)

Moreover, in East Africa where M-Pesa has become ubiquitous, Uber has started accepting this mobile currency for payment, which has further allowed it to penetrate further down the consumer pyramid. Uber has taken advantage of the exponential growth in smartphones and the rapid rate of urbanization in Africa together with a deficient existing public transport infrastructure to create a new market. Furthermore, it has recognized the need for business model innovation given the nature of the consumers and the dearth of penetration of traditional financial services. Thereby, it has ensured that its value proposition, which is solutions-driven, is firmly embedded in the African context.

Uber as a Source of Economic Empowerment in Africa

Uber has also been a major source of economic empowerment on the continent by creating opportunities for both drivers and riders. At the driver level, it has created employment options in countries with very high unemployment rates and few options. Drivers in Africa use the Uber platform to provide full-time employment for themselves, whereas often drivers in a developed country drive as part-time employment for the purposes of supplementing their income:

From a driver perspective in developed markets, the majority of drivers are doing this as a side show, excluding New York where they are full-time. But here this is something people are doing as their primary source of income; they are running businesses with the sole purpose of doing Uber, whereas in the U.S. it’s a mom who drops the kids off and then does Uber between picking up her kids and then she goes offline. (Respondent 3)

This is supported by the statistics from internal Uber studies that show that an average Uber driver in the United States drives for ten hours a week, compared with Uber drivers in Africa who work full-time and up to ten hours per day. ³⁸ The benefit that they are providing to drivers is invaluable within the context of high unemployment, ranging from 20% to a staggering 90% in Zimbabwe ³⁹ :

Unfortunately, unemployment is the reality [in Africa] and we are providing sustainable economic opportunities for driver partners which is a relatively low barrier, and is scalable through technology. (Respondent 1)

Uber is not only providing the drivers and partners with a platform and a job, they are also creating entrepreneurial opportunities. Uber encourages the drivers to work for themselves, acquire their own vehicles, and create their own employment and opportunities. This is also changing the nature of the offering itself:

Uber is creating more economic opportunities than in developed markets and that leads to the job partners having more pride, which then reflects in the product offering. So, I do think our quality is higher than in European countries. The drivers are more professional, they take more pride in their work, because this is an economic opportunity for them, to have a business and to be an entrepreneur. The benefits that drivers in developed markets seek from transport are normally earnings and flexibility, but in African countries, one of the biggest benefits they look for from a transport company is a source of pride and partnering with a company that is forward thinking, innovative and that’s doing good for their cities. That does not come out nearly as strongly in developed markets. (Respondent 8)

Although Uber is largely targeting the MoP for consumers, on the driver side it is often creating employment and income at the BoP. But Uber is also creating economic opportunities for the consumers. They offer an opportunity for workers to move around by offering an alternative transportation solution. For the most part, the consumers that now use Uber in African markets were previously restricted in their opportunities to move around due to the lack of a transportation system:

If you don’t have public transport, you don’t have freedom to move around your city. You are confined to your own vehicle and when you are confined to your own vehicle, there is congestion, there are parking issues, there is a price factor; you can’t go out. All these elements play a role, and what we do is we fill that space. (Respondent 1)

Uber has thereby transformed an existing market by creating an alternative transport solution to counter an inefficient, unsafe, or sometimes nonexistent public transport system. It has also created real depth of economic opportunity. Respondents noted that these two factors were the biggest ways in which Uber disrupted the market in Africa and simultaneously also answered two very core unmet needs within the market:

It disrupts the market in Africa because in many ways it’s actually providing something that wasn’t available before. So, the way I look at it here, there’s a massive need for transportation in a certain market and a massive need for jobs. And what Uber has done in Africa is fill this gap, so it’s an absolute game changer in terms of what it can provide in economic opportunity; plus, what it can provide in terms of access in transportation and area mobility. (Respondent 6)

Solutions-Driven Innovation, Distance, and Institutional Voids: Context Matters

Uber is a global company with a global solution and product, but they have a strong policy and culture of localization. This is premised on a belief that it is critical to the company’s success to hire local teams with local knowledge of the local market. This policy of a decentralized corporate structure has allowed them to better localize themselves in the different markets within which they operate. This is especially important in African markets where the environment of business is fraught with institutional voids and where consumer markets have a vastly different income profile to the home country base:

We have gained success through localized teams. Unlike other tech businesses, we are not operating this from an ivory tower in San Francisco shooting through commands to the rest of the world. It has always been local teams. They will go set it up and then hire a GM, operations manager, and marketing manager from that city or country. That is what has kept the fabric of Uber very local. (Respondent 10)

Although the technical and R&D teams are based in Amsterdam and San Francisco, Uber’s decentralized structure allows them to be more operationally responsive to the market demands and adapt to the market needs. Uber has made some adaptations to both the product and business model within African markets so as to better serve and appeal to the local market demand and needs. The changes have varied from getting the application translated into the local language, upgrading the mapping capabilities when Google Maps did not work efficiently in some locations, and changing the business model to accept cash and mobile payments. Nonetheless, these changes could not be made locally and had to be championed for by the local Uber Africa hub. The international hubs of San Francisco and Amsterdam were at first slow to consider and enact these changes. Respondents also mentioned that creating a second hub in Amsterdam away from San Francisco and closer to Africa facilitated responsiveness and helped overcome the problems with distance:

There’s also definitely an element of you just don’t understand the country because you haven’t been here. So, when the mapping team came here it meant driving around all our cities. And after that, there was much better understanding. Things like trying to launch with cash took a very long time to happen. Again, we had to build a massive business case; make people understand how different our market is to America and why we need cash and why it’s not going to grow without it. There are a lot of things we’ve had to look into, like different payments, subscriptions, but once again, that requires a much bigger business case. It’s gotten better. At the beginning, it took a lot longer. Also having the hub in Amsterdam has made a huge difference. When it was in San Francisco, it was very far away. Amsterdam is a lot closer and the central teams there are a lot more open to coming to visit all our countries and get involved. (Respondent 8)

The delayed action and identification of the mapping inefficiencies and the need for cash transactions supports research on the drawback of institutional distance in that it impedes the flow of information, which affects a manager’s ability to identify threats and opportunities.

Uber has also had to confront the unique challenges of institutions and institutional voids in Africa. Worldwide, Uber has taken advantage of the fact that transport regulations did not anticipate this particular smartphone technology and it has circumvented legislation by positioning itself not as a transport but as a technology company. Uber has operated ahead of the regulatory curve and thereby has been able to influence the development of regulation (in this way, there are some interesting parallels with M-Pesa):

There is regulation, but it’s outdated, but we’ve been lucky that we’ve been able to grow within this framework to a point which we are now able to contribute towards the discussion. I think if we had waited to have a discussion about where Uber fits into the regulation framework we would be nowhere. (Respondent 2)

The Uber innovation has operated in a regulatory gray area, and this has allowed the company, once it has accumulated a sufficient number of customers, to force regulators to cave into the disruption as they become aware of the need for the product and the solution it offers. ⁴⁰ This is the strategy and characteristic of Uber globally and is not unique to Africa. Where there is a difference is that within African markets, because of the added value that Uber is creating through economic opportunities and solutions, regulators and authorities are more open to having these conversations. Uber is more involved with the process of shaping new regulations within African markets than it is in other markets.

One of the bigger voids that Uber experienced was the lack of access to capital and financing available for their drivers. This was a problem unique to the emerging market context where most of their drivers did not own their vehicles. In African markets, there was a big supply of drivers with no access to capital. Uber innovated around this by partnering with WesBank (a South African bank) to create alternative solutions to overcome the lack of formalized credit records for their drivers. Uber used the drivers’ records on their platform to stand in as a proxy for formalized credit records, thereby creating a formal infrastructure and addressing information asymmetries:

If the driver went to the bank for finance, he wouldn’t be earning enough money to have a good enough credit rating. It started off with Wesbank in South Africa. What they’ve done instead of looking at credit history [was] looking at their track record on Uber, in terms of how many trips they’ve completed, how long have they been using the technology for, what are their ratings and their earnings history, and off the back of that they offer full maintenance. In Kenya it’s a formalized loan, and they’re relying on data that didn’t previously exist as a proxy for credit history. Data that’s created off the back of technology can fill the void of shortcomings that may exist in sub-Saharan African countries. (Respondent 1)

Another example of an institutional void is that an MNE may take for granted being able to check for criminal records when screening drivers in a developed country, but these are often unreliable in African countries. This necessitates improvisation and adaptation to this context. Thus, in Nigeria, the lack of a reliable database from which to get police clearance for the drivers saw Uber improvising and introducing psychometric testing to measure individuals’ capabilities and behavioral styles and to measure candidates’ suitability for these roles based on the required personality characteristics and aptitudes. Uber innovated around the lack of institutions and filled the void themselves, thereby becoming an informal institution or proxy for the formalized institution:

Institutions tend to lag behind progress of what’s needed and they always catch up, but they’re slower. So I think Africa as a whole is the biggest opportunity for Uber to help propel the economy and the business environments forward. I like that we do this. For some Uber drivers, this will be the first time they use a smartphone, or the first time they get a bank account. Uber is a part of that. And Uber is the institution that’s helping that happen. That’s pretty cool. (Respondent 6)

Although there has been a rapid growth in connectivity in Africa over the past decade, there are still connectivity issues associated with the low-income status of many of these countries, and Uber has, as a result, developed a platform that is more data light and more suited to the institutional, infrastructural, and consumer realities of this market:

We have recently launched Uber Lite in Kenya and South Africa, a lighter version of our app which was designed to make booking rides quicker and lighter in low connectivity, on basic Android phones, and for people with limited data plans. (Respondent 3)

Uber has innovated around the lack of institutions and created opportunities that are mindful of these voids. These opportunities were possible in part due to their power to aggregate and their scale. Through their pioneering adaptations, they yielded power in the market and were able to facilitate the conversations required to implement the innovations. Going forward, Uber has identified African markets as growth opportunities and admit that they are still far from reaching their potential on the continent with over 1 billion people. They advise that business in Africa needs to be part of the response to break the hold of underdevelopment and to create solutions-driven innovations if it wants to succeed:

Our ambition is to be everywhere—any progressive, forward-thinking city that has a need for safe, reliable, and efficient transportation, we want to be there. . . . Each continent has its own opportunities and challenges. As we celebrated five years of Uber in sub-Saharan Africa, we reflected on the fact that our business model and our decision to invest in the region helped play a positive role in the continued upward trajectory of the region. Above all, we have created new forms of economic opportunities with driver-partners, and opening up the convenience of e-hailing services to a young, tech-savvy continent ready to embrace technological solutions to the region’s problems and the demands of the fourth industrial revolution. . . . Uber’s success is deeply rooted in the fact that city-led growth has been identified as a key opportunity in emerging economies, as countries embrace urbanization and mobilize resources to turn cities into economic powerhouses. (Respondent 3)