Zipcar: Benefits that The Company Can Offer

“Robin Chase, Zipcar, and an Inconvenient Discovery”

In the article, “Robin Chase, Zipcar, and an Inconvenient Discovery,” Deborah Ancona and Cate Reavis give the account of the formation of Zipcar, a car-sharing company based in Cambridge, Massachusetts and Boston. The article is a case study of how the company was formed and the challenges it faced after its inception. The authors note that the founders of the ventures were Robin Chase and Antje Danielson while the Jean Hammond was Zipcar’s first investor. Four months after the launch of the car-sharing start-up, its co-founder could not believe what she discovered about the firm's financial performance. Chase found that the company had generated small revenue than the founders had anticipated. Based on this discovery, the case reveals various issues that affected Zipcar, alternative solutions to the issues and proposed solutions as discussed below.

Issues

Zipcar’s leaders invested a lot of time on designing the firm’s website, formulation of pricing model and raising money for investment (Ancona and Reavis, 2014). As a result, the company failed to invest in building technology that could make it succeed. Zipcar needed technology to connect people that wanted to use car-sharing services. Building such technology required massive investment during the early stages of company's life. However, Chase, the company's co-founder did not make this consideration because she allocated much of her time and that of her teams in designing websites and raising money for investment.

Some team leaders at Zipcar had other jobs and as such, they could not be fully available to use their expertise to help the firm to take off. For instance, Danielson was an engineering expert whose services were needed by Zipcar, but she had a full-time job at Harvard (Ancona and Reavis, 2014). Given this reality, Danielson worked at night for Zipcar and during weekends thereby availing little of her expertise to the company. Mark, Chase’s brother was also working with another firm and could not get enough time to work for Zipcar.

Chase overlooked expertise and innovation when hiring because she felt that people were capable of doing better under her leadership. For instance, when she hired Oakley, she believed that the man could manage small details of her company. Oakley was not an expert in car-sharing business since he was managing bar and restaurant and as such, Chase’s move to bring him to Zipcar showed her weakness in hiring teams and that could have contributed to the challenges that faced the company at its early stages.

Gender issues were also seen in the hiring of workers at Zipcar. Chase claimed that some of the consultants that Oakley hired such as Kefer Welch were not fit to run Zipcar (Ancona and Reavis, 2014). She also claimed that Oakley misled her to hire Welch because she was a woman.

The company could not find build a wireless technology in the early 2000s since such technology was not available during that time. This technology was needed to open and lock cars and also connect customers to Zipcar’s servers. Based on its demerits and unavailability, Chase recommended that they delay using the technology. Also, leasing cars from manufacturers was a challenge to Zipcar since the former could not understand the latter’s business model (Ancona and Reavis, 2014). Providers of parking spaces were also not ready to lease their spaces to Zipcar since they felt that such a move could fill their spaces.

Getting an insurance service provider was also an issue to Zipcar since such providers were not used to car sharing businesses. As a result, Chase had to use the insurance providers that were covering Zipcar’s rivals, Portland Car-sharing and Flexcar. According to Ancona and Reavis (2014), this move meant that the firm did not have a good plan since it ended up paying high premiums for the insurance cover.

Coming up with a pricing model was also a challenge for Zipcar and that forced Chase to copy the models used in Canada and Europe. The model she picked involved charging membership fee and security deposit from customers. Other charges included per hour per mile charges and daily charges. Regular and premium hiring services were also categories for pricing the services.

Customer complaints hit Zipcar when members could not access cars that they had booked (Ancona and Reavis, 2014). For instance, members could get annoyed when they reserved regular cars but get premium cars that were expensive. These complaints contributed to the fall of revenues for Zipcar.

Alternative Solutions

The wireless technology that Zipcar intended to build to connect cars with the users became complicated since, by that time, the world was experiencing nascent stages of technology development. Alternatively, the company could have addressed this challenge by abandoning the Zipcard and choosing a remote device for opening the doors and starting cars owned by Zipcar. Such devices could have been given to the members and inform them to report when they misplace the devices for deactivation. This deactivation is essential to ensure that other persons do not use the remote devices to access the cars. The device should have the secret passwords for opening and locking cars owned by Zipcar.

Also, the solution to technological problems that Zipcar faced during its launch could have been achieved through installing chip-readers on the cars to facilitate their ignition. Initially, the company intended to install card-readers that could detect Zipcards to open and start the cars. In this case, the proposal is to have the readers for only starting the car. This proposal means that the company should have left the cars open for their users but install the software for only starting the cars.

Proposed Solutions

The experts working with Zipcar proposed that the firm should have installed readers on cars to facilitate the use of Zipcards for opening and starting the cars. These readers were hardware devices but could be modified to use the software that the company was to adopt in future (Ancona and Reavis, 2014). Since the readers could not recognize unique numbers printed on the Zipcards, then the identification function was scrapped and the readers could detect any Zipcard. This move was a risky decision since members could lose the cards and enable non-users to access Zipcar cars.

Rationale

The proposal for alternative solutions is based on the fact that unique remote devices could have been cheap for Zipcar. Also, the devices could have easy to disable if the members lost them and reported to the firm. As such, the devices could have been secure for both users and the company. Microchip-readers or card-readers could have served as an alternative technology since they could use automatic-machine idea used by banks to develop. Also, these readers do not require a sensory mechanism to detect numbers but require the members to feed the numbers to start the cars. Thus, such chips could have been secure since Zipcar members who lost their Zipcards needed not to worry because they knew the passwords to start the car.