Google's Carpool Pilot With Waze Offers Lessons For Innovative Executives

It’s all too obvious that carpooling is a tough market to crack. Even Uber, the paragon of the sharing economy, reportedly lost $1.2 billion in the first half of 2016. So when news broke this week that Google is launching a ride-sharing service that manages carpools, one can’t help but wonder how well thought out that move is. It’s a stark contrast to the Steve Jobs’s innovation rule book.

In a 1995 interview, the young Jobs described how Apple came to develop the Macintosh:

The problem is that market research can tell you what your customers think of something you show them, or it can tell you what your customers want as an incremental improvement on what you have, but very rarely can your customers predict something that they don’t even quite know they want yet. As an example, no market research could have led to the development of the Macintosh or the personal computer in the first place.

Jobs was adamant that “it was very difficult for market research to contribute much during the early thinking of what those [potential solutions] should be.” Two decades later, when asked how much market research had gone into the iPad, Jobs replied, “None. It’s not for consumers to know what they want.”

Happily, one doesn’t need to be Jobs to have a eureka moment. If anything, Google’s carpool pilot has demonstrated an equally viable, albeit opposing, worldview of how to create a new product or solution.

Waze, which Google bought in 2013 for $1 billion, will run the pilot—Waze Carpool. The concept is similar to the RideWith program, which Waze has offered in Tel Aviv since last year. To carpool, riders will simply select the closest driver who is planning a drive on their route. Drivers will receive the ride requests and can choose to accept or decline them.

In characteristically Google style, Waze Carpool resembles a quick experiment. It looks like a sort of rapid prototyping, aimed to develop quick and cheap solutions and to update them rapidly in response to users’ actions and suggestions. With Waze, Google is again taking a page from the classic lean startup playbook.

To begin, the current trial is limited to employees at a few companies in the San Francisco Bay Area, like Google, Adobe, and Walmart. This limitation helps to focus on the working population who are most likely to drive in the same direction during peak hours. According to a report from Time, there are about 20 spots around the East Bay where people regularly line up, looking to hitch rides over the Bay Bridge, into the city. Waze is simply testing the viability of a technology platform to better serve the existing workaround solution.

Unlike with Uber or Lyft, Waze drivers receive payment only for gas, which amounts to about 54 cents per mile, the rate set for travel reimbursement by the IRS. At this level,Google has reason to believe a driver’s income won’t be taxable, which in turn will help cut red tape in the growth process. And to avoid being regulated by the California Public Utility Commission, Google has chosen not to take any fees, at least for the time being. With drivers not poised to earn income by giving people rides, no special insurance or background checks are required.

Although the Wall Street Journal declared that, in one fell swoop, Google is “moving onto Uber turf,” it looks less like a calculated, strategic move. Experimentation and organizational learning have been key. How the battle of ride sharing plays out will be anyone’s guess, but the real takeaway for every executive is in how Google learns important lessons, cheaply and quickly.