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Bike sharing, ride sharing, freelancing—all have emerged as technology-enabled ways of doing business. How do we assess these new business models?
Patricia Kuharic
Patricia Kuharic

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Karan Girotra and his research group study how these systems operate—how users respond to them, how they use them, and why they choose them over other options—with the goal of refining these types of business models.
Patricia Kuharic
Patricia Kuharic

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“It’s not technology alone that changes industries and has an impact on the real world…because of technology…companies have a new way of bringing a product or service to customers.”
Beatrice Jin; Patricia Kuharic
Beatrice Jin; Patricia Kuharic

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On experimentation, “Companies need to try things out, identify the components that are truly novel, and rigorously test those components without bias.”
Patricia Kuharic
Patricia Kuharic

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“A lot of the startup companies in these industries are great experiments. We have…a long road of optimizing and refining these things, not just from a business point of view but also from a social point of view.”
Patricia Kuharic
Patricia Kuharic

A Technology-Transformed Way of Life

by Caitlin Hayes

It is now stating the obvious to say that technology has changed our lives—how we work and play, how we get from point A to point B—but technology isn’t solely responsible for all of these changes. A crucial component is how technology has transformed the ways in which businesses operate.

“It’s not technology alone that changes industries and has an impact on the real world,” says Karan Girotra, Cornell Tech/Johnson Graduate School of Management. “The technology enables new business models across various industries. In transportation systems for example, we see ride sharing, bike sharing—because of technology, these companies have a new way of bringing a product or service to customers.”

With emerging business models, we need new and innovative approaches for evaluating how these companies operate and for improving them. Girotra works to assess, refine, and optimize technology-enabled business models, especially in the areas of smart transportation, urban living, and e-commerce. “A lot of the startup companies in these industries are great experiments,” Girotra says. “We have many years ahead of us, a long road of optimizing and refining these things, not just from a business point of view but also from a social point of view.”

A New System of Transportation, Bike Shares

Smartphone technology, along with widespread connectivity, has allowed businesses to change the way we physically move around. Five years ago if you wanted to use a bike for a day, you would have to find a bike shop, rent a bike—if one was available—and then return it to the same shop.

Now, many cities have worked with companies to establish bike share programs, where bikes are scattered at various locations throughout the busiest areas. Users can use their smartphones to see where bikes are available, rent them in short or long time increments, and return them to the nearest docking station at their destination.

As in much of his research, Girotra is interested in how these systems operate—how users react to the system, how they use it, and how or why they choose it over other options. “In the context of bike share, we study how riders respond to where stations are located in the city and how the availability of bikes affects whether or not they will use the system,” he says.

With researchers from Columbia University, Girotra recently analyzed London’s bike share system, helping to answer a question about how the system should evolve. “They wanted to know: should we expand into new areas or increase density in existing areas?” Girotra says.

He and his collaborators found that expanding the system into more distant neighborhoods would offer only modest gains in usage. On the other hand, increasing the density of stations and bikes on the most popular routes would raise use by 10 percent or more.

In their models, having a density of docking stations at the beginning and end of popular routes also proved better than uniformly spreading the stations throughout the city, as London’s system does currently. “Now we can use this understanding to design a better system,” Girotra says.

Ride Shares—Uber, Lyft

Girotra takes similar approaches to researching how companies like Uber, Lyft, and others can design more efficient ride share systems. He has studied how ride sharing companies can incentivize—finding that providing drivers rather than riders with incentives boosts business more. He’s even found the kind of incentive that would work best—a threshold incentive where drivers receive a bonus when they reach a certain number of rides.

Optimizing pooled ride sharing services, where a number of passengers are grouped together, is also on Girotra’s research agenda. In a number of studies, he’s working to find recommendations for the ideal service design. “When you use a pool service, you typically have to walk some distance to catch the ride, and the car might not take the shortest route because it’s dropping other people on the way,” Girotra says. “So the research question are these: How much of a discount on this service do you need to compensate for that inconvenience? Where is the tipping point, where it becomes not worth it? We want to find the optimal design, where the costs and benefits balance each other.”

New Work Styles, Freelancing

The workplace is another area where technology is proving disruptive. The internet allows for work to be done remotely, and employees who value the flexibility can work from wherever they are as contractors. Girotra collaborates with Upwork, an online company that matches freelance workers with employers.

With this new business model, lots of questions arise about how to value the service Upwork provides. On the employer side, finding the right specialist for each particular job is a huge benefit. Other employers value the opportunity to build a relationship with one contractor, which can save time. “So we estimated the value of these two aspects, and then used that to find out how this intermediary that puts people together should charge for their services,” Girotra says.

“There are significant changes in our lives and in our systems, largely because of these new business models,” he continues. “Studying these things gives us an opportunity to have an impact, too.”

Technology-Transformed, Business Practices

Another strand of Girotra’s research is about outlining the ways in which companies can better succeed in the kinds of transformations that technology enables. In a shifting technology landscape, what practices can companies adopt to take advantage of technology and its disruptions? How can they build new technology-enabled business plans?

“The world is much more volatile than it’s ever been before. Planning and thinking ahead about what will work, strategizing, will only go so far.”

One of his main recommendations includes the adoption of a skillset somewhat new to business—the incorporation of rigorous and consistent experimentation. “The world is much more volatile than it’s ever been before. Planning and thinking ahead about what will work, strategizing, will only go so far,” he says. “Companies need to try things out, identify the components that are truly novel, and rigorously test those components without bias—following good, scientific protocol. It’s a whole new skillset.”

Other practices include creating a continuous pipeline and infrastructure for the creation of new ideas, as well as breaking down siloes within an organization. The business side of a company should be thinking and talking about technology and vice versa.

Johnson Cornell Tech MBA, On the Cutting Edge

As an award-winning teacher and one of the first business faculty at Cornell Tech, Girotra is teaching these principles to students in the new Johnson Cornell Tech MBA program, which is focused on the marriage between business and technology. Working toward degrees conferred by the SC Johnson Business School, students spend a semester in Ithaca and a semester at the Cornell Tech campus in New York City. They learn MBA fundamentals as well as how to creatively experiment to find new tech-enabled ways of doing business. Girotra also teaches in Cornell Tech’s innovative Studio Curriculum, a series of courses where students work to bring their technology and business ideas to fruition.

“It’s very simple—technology and business together having an impact on the world. That’s exactly what Cornell Tech is,” Girotra says.