When I recently updated my OpenTable app, I noticed they incorporated a partnership with Uber in which you can request a car when looking at an upcoming reservation and the car would already know your destination. This partnership between Uber and OpenTable is a great example of strategic thinking by both companies. I wanted to comment on it as I think all companies can learn some key lessons from the initiative.
The OpenTable/Uber relationship shows the value of partnerships. First, it is difficult to make an argument that either of these companies is naïve or prone to bad decisions, so simply the fact that they have decided to go the partnership route validates this strategy.
Second, the partnership gives immediate value to both companies. OpenTable has a more complete offering. For users, it is another reason to use the app rather than contact the restaurant directly or go to a restaurant that is using a different provider. Do not underestimate the value of ease to users; the ability to now integrate your reservation with your taxi or car enhances both apps. For Uber, it provides a new marketing channel. Anyone checking their OpenTable reservation will see Uber, and that trigger will get at least some people who would hail a taxi to click on the order an Uber option instead. And, as OpenTable benefits from the added ease to the user, so does Uber, as a user now does not even have to open the Uber app and the destination is automatically sent to the driver. Again, small changes to ease of use, but each small change has a dramatic benefit.
Another trait that I preach for tech companies is focus, and this partnership helps both companies do just that. Uber could build relationships with restaurants and market around reservations but chose the OpenTable partnership themselves. Likewise, OpenTable could have contracted with car services and taxi operators nationwide and provided the service themselves. Although both may have enjoyed higher margins, the partnership allows them to focus on their core businesses (i.e., technology for ride sharing and restaurant reservation services). This focus allows both companies to make their core products better while offering a new service.
Finally, the partnership is a way for both companies to gain a competitive advantage. Uber operates in a highly charged competitive environment, and its battles with Lyft and Sidecar are well documented. The partnership with OpenTable provides an advantage in prompting people going to a restaurant to use their service over a competitor.
OpenTable does not face the same level of competition but must be wary of Yelp, Zagat and others entering their space. By offering a more complete solution to end users, new entrants in the space will have a bigger challenge providing a compelling product that would encourage customers (and thus restaurants) to change.
The power of partnerships
The Uber/OpenTable relationship shows the power of partnerships and how you should look at the opportunity to improve your competitive situation. Rather than just relying on technology and internal growth efforts, partnerships can provide a long-term competitive advantage as well as a better offering for your customers.
- Uber’s partnership with OpenTable, in which you can call an Uber car when checking a restaurant reservation, shows the value of partnerships to tech companies.
- Partnerships allow you to offer a better product to your customers and an advantage over your competitors while allowing you to focus on your core offering.
- In highly competitive markets, partnerships can provide an advantage that other companies cannot replicate.