Scott Griffith's engineering mindset and Zipcar's entrepreneurial success

¶ … Scott Griffith, the brains behind Zipcar. Zipcar is a company that is engaged, basically, in the automobile rental business. The premise is that people join Zipcar, giving it membership-based revenue, and then they pay when they want to use the car. Zipcars are located in neighborhoods, so that people can walk to the nearest car after they have booked it, and just take it. The target market for Zipcar is mainly urbanites who generally do not need to maintain a full-time automobile but who might need one for temporary purposes -- a run to Costco, or a short trip -- where a Zipcar will be cheaper and more convenient than a conventional rental car option.

Historical Background

Griffith was educated in mechanical engineering, not running a car-sharing business. Griffith has stated on many occasions that his engineering background was critical to developing the traits needed to succeed as an entrepreneur (Levitt, 2014). While there is nothing academic that he learned that helped him, his engineering background gave him some of the mental preparation, especially in terms of ways of thinking, that allowed him to succeed with this entrepreneurial venture. This corresponds well with the material in the text.

The first thing is that it is his thinking that he credits to his success, which highlights the first myth of entrepreneurship, that entrepreneurs are doers and not thinkers. While no doubt entrepreneurs need to "do" a lot of things, they must first and foremost have a good idea and then be able to think their way through a lot of problems. The text highlights that there is a need for commitment and determination in entrepreneurs, and that is something that Griffith was able to demonstrate in the way that he learned how to think. He notes that "engineers take a situation, pick it apart, examine the pieces, and then put them back together in a better way. Looking at business problems this way gave Griffith a fresh perspective from many of his peers" (Levitt, 2014).

The idea for Zipcar came about from Griffith' passions for cities, transportation and technology. The text points out that creativity and innovation are critical elements to entrepreneurship because the entrepreneur needs to be able to identify gaps in the market and to be able to implement an idea to address that gap. In the case of Zipcar, Griffith was able to identify that an increasing number of urban-dwellers were turning their backs on the version of the American dream that included car ownership (Kilcrease, 2011). There were still certain things for which people wanted cars, and they would rent them or borrow them to fulfill these needs. However, consumers who lived a near-car-free lifestyle had trouble implementing this plan and wanted a new solution.

Griffith was able to recognize at an early stage that "the future of transportation and car ownership is changing now and will continue to change." This was simple application of the creative process. Demographic changes were occurring -- people were being drawn back into cities, and this was creating a market niche of people who did not own vehicles. This combined with increasing attractiveness of urban living, new urban residential construction, rising fuel costs, lower real incomes that demanded sacrifices to the American dream for many, and greater environmental consciousness. These trends, being numerous, were set to accelerate with the coming of the Generation Y or millennial generation. Thus, Griffith was able to identify a large unserved market and devised a creative solution to addressing this market's needs in the form of the car-sharing program (Kilcrease, 2011).

Strategy Employed

One thing that stands out in the Zipcar case is that the company succeeded largely by being the most dogmatic, professional organization in the industry. this put Zipcar in a position to buy out a lot of its competitors, allowing it to effectively corner the car-sharing market. The determination that Griffith showed to get this idea off the ground when it was struggling back in 2003 was based on a belief in the vision, but it was the implementation that made the company successful where it had been struggling. With professional systems, the company was no longer trading simply on having a great vision of a market opportunity -- Zipcar was in a position of thriving because its costs were managed, and its market was grown in a controlled but persistent manner. The management systems were the key to growth, because each office was run according to the same principles, in the manner of a franchise but without franchising.

Griffith was able to enter the business because he saw an opportunity with a struggling company. He knew that it had the potential to be a success, but was going to need managerial expertise and problem-solving in order to bring that success to fruition.. so Griffith was a classic case of an entrepreneur who did not innovate, but found an innovative idea that was struggling to find a market. This is an acceptable way of entering a new business, and becoming an entrepreneur, because he was not getting involved in a business that had any proven track record -- the entire industry was only a couple of years old and with new proven track record.

Building Zipcar relied on strategies such as building up organizational learning. As noted, it was the way o thinking that differentiated Zipcar within its industry and allowed it to be the most successful firm. An entrepreneur needs to have the ability to not only have a vision, but meet the different challenges that come with bringing that vision to fruition (Peavler, 2014). Thus, it was the problem-solving techniques that allowed Zipcar to overcome a lot of the logistical problems that were holding the company back. It made changes to its service offering to make it more enticing to potential members, and in doing this managed to build its market share. Zipcar also needed to gain more brand exposure, something that is always difficult to do with limited cash flow. It is established that cash flow is pretty much everything to an entrepreneur, because without cash you cannot grow. Thus, one of the key jobs that Griffith did in his earlier days was to establish sufficient cash flow to allow the business to continue to grow.

Strategic management techniques were also employed at Zipcar. Things like a SWOT analysis and an analysis of the competition are important steps for any venture, especially during the process were one is deciding to enter a business. It is necessary to understand the drivers of a business and the key success factors, something that these strategic analysis techniques allows for. Zipcar needed to determine what its competitive advantage was going to be, and it needed to learn more about the niche in which it was operating. It became evident that the trends that allowed Zipcar to be founded where only accelerating, but in order to improve the market share, Zipcar needed to be in a position where it understood its customers more. The niche was growing, and while that created opportunity for Zipcar it also created opportunity for competitors. Thus, Zipcar's use of strategic management techniques to understand the business helped it to gain competitive advantage over its competition.

Conclusion

Zipcar is an entrepreneurial success story, largely on the basis of the leadership of Scott Griffith, who shepherded the company from a fledgling operation with a good idea that was nowhere near profitability, until the point where it was sold to Avis and Griffith cashed out. Zipcar and Griffith therefore are representative of a number of principles at work. The market opportunity was identified, and the niche understood. Then the company made sure that it had the cash flow available to tap into this market. Moreover, it was important for the customer focus strategy to help guide the company to higher revenues. There were a lot of challenges along the way, but one of the keys to the entrepreneurial mindset is a determination to solve problems, which is something that was in evidence at Zipcar under the entrepreneurial leadership of Scott Griffith.