How companies can save themselves from being 'uberized'

Thomson ReutersPhoto illustration of logo of car-sharing service app Uber on a smartphone over a reserved lane for taxis in a street in Madrid

We all know the Uber story. How it swept in and turned the taxi and automotive industry on its head. It showed how quickly a middleman can come in and change your business - and how much has changed in this digital age.

Customers are expecting new ways of doing business, and if companies don't give them what they want, someone else will, Mark Hutchinson, the CEO of GE Digital Europe, told Business Insider at the IoT Solutions World Congress in Barcelona.

It's a risk he calls being "uberized."

"Customers will go from buying products to outcomes. So our view is that every business, every industry will be digitized, whether they are uberized is up to them. But in our world, we aren't going to let anybody uberize us," he said.

Customers are increasingly turning away from traditional ownership models to usage based models and this mindset is making its way into company culture. Company leaders are increasingly demanding new ways of doing business and IOT is what's going to make that possible, Hutchinson said.

We are already beginning to see this in some regards. For example, instead of selling a CT scan machine directly to a hospital, GE now offers hospitals the option of paying based on patient throughput, which is how many patients are put through the machine.

It's a clever new model, but it wasn't GE's idea. Hutchinson said it was actually something a client asked for.

"The problem for industry is that customers are going to be smarter than the product providers," Hutchinson said. "This is going to happen to everybody. Customers are figuring out that there needs to be a different risk parameter and that they need to share risk."

Some companies are beginning to figure this out and are trying to stay ahead of the curve by exploring new ways of doing business.

For example, Nils Herzberg, SAP's head of Internet of Things, told Business Insider that an SAP customer who once sold air compressors is now using an IOT solution to instead sell compressed air by the cubic meter, which is something no one else is currently doing.

Another SAP customer that rents out drilling equipment to construction companies had his machines connected so that he can charge by how it is being used instead of by how long its checked out.

These new payment concepts are muddying the waters a little bit for competitors and are still in the early days of implementation, but it's where business is heading as more companies adopt a consumer like mindset about how these models should work, Herzberg said.

"Companies want to win, and sometimes you have to change the rules of how you compete," Herzberg said. "This whole use age base thing, I think is probably in the next 20, 30 years going to be the way things are going to be."