Case study-Robin Chase Zipcar and an Inconvenient Discovery

Case study-Robin Chase Zipcar and an Inconvenient Discovery

Who is Robin Chase?

Robin Chase is the daughter of an American diplomat father who lived most of her childhood in the Middle East and a few years in various parts of the world due to the nature of the diplomatic work. Thus, Chase grew up in different multicultural societies, which later shaped her perspective of life and how she perceived other people. Chase learned from her father that everyone was equal and important; thus, every individual must respect individual differences (Chase, 2009). This global perception approach to life made her desire to come up with something that would impact society differently (Ancona & Reavis, 2014). Chase graduated from American University in Paris, and later she pursued a master’s of finance at the Massachusetts Institute of Technology (MIT Sloan).

Chase is the co-founder of Zipcar, an American car-sharing company and is currently a subsidiary of Avis Budget Group. Chase is married and has three children. She built Zipcar Company from scratch, making many mistakes but remaining hopeful that she would succeed. Chase is an open-minded, knowledgeable, and emotionally business-oriented lady. Her positive attitude toward other people helped her get an idea of how to build this company (Ancona & Reavis, 2014). She believed that everyone had the best side and, thus, did not hesitate to give anyone in her company a chance. In addition to being respectful and considerate, she is a hardworking lady who believes everything is possible.

How Chase Took On The Various Challenges

Chase encountered many challenges in her quest to launch and operate a company. Chase had worked in various companies as a top executive. Chase’s many years of work enabled her to amass much experience in management matters (Harrington, 2000). Despite working as a top executive, the dynamic nature of work got her tired, and she had a strong desire to own a company that would help solve some of the societal problems (Ancona & Reavis, 2014). She was indeed earning enough from her top management jobs but seemed not satisfied with working as an employee. She wanted to create jobs, employ people, and participate in community development.

The first challenge that Chase encountered was that she realized she did not have enough knowledge to become a fine management guru who could manage her own company. She doubted her graduate knowledge and felt it was not enough to propel her to the company CEO. To address this challenge, she applied for a master’s in finance at MIT Sloan (Ancona & Reavis, 2014). Unfortunately, her application was rejected because she was weak in mathematics, which is one of the core subjects one needs to be proficient in to handle a master’s in finance. She did not give up; she went for mathematics upgrade classes and improved her ratings, enabling her to secure a chance at MIT Sloan to pursue a master’s in finance (Chase, 2009). She believed that going through the successful courses would equip her with great knowledge that would help her handle the many challenges of managing a company.

The second challenge she encountered was finding a business idea on which she could be able to build a company. There were many ideas, but most were expensive and overwhelming; hence, she was at a crossroads, not knowing the best idea that would work. To solve this challenge, she often shared her thoughts with friends (Dinah, 2012). However, the actual idea came when she shared it with Antje Danielson, her former MIT Sloan classmate, and they decided to start a car-sharing company in Boston. Therefore, sharing her thoughts with people helped in solving the problem of finding the best and most viable business idea that would work for her (Ancona & Reavis, 2014). The car-sharing business was viable and appropriate because few firms were doing this kind of business in Boston, and technology was improving worldwide, providing an avenue where such business could thrive.

The third challenge that Chase faced was actualizing the business idea. She knew that getting a business idea would not be as big a problem as actualizing it. Putting a business idea into reality is where many people fail (Tice, 2012). Actualizing Zipcar Company was a torturous exercise since she did not have any prior knowledge of how this business works. She needed individuals with some experience to provide advice and guidance. Chase approached numerous business executives, some of whom gave her important knowledge, while some did not help much (Ancona & Reavis, 2014). However, with time, she got to the knowledge of where to start. Chase’s brother, Mark and her husband played a big role in launching this company because they were both professionals who brought their knowledge into the business.

Chase faced another challenge in finding the right people to take on various company responsibilities. One individual cannot run a company. It is a collective effort of many people, most of them professionals (Harrington, 2000). This was a young company that did not have the financial muscles to employ fine executives, but with her respect and brave character, she managed to get fine professionals to help her run it (Ancona & Reavis, 2014). Chase’s husband and brother were among the professionals who helped build this company.

Chase also faced the challenge of low return. In September, she realized that the company earned half what she expected. If the trend continued, the company could not survive (Chase, 2009). To solve this challenge, she applied her MIT finance knowledge to come up with a different pricing model and checked the competitors’ pricing models to try to stabilize the company.

Chase’s Leadership Style

In this case study, it is evident that Chase exhibited three leadership styles. First, she displayed an autocratic leadership style. The autocratic leadership style is where the leaders hardly consider the opinions of the employees. Leaders with autocratic leadership styles expect the employees to adhere to their decisions. This kind of leadership style is not sustainable for a long time (Hart et al., 2005). One piece of evidence showing that Chase used an autocratic leadership style was when she set the pricing model. When she realized that the company had earned half of what she expected, she knew she had chosen the wrong pricing model. She locked herself in a room and then came out and opted to increase the pricing, a move that employees believed would be futile (Demirtas, 2020). From this incident, it was clear that most of the decisions Chase made were on her own without engaging other employees. The finance knowledge she acquired from MIT Sloan made her believe she could make informed decisions independently without involving employees.

Chase also displayed a delegate leadership style. When hiring new employees, Chase did not hesitate to offer an opportunity to the applicants because she believed that everyone has a positive side. She allowed the newly hired individuals to navigate independently to ensure that they played a part in the company’s progress (Harrington, 2000). When she hired Stephen Oakley and Larry Slotnick, she believed in them and allowed them to play a part in whichever way. Later, when the company picked up, Slotnick became the fleet manager (Demirtas, 2020). Chase used a delegating leadership style because she did not have vast knowledge in other fields and thus allowed those with skills to carry out the tasks.

Lastly, Chase displayed a pacesetting type of leadership. The pacesetting leadership style is where a leader is on the front, sets high standards for the team, and expects them to follow. If there are doubts about certain decisions, leaders take the lead as an example so that the team members can follow. In launching and running this young company, Chase made hard decisions to show the team that she was determined and expected the team to follow (Hart, 2005). The car-sharing industry was complicated since many had tried and failed, but Chase was brave enough to succeed.

What She Should Do

Zipcar earned half of what Chase had expected, which made her worry that it would be impossible for the company to operate with such earnings. However, from my point of view, many startups usually experience such low earnings. Chase would not have been worried since this new company was just picking, and earning half the expected amount was not surprising. She needed to increase promotions so that many potential customers within Boston could become aware of the availability of Zipcar services. Marketing Zipcar services would automatically increase the customer base; hence, the sales volumes would be high, resulting in more income.

The second action that Chase should have taken is adjusting the pricing model. It was likely that the pricing model being used was inappropriate. Therefore, adjusting the pricing model and checking the daily rates could have helped increase revenues. Chase was supposed to experiment with various pricing models to settle on a model that worked best for the company.

One likely reason the earnings were half of what was expected was that the costs were much higher. One ultimate way of addressing this was adopting cost-cutting methodologies to help minimize costs. Since it was a young company, the management likely overspent on certain activities, increasing the cost. Therefore, Chase was supposed to relook at every cost to carry out possible cost-cutting so that the overall costs could be as minimal as possible.

Another action that Chase was supposed to take in that situation was to employ staff on a part-time basis rather than on a permanent basis. Permanent employees are paid more, and the incentives are even higher compared to part-time employees. Employing part-time employees could be a cost-cutting approach that could help reduce costs and increase revenues.

References

Ancona, D., & Reavis, C. (2014). Robin Chase, Zipcar, and an Inconvenient Discover. MIT Sloan School of Management

Chase, R. (2009). (Zipcar), StartupBootcamp. https://www.youtube.com/watch?v=Ks4B82CJkpo

Demirtas, O. (2020). A Handbook of Leadership Styles. Cambridge Scholars Publishing.

Dinah, E. (2012). Robin Chase: Zipcar’s Founder Finds a New Gear. Fortune.

Harrington, C. (2000). Car-Sharing Gaining Fans. The Canadian Press.

Hart, M. (2005). “Zipcar,” HBS Case No. 9-802-085, rev. August 24, 2005.

Hart, M., Roberts, M.J., & Stevens J.D. (2005). Zipcar: Refining the Business Model. HBS Case No. 9-803-096, rev. May 9, 2005; U.S. Census Data.

Tice, C. (2012). Zipcar: Two Moms, a Business Idea and $68 in the Bank. Entrepreneur.com.

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Case study: Robin Chase, Zipcar, and an Inconvenient Discovery.

Summary

In October 2000, with just a couple of weeks until the three-month-old car-sharing startup closed on its first round of venture capital funding, Zipcar co-founder Robin Chase made an alarming discovery: the amount of revenue that Zipcars had generated for the month of September was half of what she estimated.

Case study-Robin Chase Zipcar and an Inconvenient Discovery

After spending the previous 10 months networking, building a team, overseeing the development of technology, seeking funding, and otherwise navigating the confusing maze of twists and turns that entrepreneurs face in launching new ventures, this was one setback she was not expecting. Relying on her quantitative skills – discovered and subsequently honed while working for her MBA at MIT’s Sloan School of Management – Chase spent months modelling various pricing scenarios before finally taking the advice of a pricing expert who told her to “Stop worrying about it…. Make your best guess and go.” Upon discovering that her pricing model contained a grave mathematical error, Chase’s initial reaction was to lock herself in her bedroom and cry for two hours while the rest of the Zipcar team, working out of a spare bedroom in Chase’s house, carried on with their respective responsibilities. They had become used to Chase’s honest and emotional responses to setbacks. After collecting herself, Chase studied the previous month’s results and soon realized that in order for Zipcar to be profitable, the daily rate at which cars could be reserved had to increase by 20%. While Chase believed raising the daily rate was the right course of action, members of her team worried that such a move could potentially jeopardize the company’s developing relationship with its 430 and growing membership base right when the company was about to close on its first round of funding.

Your final analysis must include the following aspects.

Who is Robin Chase
Describe how she took on the various challenges
How would you describe her leadership style
What should she do? Explain in detail your reasons why you chose your answer.