Uber lessons in disruption
TAXI alternative Uber is throwing all the rules about hiring a car with driver out the (taxi) window.
In turning the taxi industry upside down, Uber is causing political storms across North America. The controversy in Australia has only just begun.
It’s just one example of our “disruption addiction”.
Once, keeping everything the same made people feel comfortable. Now we’ve become the disruption generation, accommodating disruption in deeply personal ways.
There’s hardly an extended family where partner separation is not somewhere in the mix. Same-sex relationships are standard. Relationships that come and go are no longer frowned on.
This acceptance of disruption in our personal lives displays itself in more hardnosed attitudes when we operate as consumers. We’re unforgiving of businesses that don’t respond instantly to our personal wants. “Disrupt your business” or die is our unspoken message.
Uber’s response is disrupting the viability of the regulated taxi industry cartels. Uber connects consumers directly with the service provider, the owner-driver.
The drivers are self-employed. Unlike taxi drivers, Uber small-business drivers choose their jobs and the price they charge. Uber drivers aren’t forced to accept fares. Consumers pick the driver they want at the price they are prepared to pay, displayed on the Uber mobile app. In contrast, the price for taxi services is decided by a Big Brother regulator.
It’s pure free market. Uber doesn’t provide transport services. It’s a free-market facilitator, like a stockmarket for personal transport services with an array of checks and balances.
We consumers provide ratings on drivers displayed on the Uber app for others to see. “Sleazy”, unpleasant drivers driving dirty vehicles are identified. People stop choosing them.
Uber drivers have potentially higher income security and better safety from abusive and fare evasive passengers. To be an Uber customer, you must register with Uber, giving personal and credit card details. Payment happens automatically. If you’re obnoxious or violent towards a driver, you’re easily traced.
Uber’s surge-pricing system means that in peak demand prices go up, sometimes dramatically. But higher prices attract more drivers providing faster service to customers who are prepared to pay. Sometimes this backfires on Uber, but they are quick learners.
During the Lindt cafe siege in Sydney in December, much of the CBD was evacuated. Demand for Uber drivers skyrocketed, kicking in its automatic price surge. This infuriated many customers. The following day, Uber publicly apologised, contacted every customer, saying Uber was wrong, and refunded fares for anyone affected by the emergency.
The regulated taxi industry would be incapable of even administering such refunds, let alone responding quickly.
Uber represents disruption at its most agile. It’s existence scares the taxi cartels, developed under and because of taxi regulation. This is where uncomfortable politics is kicking in. Taxi regulation has been developed to “protect” consumers and ensure service standards. But the regulations also protect Mr Big taxi cartels. Unsurprisingly, the cartels are fighting to protect their business models, pressing regulators to prosecute Uber drivers. Small taxi owners are the public fronts in their campaigning.
Politicians are being heavily lobbied. Allegedly, Uber is a big, bad business threatening small taxi owners. But Uber is truly smart.
It is spending a fortune in North America on lobbyists, putting Uber’s position directly to politicians and regulators. Uber pays fines imposed on its drivers. But smartest of all is Uber’s communication directly with its customers.
Where Uber is under regulator threat in a US state or Canadian province, it informs its local customer base of the threat, asking the customers to contact the regulator and politicians.
The result has been swarms of Uber customers pressing the Uber case with individual regulators as well as with politicians.
This is political disruption on a new scale. Uber is not just a new technology or service. It’s a lobbying machine galvanising huge numbers of individuals. This disruptive power is not about “big business”. It’s the power of disruption that delivers benefits to individuals. If the Uber service did not satisfy the needs of its customers and drivers, it would have no influence and would die.
For politicians this is massively confusing and difficult. Every politician wants to be seen to be a lover of small business. Consequently, politicians want to be seen supporting small taxi cab owners. But Uber’s activist support from customers and drivers counters this. If politicians aren’t careful they look like “yesterday” people — political death!
This is disruption. Politicians who have built their power on the back of entrenched interests are vulnerable like never before. We, the disruption generation, have accommodated disruption in our personal lives and even welcome it. Adherence to expectations enforced by entrenched interests is not tolerated when something different delivers something better.
Disruption has become a new rule.
Ken Phillips is executive director of Independent Contractors Australia and author of Independence and the Death of Employment. Article from The Australian 5th January 2015.
