Disrupting the status quo

I have always liked the concept of disruptive technologies – technological advances that change the way things work in a drastic way. The effect of disruptive technologies is to break the “rules” by which business operates. A company may be producing a product, marketing and selling it successfully. They can continue to develop that product enthusiastically and competently. Then, one day, someone develops a new technology that complete revolutionizes the market in which they operated and they eat their lunch.

An example is computer mass storage devices. At the high level, these progressed from cards and paper tape, to drums and magnetic tape, to magnetic disks, and now we have solid state drives [SSDs]. Within this progress, the dominant manufacturers of hard drives changed several times, as different technologies were developed. Consumers are often blissfully unaware of huge changes resulting from disruptive technologies, but, in other cases, they are affected very tangibly …

The most disruptive technology, that has emerged in my lifetime [so far!], is the Internet.

As the Internet has become part of almost everyone’s life, numerous businesses have been transformed. The really obvious example is Amazon, who changed the market for books for ever. By providing an amazing selection and very efficient delivery, Amazon changed shoppers expectations to the detriment of traditional bookstores. Having been an Amazon customer for more than 20 years, I can hardly remember a life before them. [I should note that I am a share-holder in a local cooperative bookstore, as I do recognize the importance of such stores to a community.]

In more recent years, the game-changing business, that has caught my attention, is Uber. They started out by using a fusion of available technology [the Internet and smart phones] to provide an efficient service that fulfilled a real need. The idea that you order a ride and quickly know what it will cost and when it will arrive sounds a small step, but it was a real advance. Add to this the elimination of payment problems and the service become compelling. What I find particularly intriguing is how their business model morphs somewhat to accommodate local business climates.

When Uber started out in the US, they were apparently very unregulated. This enabled them to grow rapidly and respond to demand. In some places there was a big shortage of taxis [I recall waiting for hours a few years back in San Jose] and Uber filled that gap. This low-regulation model has been used elsewhere. I was in India recently and Uber seemed quite free and easy there, for example.

In other countries, Uber have faced regulation. In London, for example, I do not know how their license was termed, but I am aware that, at the time of writing, its renewal is under negotiation. In Stockholm, I found that Uber had filled a different niche. Stockholm taxis are highly regulated. There are a handful of big, well-known companies. They are safe to use and customers are not ripped off. There are a small number of companies who manage to appear to be one of the big ones, who are well known for their ability to defraud customers. Then, there are numerous tiny companies, who want to operate legitimately and legally, but do not have the solid reputation of the “big boys”. These small companies have all signed up with Uber. So, you call an Uber ride and a “real” taxi arrives. I liked this very much, as I felt that I was supporting a small business and knew that I was not going to be ripped off.

Regardless of all the controversy, it is clear to me that Uber provide the kind of service that customers actually want. Most of the objections come from traditional operators, who do not want to change their practices. I just hope that Uber can negotiate their way through all the necessary regulations, as the consumer will be the winner.