Thursday, 29 May 2014

The human side of disruptive innovation

In the blue corner - Uber, the taxi app that puts a customer in touch with the nearest driver willing to drive you to wherever. In the red corner is the traditional licensed cab. An almighty fight beckons in most cities in the world.

Nowhere is this contrast starker than in London - the home of the black cab. Any visitor to London knows the unique black cabs that are ubiquitous all over the city. I know Londoners complain about them, just as people in any other city do of their own cabbies, but having seen a fair bit of the world, I can testify that London cabs are amongst the best. The cabs are spacious, they are almost always available, they go wherever you want, the drivers are usually good, they rarely cheat you and because of "The Knowledge" they know the way to where you want to go. The only drawback is that they are outrageously expensive ! Anybody who say "Bah" at my description of the London cabbie is welcome to meet his close cousin in New York  or a more distant cousin , the Chennai autowallah who are incidentally of exactly the same rudeness quotient.

"The Knowledge" is a unique feature of qualifying as a London cabbie. To get your license you have to master the roads and routes of the city intimately. During the test, you will be asked to go to odd places chosen at random and you have to know the exact route - no referring to maps, no asking anybody, no taking any help at all.  It has been this way historically. No London cabbie would say he didn't know the place you wanted to go to. That was great..... until the GPS came. In one stroke, all that  "knowledge" has become useless.  Its easy to say that is progress, but put yourself in the shoes of the cabbie who has spent 4 or 5 years slogging away at the routes, only to find the rug whisked from underneath him in an instant.

Uber, compounds this problem. One of the great advantages of the London cabbie was that he was (mostly) available anywhere. But it came at a price. Uber changes all that. A cheaper mini cab can be put in touch with a prospective customer in a jiffy.

Predictably the London cabbies are trying to protect their monopoly. They are launching court cases, they will go on a strike and disrupt London, etc etc.  But it is a losing battle. They don't stand a chance in the long run. London is not Paris where they will protect the surly, unavailable, rude driver as an essential part of Parisian culture !

I know this is all great for the customer, this is technology at its best offering a  real value to the customer, this has happened to so many industries and will no doubt happen again etc etc. And yet I can't but help feel a bit for the cabbie.

The cabbie is often a poor guy. He knows no other trade. He doesn't have a huge education. He slogged his butt to pass "The Knowledge", and works hard to make a living. In just a couple of years, through changes he doesn't comprehend, he may be out of a job. And what does he then do ? Not many options other than to get on the dole. The "society" that benefited from the technological change, now picks up the cost through the social welfare system.

I've often felt uncomfortable when change leads to unemployment of those who aren't easily employable elsewhere. Shareholders, companies and consumers benefit. That is good. But  some workers suffer and their costs are picked up by governments, and therefore societies. I can't but help feel a little pang of regret. Yes, they should adapt. Yes, they should retrain to find another job. Yes, that is the price of progress. I understand all that. But if I am a 50 something , with a couple of kids, trying to pay off a mortgage and I am thrown out into the streets for reasons I can't really comprehend , then its tough to appreciate logic and rationale.

Yes, I know its not new. Millions of factory workers have been through this. And yet, despite all the logic, I feel just a tad sorry for the London cabbie.

PS: I write this post under extreme stress. My good friend Sriram has turned into a grammar Nazi. I know my posts might cause the Queen to raise her upper lip at the English.  But to be caught out by an American    - that will deeply hurt my pride :):)


Sriram Khé said...

u no dat eye reed all da weigh 2 the yend, write?

In the role to which you have appointed me, ahem, did you notice the usage "its" when it instead should have been ... ;)


Ok, regarding the content ... I am shocked, shocked, that the pro-business, pro-capitalist Ramesh has a bleeding heart after all. His heart bleeds, even if only a drop or two, for the cabbie whose life is messed up by economic and technological forces beyond his control. Next thing you know he might say that we will have to strengthen the social safety net. Oh,wait, he does recognize that: "Not many options other than to get on the dole. The "society" that benefited from the technological change, now picks up the cost through the social welfare system."


All right ... seriously, yes, this is one heck of a problem. I often remind students that they ought not to bet all their undergraduate years on a particular kind of a job because careers are so volatile and will get increasingly volatile. They, of course, do not listen to me. But who ever has!

As you note, it is the middle-aged labor that gets screwed the most by the rapid disruptions that deliver aggregate social benefits. You and I and some of the readers of your blog have explored these issues before, too, via the urgency to rewrite the social contracts that countries have with their peoples. It will be a challenge, especially when the ideology to provide as minimum a safety net as possible gets more and more dominant.

Ramesh said...

@sriram - Much tickled that I am now qualifying for associate membership of the Bleeding Heart Liberals club. Much honoured :)

Yes, the social contract is all torn up. What should the new one be ? As a Distinguished Academic, please propose :)

The Million Miler said...

Remember a breed called stenographers and telex operators? I had the unfortunate task of "disestablishing" their roles early in my career! Perhaps you must write a post on how technology has changed giants and how they have turned their inherent brick and mortar assets into a strength. A case and point is the reinvention of India Post. Who writes letters these days, yet India Post has kind of reinvented itself as the last mile delivery option where technology doesn't go. You can send an email to any one in India even if they don't have an email address. India post receive the email, print and deliver like a letter! Strangely enough the case study on India Post was told to me by a Kiwi friend who works for NZ Post which is also trying to reinvent itself and convert their physical assets into a tech enabled solution. Big foray into retail banking (very imaginatively named Kiwibank!)and now I believe Logistics!

Ramesh said...

@Kiwi - You forget that I am from an earlier generation than you ! If you mentioned comptists, rather than telex operators, that would be something I would relate to :):)

I wouldn't be so complimentary as to say "reinvented" for India Post, but yes, they are trying to do the email last mile delivery. Many postal systems in the world have tried to get into both logistics and retail banking, but with limited success. Just goes to show that reinvention is not easy.

Sriram Khé said...

There is a difference between the disruptions in India versus the disruptions in the post-industrial economies in North America or Western Europe. Ramesh is all too familiar with the long-running series of my rants ( on the possibility that the digital disruptions might not lead to job creation. In many of those posts, Ramesh often disagreed with me and I almost every time reminded him that I was expressing those concerns in the context of the US and other advanced economies. The cabbie story fits into that broader discussion.

An economy like India or Indonesia will be able to create jobs in plenty because of their relatively late entry into this process. So, the postal system adapting is to be expected (and the criticism, which is justified, has always been that India's Ramamirthams do not allow for a lot more of disruptions and adaptations.) However, even in the case of india, the job multipliers from the digital revolution might be far lower than the jobs multiplier from the industrial revolution. To quite an extent, that has also been a major factor in the difference between the Chinese and Indian experiences over the past two decades--India going for the digital route, while China became the world's factory.

I have no freaking clue about what, therefore, ought to be done. All I know is that we--wherever we are on this planet--need to engage a lot more in these discussions than what we currently do. It is via such discussions that we will rethink many aspects of the social contract. It is not merely aspects like unemployment insurance that I refer to as the social contract, but everything from that to even things like public education.

So, yes, continue to blog away on topics like this and at least a few of us will talk here ... even if all these mean all talk and no shit ;)

J said...

This is a real problem in every field. Academics will potentially become London cabbies soon :( It is the speed of change that makes it so hard to adapt to.

Ramesh said...

@J - No way. You are all protected by that "brilliant" concept that begins with T and ends with E :)

Sriram Khé said...


TeeheeheE ;)

Ramesh said...

In the Supreme Court of the great state of Oregon

The people vs Sriram Khe

Judge "J" presiding

The defendant is accused of causing grievous bodily harm to a foreign citizen in the city of Bangalore by making him laugh uncontrollably rolling on the floor

All rise. Judge J is ready to pronounce sentence :)

Sriram Khé said...

Hey, I loved this graphic comparison ... The London Taxi Challenge: Black cab vs Uber. See which taxi was quicker and cheaper

Prats said...

Brilliant post. Being in the area of BPR has given me an insight a lot of time of change which sweeps the rug underneath the people. The enterprising ones try to get on the band wagon as soon as possible probably in the hope they will graduate to a higher paying skill set. While the others keep resisting the change till it is inevitable.

But on the extreme opposite end of the spectrum is this. Would love to know your views on this.

Ramesh said...

@Prats - Yeah I read that article and found it to be a gross exaggeration. Amma canteens are not a competitor to office canteens or even roadside hotels. They mostly serve the very poor. Its a great initiative in that nobody will go hungry on the streets. Its run quite professionally - clean and efficient and the subsidy bill to the exchequer is quite small.

Only the poor go there. Its a bit like the soup kitchens in the US except that it is state run. The miserable and the hungry can fill their stomachs. A few not so poor might go there occasionally, but won't be regulars. It isn't a gourmet meal. Its just simple food for the poor.

I think its actually a very good initiative.

Sriram Khé said...

And here is Larry Summers:
"The economic challenge of the future will not be producing enough. It will be providing enough good jobs. ... the challenge for economic policy will increasingly be generating enough work for all who need work for income, purchasing power and dignity. What will this require? The role of government was transformed to meet the needs of an industrial age by Gladstone, Bismarck and the two Roosevelts. We will need their equivalent if we are to meet the needs of the information age."

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