Killer sport

Innovations disrupt the status quo. They promise you something better, cheaper or different to attract you to be an adopter and it is only to be expected that the status quo will revolt, kick and scream to defeat the disrupter. Often, you can expect a sympathetic or ignorant authority to huff and puff and slow down the innovator. The successful innovator not only needs to have the skill to come up with and operationalise a good idea, but also the savvy to deal with the powerful forces of the opposition.

Remember when the ball point pen came on the scene? It got a ready adoption, even though it was a long time before exam authorities and government departments would accept documents written or signed with a ball pen. The poor Segway, the personal transporter based on gyroscopic sensors, could not overcome the opposition to its use in public spaces, and from a revolution, it is close to becoming a rich man’s toy.

Taxi aggregators have run into a similar opposition. Taxi aggregators, like Uber and Ola, do not employ or own taxis but deal with every driver as an independent entrepreneur. By assuring the customer of a vehicle when she needs one, they undercut years of brand building by automobile companies who want to tie your sense of status or esteem to owning one of their vehicles.

Thus, the taxi aggregator, like its disruptive cousins, the Airbnb and so on, has begun to draw the ire of those being disrupted. In the US, there are cases being argued in court that the aggregating companies must treat their drivers as employees and be brought under the purview of various labour laws. Thus, the freelance driver, who is otherwise a student, or a part time employee somewhere and now drives for Uber with an entrepreneurial zeal to make something extra, will give up his freedom to participate, and become another taxi driver for a taxi company.

Uber used technology to leverage the power of simple demand/supply economics in its favour. When demand is high and there is an insufficient number of vehicles on the road, surge pricing gave information to both the customer and the supplier to decide on how they can respond. Thus, if the need was urgent, the customer agreed to pay the higher price. The taxi entrepreneur, enjoying an evening with the family, could be motivated to break away from the party at the right price.

As demand dropped and supply increased, equilibrium returned. Beautiful, till established taxi companies began calling their friends in their favourite political party. Ignorant journalists joined. A recent report in an Indian newspaper on the efforts by a government to cap surge pricing, gloats that ‘Uber and Ola drivers will no longer be able to raise prices arbitrarily ’. That is certainly more appealing to the populist rather than to say that the government is once again interfering with market forces.

And surely, a new committee, probably headed by a senior civil servant, will look into this along with advisory bodies, and an army of bureaucrats, all determined to kill another disruptive innovation. This should certainly be the next sport in the Olympics.

The writer is a professor at the Jindal Global Business School, Delhi NCR and Suffolk University, Boston