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How the ride-share fight isn't just about taxis

August 13, 2014

Uber, along with its competitor and policy partner-in-sector Lyft, is about to set off a good old-fashioned war over innovation.

The ongoing, fever-pitched and almost hand-to-hand combat between traditional taxis and ride-share services might seem like just another nose-breaking scrap between rivals in a market space. As the fight explodes from multicity trench warfare over local regulations to a new political front in Washington, it’s becoming more than just an isolated skirmish.

The outcome, along with parallel brawls over such issues as net neutrality, could very well shape a larger and much more fundamental debate over the role government plays in fostering innovation.

As a result, what started off innocently enough as tech-savvy urban dwelling millenials and Gen Xers ditching their cars for someone else’s ride is now the front line of the centuries-old philosophical friction between business and regulation. The contours of the debate are familiar. The ride share players, however, are somewhat quirky since they are the last to be considered key purveyors of true technological innovation. 

Normally, the public would find itself looking in the direction of outfits like Google, Microsoft, Amazon and others.  Yet ride-sharing has turned into a disruptive force so intense that it is reshaping the definition of customer experience (or “CX”). Forrester analyst Phil Murphy devotes an entire section of a research note to it. “The age of the customer challenge for application development and delivery leaders is to innovate to disrupt their industry the way Uber has in transportation—and to anticipate and out-innovate competitors,” argues Murphy. “Innovation will transform application strategies, organizational structures, and sourcing strategies to deliver software solutions that help retain and enrich customers through excellent experiences and fuel business growth by attracting new customers.”

Such acknowledgement from both customers of ride share and analysts alike feels like an existential threat to heavily regulated taxicabs requiring a license to operate. Interestingly enough, the conversation has yet to prompt any large-scale innovation by old school taxis, nor has it triggered the taxi traditionalists to—at least—emulate the Uber or Lyft model. 

Instead, it’s exposed a generational rift in how political advocacy and public policy making is perceived and executed. Millenial-inspired innovators just didn’t think about all that. They’ve simply relied on business win-win CX to organically shape the discourse and ultimately put pressure on lawmakers—and, in the process, seemed genuinely flabbergasted by the gritty lobbying skills of a scrappy analog taxi industry. Uber and Lyft are now playing catch-up (a weird feeling for innovators).

The younger ride-share industry is skilled in creating the newest groundbreaking transportation app. Yet, it was caught unaware by the grip-and-grin politicking needed to lobby taxi commissions, local city councilors and state legislators. In most cities, the taxi interests had the advantage of a longstanding machine already baked into the government regulatory apparatus. 

Taxi sector resistance has managed to, for the moment, stall the tables. That worries analysts like Forrester’s John McCarthy and Ted Schadler, who lament larger consequences for the innovation economy in which “governments in developing and developed countries alike will use regulations, tariffs, and antitrust measures to protect local industries by slowing the growth in digital experiences.”

The fact that the battle has now reached Capitol Hill and is being exploited by one political party in a fresh bid for millenial voters in 2016 means the stakes have been raised substantially. But it also means innovators will need to do a number of things when innovating, perhaps tapping into the type of expertise that can provide guidance on future regulatory snags. In the meantime, as innovators adapt to the policy oversight environment, opportunities abound for talent that can develop and support the technology while helping digitalized companies comply with government creed. It will be a tricky balance.

Charles Ellison is a senior analyst relations strategist for TEKsystems. He keeps close tabs on changes and public policy shaping the innovation space. He is also a former congressional staffer, senior aide to state and local elected officials and an expert advocacy strategist. You can reach him with questions and comments @twoARguys via Twitter.

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