It's looking pretty sci-fi at the moment, you'd be forgiven for thinking that we're inches away from conjuring objects from thin air and completely transporting people into imagined worlds, or effortlessly across our own.
Well, sorry, but we're not there just yet. We've got some way to go. most of us are simply trying to fill a need, find a niche, create something people will pay for, pay the bills.
Technology is full of people with their feet on the ground, watching those who don't with interest.
So now you understand where I'm starting from when I talk to you about disruption and particularly disrupting industries. It's a phrase which attracts endless amounts of buzz, as we see a small number of companies start to very quickly dominate a field, world wide.
This makes business people to sit up and listen.
First they listen, then they talk.
So many words have been expended on this topic. Financial commentators, entrepreneurs and investors are desperate to reduce this idea to a reproducible formula. The goal seems to be a method where you can pick an industry, any industry, and make a brand new business into the next Uber.
I am not one of these people.
I can not give my perspective on this phenomena in a way that is backed up by economic theory, or conventional wisdom of business. This is just my perceptive, as someone who works with some of the tools involved, observing what's happening in the world around me.
So here's the business model of Uber (as well as AirBnB, and countless clones of both):
- Do not own what you're selling: Let someone else own it, maintain it, and provide the related services.
- Find someone who already owns it (and can provide the service): This is really important, the hardware involved should be something widely owned. Something you would not be surprised to find in any home.
- Make it easy for them to work for you: Create a platform where work appears in their lap, they have the option to take it, or not.
- Make it easy to employ them: If your service providers are not employees, but self-employed contractors, their rights and responsibilities are none of your concern. That's easy (and why there's a lot of back-lash against companies that work in this way).
- Make it easy for people to find the service provider: It should feel effortless, between deciding to use the service, and the service being provided.
- Make it easy to pay: Okay, this is a lie. The easiest way to pay is to take some money from your pocket, and hand it to the provider. Perhaps this should say make it easy to pay cashlessly, then, of course, take your cut.
Let's look at the business plan of a traditional nation wide taxi company.
- Start small: Unless you're the child of someone incredibly rich who's willing to give you a small million dollar loan with no obligation to pay it back, you don't have the money to do this all at once. Start in a smaller area, probably a town or city, and serve that area well.
- Do your market research: You need some idea of how many more taxis your city can support, what people will pay for a taxi, if there's a selling-point that other taxi companies don't have. You also need to know details like how many trips a day a taxi would have to take to pay for its upkeep. There's a lot of very important information here. Here's the rub, if you can't pay for your hardware, your business has failed.
- Buy your hardware: You need taxis, an office to co-ordinate them from, radio equipment (okay, mobile phones), and multiple phone lines to take commissions. This all costs, and as soon as you buy it, it's an asset. You also need to acquire appropriate licences
- Employ some people: If you've done your research, you know roughly how many journeys your company can make, and how many it needs to make. Ensure you have drivers to fill the need, and keep them there by giving them a contract where they are paid enough to pay their own bills. You now have various responsibilities to them, duties of care for their well-being (and this is a good thing).
- Provide a service: Now you have a company, get to it. Do your business, take calls, send taxis. Go about the day to day business of moving people from A to B.
- Grow incrementally: Once that business can sustain itself, think about expanding. Perhaps to the nearest city, or somewhere people often want lifts to. With each success, start the next. Eventually you'll be nation wide, even world wide.
- Hardware: The employee owns the hardware, maintains it, cleans the seats when a punter is sick, fills it with fuel. With no responsibility for the vehicle, a huge expense is ignored. Each service provider only provides the hardware they need.
- Responsibility to the Employee: Thanks to decades of political and social struggle, workers have rights. These differ by nation, but employers are responsible for their employees and their access to water, for instance, and toilet facilities. Employers are responsible for their employees safety (at work) and well-being. If they fail in these responsibilities, there are methods of holding the employer responsible. In the disruptor model, service providers are technically their own employer, so no taking care of people is required.
- Responsibility to the Customer: A traditional company has to take some control over the quality of the service they provide, and has a duty of care to the customer. To see that they arrive safe and well. There are many laws around the behaviour of service providers to the customer. Disruptors delegate this responsiblity to the service provider themselves.
- Financial responsibility: When the traditional taxi company gets it wrong, they fail. If they provide for more than the demand, they over-pay and lose money. If they can not meet demand, customers will look for someone else who does. When Uber over-supplies, some drivers don't get work, so they don't get paid, and we've just seen how that's their own responsibility. If they can not supply enough rides, they don't seem to mind people being stuck, or going back to traditional companies.
How to succeed in disrupting industries
- Many people can provide the service.
- The required hardware is commonplace.
- An industry exists to provide the service.
- Taxis - Uber, Lyft etc.
- Hotels - AirBnB and various others
- Food - Just Eat, Deliveroo etc.
How to disrupt an industry
- Find something parents do for their children.
- Give people a simple method of doing it casually, for low pay.
- Give people a simple way to engage their services.
- Take a cut.