Exec Spin: Harnessing Market Disruption
Friday, September 7, 2018
Posted by: Gary Hotze
Julia Kanouse, CEO, ITA
The gig economy is shaking things up across industries and verticals at a rate we haven't seen since the birth of the personal computer. This disruption has thrown age-old systems into havoc and has sent some industries into terminal decline while giving new-life and opportunity to others. This interruption is the nature of the market. Innovation and invention shake the foundations of age-old systems and change the game even if the new rules crown winners and losers.
Recently, New York Mayor Bill de Blasio signed a bill capping the expansion of Uber and Lyft vehicles in NYC. Ride-share has thrown city-wide transportation systems and infrastructure into disarray and the taxi industry into free-fall. For months, pressure has been building from various transportation constituencies in New York to saddle Uber and Lyft with serious regulation and growth restrictions. These voices have been echoed here in The Windy City. The Chicago Tribune1 and Crain's Chicago Business2 have both been weighing in heavily on the issue.
As with other new disruptive technologies and service models, there is a steep learning curve in implementation, regulation and, ultimately, understanding. The pain-point has certainly emerged on the streets of New York but regulation might not be the solution.
Chicago has always been a market rife with industry disruption for better or worse. The market continuously adjusts and finds ways to harness these new services and industries to its advantage. Even just within the technological community, companies such as CareerBuilder, Cars.com and Peapod have shaken up the status-quo in fairly static markets. Launched in '95 CareerBuilder was the first online job search engine in a market where the internet is now the primary means by which job-seekers search for employment opportunities and Peapod was the first online grocery delivery service to launch in 1996, well before the current meal and grocery delivery rage of the last few years. Both of these disruptive services changed the paradigm and created entirely new markets in the process.
For current “mobility as a service” market parallels, we only have to look back a few years to see similar cries about the restaurant apocalypse with the rise of Chicago-based GrubHub. Food delivery was to lay waste to fast casual and restaurant chains across the US. What we have seen instead is growth opportunity with traditional dining and establishment restaurants embracing delivery to expand service, profit margins and dining times.3 Traditionally, McDonald's strongest dining hours were breakfast and lunch but harnessing online delivery they've seen tremendous growth in their dinner time service and profits.3 This online-delivery embrace has fueled a Chicago-based GrubHub that's growing faster than Netflix.4 Regulations early in GrubHub's growth story might have been premature and unnecessary. The restaurant industry as a whole is finding new ways to leverage this platform to find success in non-traditional areas and models.
If the past is any indication, the market always finds a balance and self-corrects after a period of transition and oftentimes difficult headaches and complications. The bigger question ahead is how does the city work with mobility services to improve our transportation model without hampering them? Certainly, the transportation and data logistics that these companies can provide to improve regional transit and transportation is unparalleled. How policymakers can leverage these private services and their data for the benefit of the public should be at the forefront of any conversation where policy, tech and mobility are intersecting.
Transportation is multifaceted, multivariable and regulation that could hamper the development of new innovative solutions must be carefully considered. Ride sharing is only a fraction of any city’s transportation equation; future solutions must look holistically at how all systems and stakeholders work together to find more prosperous and beneficial solutions.