The only way to fight disruption

As I was driving home the other day, I had the misfortune of getting stuck in standstill traffic for over 90 minutes.   Despite trying every side street I can think of, I was just stuck – going nowhere fast!   Turns out that there was a massive protest against Uber by taxi drivers who intentionally blocked all lanes of traffic.

Uber protests have become commonplace around the world as the taxi industry and municipalities are doing anything in their power to keep Uber and other ride sharing services out of their cities.

In a way, I can empathize with taxi drivers. It isn’t only their jobs that are at risk, but their entire lives.   What many of us don’t realize is that a taxi medallion, or, in other words, a permit to operate a taxi, is actually one of the greatest producing investments in the last 30 years.   Taxi medallions have traditionally been appreciating in value due to limitations that municipalities place on the amount of taxi licenses that are issued each year. Dating back to the 1930s, medallions in major cities cost big bucks, with some of them easily spanning into high six digits.

For example: Boston ($700k), San Francisco ($250K), Chicago ($350K) and New York ($1M+).

For a taxi driver, the appreciation of medallions act like a retirement plan.   Their entire future and the future of their families may be dependent on the value of that medallion when they’re ready to hand in their keys for good.   To add to that, there’s also an entire industry of middlemen – Medallion managers, who own and lease medallions to cab drivers. Today, medallion managers serve almost the same function as property managers in the residential rental industry: A hands-off investor with many medallions can hire a management company to find drivers to lease them.

In a recent auction of 50 new medallions in Chicago, the city set the minimum bid at $360,000, just above what most owners considered the market price. The auction was widely publicized — and apparently no one came.  A sign of the times and a clear signal that should have both drivers and medallion owners very concerned.

In contrast, Uber and other ride-sharing drivers don’t require medallions. They only require a phone, an app, and some basic orientation to get started in the business. Even previous barriers-to-entry such as knowledge of city streets or accepting credit card payments have been removed and are contained within the app.

With the market being wide open to amateurs, part-timers and the underemployed, medallions have lost their exclusivity, and with that, there goes the appreciation of their value. It is no wonder taxi drivers are staging protests all over the world, with some sadly resorting to violence and causing agony for other drivers and passengers everywhere.

While there’s clearly a lot at stake here, I can’t help it but ponder what these protests and fights seek to accomplish? Who are the taxi drivers trying to punish? Most importantly, is there a way for taxi drivers to spend their time and energy elsewhere, such as in trying to actually outcompete Uber ?

It’s easy to label taxi drivers’ resistance to ridesharing companies as just a bunch of people trying to stop progress. But in fact, most of them don’t mind the competition from Uber.   All they really want is the ride-sharing companies to play by the same rules.   Rules that some might argue are outdated, by nonetheless, they exist for a reason.

Personally, I think that counting on regulators to enforce the rules is just wishful thinking.  Even if they wanted to (and many have been trying), who is going to enforce the law? Are we counting on already-stretched law enforcement to chase down illegal UberX drivers using sting operations? Are taxpayers willing to fund that?

Drivers and medallion owners are spending their time on the streets protesting and in our court system fighting to uphold the rules.   What they don’t understand is that disruptors don’t play by the rules.   Uber doesn’t play by the rules.  Amazon doesn’t play by the rules.  Neither does Facebook or any other successful digital company that has emerged in the past decade or so.  They don’t seek the break the law, but aim to rethink the very norms by which we’ve been living our lives in past decades or even centuries in some cases.

Digital companies are changing the way people travel, save, learn, eat, pay, lend—and more. Typically positioned as alternatives, they offer, among other things, financial services without being banks, car services without being taxi companies, and somewhere to stay without being hotels.

This, of course has regulators’ heads spinning as they struggle to make sense of the changed industry ecosystems they oversee as they try to determine whether to permit or prohibit these digital disruptors. It is a bit like walking on eggshells. On one hand, innovation equals growth and societal progress, while on the other, there are likely still regulations that make sense and are there to protect consumers and employees.

For regulators, it is always a balance between the opportunity and threat that comes to play.   It might be the right thing to fight a digital disruptor, putting them through red tape and court systems in hopes they run out of cash, but what are we giving up in exchange? What are we depriving constituents from?

For incumbents, if your time is the scarcest resource, do you spend it fighting disruptors in courts?  or should you spend it trying to figure out how to one-up them?

I can’t help but wonder why hasn’t a single traditional taxi company managed to even copy Uber’s model or even parts of it? Even if they improved things such as payments (there’s nothing like being late for a flight when the taxi driver decides to pull out a carbon-copy credit card machine to process your payment).   Or how about having higher standards with cleaner and more pleasant fleets of vehicles?

It isn’t necessarily that Uber is an exceptionally brilliant company.   They simply understand how to better serve customers’ needs and wants.   They just want you to take your first Uber ride and you’ll be hooked.   Is it that difficult to copy or even outdo the Uber experience or the AirBNB experience, or Apple Pay experience?

Granted, there are barriers such as fragmentation in certain industries, costs, among others, but it all depends on your mindset.   It will dictate where your time and energy are spent.   You could choose to spend years lobbying municipalities, courts and even resorting to violent protests.   You can choose to spend your time in denial.   But that’s not what’s going to fix the issue.   Whether it’s a medallion or the market value of your stock, the only way to combat digital disruptors is with a different mindset.

A mindset? huh? Yes!  It starts with a mindset.  For starters, you can’t think of yourself as the victim here.   What you’ve been given is a unique opportunity to be even better.   Does it involve major change? Yes!   Will be it easy? Heck No!   But the first step for every organization and the individuals within them need to look around and adopt a definitivemindset – a growth mindset.

In her book, Mindset: The New Psychology of Success, Stanford psychologist Carol Dweck, emphasizes how changing even the simplest beliefs can have profound impact on nearly every aspect of our lives.

Dweck found in her research, that people generally stick to one of two mindsets.  A “fixed mindset” assumes that our character, intelligence, and creative ability are static givens which we can’t change in any meaningful way, and success is the affirmation of that inherent intelligence, an assessment of how those givens measure up against an equally fixed standard; striving for success and avoiding failure at all costs become a way of maintaining the sense of being smart or skilled.

A growth mindset, on the other hand, thrives on challenge and sees failure not as evidence of unintelligence but as a heartening springboard for growth and for stretching our existing abilities.

A growth mindset lets you see things beyond what you see when you are heads-down in busy work.   It allows you to re-frame your thinking and refocus on what’s really important.   What do your customers REALLY desire? Is it really a 40-page loan application? Is it yet another mobile app to add to the 75 they already have on their smartphone? Perhaps. But perhaps not.

When times get tough, leaders and organizations typically react with a fixed mindset.   They employ a relentless focus on cutting costs and gaining more efficiency.   In a way, companies react in a way similar to an individual who just walked out of a doctor’s office after being told to get their affairs in order because they only have 3 months to live.  Most conversations and priorities become all about efficiency and standardization, not about how we could out-innovate the competition. In most cases,  applying a fixed mindset is the absolute wrong move and sets organizations down one path – the death spiral.  Keeping your costs in check is critical.   Fading into irrelevance arguably has a much greater consequence.

A growth mindset focuses on the customer. It is all about redefining how you deliver value to them.   It makes the tough decisions between what REALLY matters and what no longer matters.   It involves rethinking literally everything – taking nothing for granted.   Mostly, it involves ditching the deadly “we’ve always done it this way” premise.

There are many lessons that we can learn from how companies are reacting to change. There is nothing more important than the mindset taken. It dictates the path, the moves, and the hard decisions that have to be made. Most importantly, it provides a way forward for organizations and their employees to be fully aware that the seas ahead are going to get pretty choppy. It creates a culture that is responsive to change because expectations are set and positive progress is demonstrated by actions.   Having a growth mindset means that we are in it together.   It’s a mentality of “WE”, as opposed to “ME”.

When it comes to change, the choice is yours.   You can choose to hang on to hopes that some day your “medallion” will once again flourish (Sorry – it just won’t).  You can adopt the mindset of protest, resistance and denial, or you can figure out how to move on and build the future with a growth mindset.

This article is published in collaboration with SAP Community Network. Publication does not imply endorsement of views by the World Economic Forum.

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Author: Reuven Gorsht writes for SAP Community Network.

Image: Traffic moves through the rain along interstate 5 in Encinitas, California. REUTERS/Mike Blake.