The tide of disruptive business rises – don’t be King Canute

Amongst the wave of disapproval being hurled at bike-share schemes at the moment, there’s an interestingly thought-through argument in today’s Sydney Morning Herald. The argument is that the real problem with bike share schemes and similar disruptive business models is that they are taking advantage of public space – and that’s a problem not for the public, but for small businesses that don’t do the same.

Imagine if a local cafe put several coffee carts on footpaths without council approval or paying a fee. Or if McDonald’s slapped up thousands of mini McCafes in the suburbs without neighbourhood consultation, council permits or fees. There would be outrage.

On first look the author is quite right. Disruptive businesses are in fact competing by using public space or by not adhering to the same rules as traditional businesses. So the bike share schemes get to take advantage of free parking. AirTasker and Uber gets people willing to work without factoring in overheads or superannuation. AirBnB doesn’t have to worry about hotel regulations. And so on. It is in fact, not fair.

While it’s not fair, it is the very definition of a disruptive business model. If they were doing things differently they, well, wouldn’t be disruptive.

Now over time some of these businesses will be forced to pay for what they currently slide around and will become more traditional. Some wont. Some will be replaced by even more disruptive models. Standing in front of that and saying ‘stop’ is a brave move.

Why is it brave? Well because the costs of all of this are relatively hidden, but the benefits are clear. Having a meal delivered is a clear benefit. Being able to find a nice apartment for your holiday is a clear benefit. Hopping in a car that’s cheaper than a taxi is a clear benefit. The fact that the cost savings we enjoy now, we’ll all be paying for down the track because none of the people involve are properly looking to their retirement in 40 years time is just too vague to be effectively weighed up.

So it’s true that it probably is wrong that so many new businesses are based upon using public space or legally dodging restrictions placed on old, established businesses. But the only reason that this is a story is that we, the consuming public, can’t seem to separate out in our heads who the ‘us’ and the ‘them’ is – and that applies to old businesses as well as disruptive ones. We all hate the banks, but we all want their dividends in our superannuation. We don’t like the fact delivery companies rely on poorly paid piece-rate workers, but we do like getting hot food via an app.

It’s simply not possible to have it both ways. If we want the immediate benefits that disruptive business models bring, we have to accept that something in the status quo has to give. Personally I don’t agree with all of the points  of giving or like all that’s happening; but I don’t believe it’s going to be stopped by a pile of regulations – simply because too many people benefit immediately from the services being provided.

It would be nice to think that the worst cases will be moderated by laws – a bit like a sandcastle dam protecting a couple of meters of the beach for a while. And that may be so. But the overall trend is clear and inexorable – the tide is rising and wont be stopped.

Poor bike share may turn out to be the sacrificial lamb though. The number of users, or even potential users, is vastly out-weighed by those willing to disapprove of it because of the actions of a few vandals. It may well end up being regulated out of existence just to reassure everyone that the world is not changing.

But that won’t alter the fact that small traditional businesses, or big traditional businesses, cannot practically be protected from in-coming disruptive business models – they’re going to have to change too.