Lyft, Uber, and “Hyper-Capitalism”

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The Lyft IPO tells us “new economy models” are now mainstream

With Lyft going public today, our attention is fixed on the “gig economy”, “collaborative economy” and other “new economy models”. What most of these new economy models have in common is that they are based on “Platform Business Models” aka “Networked Markets”. These multi-sided, market-generating approaches to building new enterprises are having an inestimable impact on industry as well as how we as individuals use technology to work with each other.

What is it about the gig economy that makes us nervous?

While the benefits of these transformative platform businesses are being reaped by millions, there is something about them that gives us pause. And it’s more than simply people getting replaced by machines or established businesses being disrupted.

There are lots of specifics we could go into, but one critique stood out to me back in 2013 by Jeremiah Owyang, an industry analyst and strategic thinker. In his “The Dark Side to the Collaborative Economy”, he listed several points that I really agreed with. And one point that I disagreed with:

Socialistic values are at odds with free market capitalism. Boom. I swore to myself I wouldn’t bring it up in public, but it warrants a discussion. The collaborative economy, like the internet and social media is a form of socialism where the crowd gains power over institutions. History is rife with examples of variations of socialism being challenged, notworking at all, or in a few cases, working just fine (see Northern Europe). Nothing I learned in business school prepared me for these radical models where corporations, and capitalism as we knew it, are upended by this radical change.

Hyper-Capitalism

“Socialist values are at odds with free market capitalism.” While I agreed with this statement at a very general level, at the time I didn’t think it applied to most collaborative economy or gig economy platforms. If anything, the collaborative economy, rather than evolving along socialist lines, is more likely to turn into something worse if not tempered with a healthy dose of humanity. This potential scenario is that of a rampant, omnipresent form of capitalism that I like to call, for lack of a better word, “Hyper-Capitalism.” To describe this concept, let’s speculate upon some new economy scenarios that, if you think about it, get really dystopian, really fast.

“Smart stuff” and the internet of things

We are just now starting to scratch the surface of the data surrounding our lives. This includes:

— Our likes, dislikes, technology usage patterns, locations, and social connections

—Pyschometric and behavioral data indicating our likelihood of performing an action

— Data regarding the things we own

— Sensor data (including biometric data) from all of our devices as well as other devices these now interact with

The day is coming when it will be hard to find a product that isn’t “smart” and “connected” to the internet / IoT. This environment of computing power and communication surrounding us has far reaching implications for ourselves personally as well as for the most mundane durable goods we purchase for ourselves.

Thought experiment: the skilsaw that makes money when you’re not using it

To the extent our durable goods (e.g. washing machines, power tools, furniture, lighting, sporting equipment, etc) are smart/connected, they are potential candidates for inclusion in “sharing economy” and other new economy models. This has some really huge implications, namely:

— Any smart/connected durable good can be contributed to the sharing economy and become a source of personal revenue

— Like the hotel industry, we will see “overcapacity” of durable goods (why buy a skilsaw if you can borrow one from somebody down the street for $5)

— New smart/connected durable goods will be connected to IoT sharing platforms before they are ever purchased and will be priced based on IoT sharing revenue participation (i.e. if the seller participates in IoT sharing revenues, you might get a significant price discount on that skilsaw)

All of this results in us really optimizing our choices around which durable goods we really want to own, and which ones we want to borrow. We will potentially make those decisions based on how much our durable goods will make for us based on the “capacity utilization” and revenue of such goods in our area.

In essence, the average consumer becomes a capitalist at a very personal level as each durable goods purchasing decision gets scrutinized from the standpoint of an efficient, return-maximizing allocation of hard-earned cash.

The part where things get really dystopian

As we start to optimize our ownership of things based upon the returns our things are providing, we will similarly scrutinize how we spend our time as well because, after all, “time is money”. We start to think about our return on that spare hour on a Thursday evening. Or the trip home from the office with an empty car and just enough time to pick up someone’s groceries and drop them off for them. Or maybe we quit our jobs altogether if we see we can make more per hour by making our time and skills as people available on the gig economy / collaborative economy.

Are we turning people into things?

As we start to compare “capacity utilization” and “IRR” of people and things (something that clearly Uber is considering as it moves towards autonomous vehicles), the danger is that we start to think of people AS things, as inputs in an equation that has outputs. The greatest nightmare of all is not people being replaced by machines so much as people being treated LIKE machines and having this form of thinking and living being persistent and omnipresent in our lives and social interactions.

People are not commodities. People matter in a way that equipment doesn’t. Just as the industrial revolution’s mechanization trended toward the dehumanization of work, new economy models, if not tempered, could have a dehumanizing streak to the extent people’s time becomes a commodity assessed in the same way that machine time is.

A human future is one with meaning

A world of incessant measurement fails to realize the value of things immeasurable. As we build new economy models and businesses, let us strive to contribute to the meaning each human derives from their work and help them fulfill their unique potential

The only way to deal with change is unleash it

Photo Credit: Marco Nürnberger

Photo Credit: Marco Nürnberger

When “the world has moved on” but your business hasn’t

Businesses are put at risk when external factors (e.g. customer needs, demographics, technology, competition, public policy, etc. ) change but internal factors (operations, strategy, business models, systems, capabilities, culture, etc.) stay the same. As Stephen King says, when “the world has moved on” but your organization is still “business as usual”, things (e.g. business models, profits, customer satisfaction, solvency, etc.) start to break.

What exacerbates the situation is today the world is “moving on” faster than ever. Organizations need to be responsive, adaptive, and dynamic to meet the challenges of today’s accelerating marketplace and continue to meet customer needs.

“Strategery” and other temporary fixes

None of this is new information to business leaders. Fortunately, the MBA industry has furnished the modern executive with a hefty strategic toolkit to deal with change. So we sharpen our pencils, go reread Sun Tzu’s “The Art of War, put our best minds together, and indulge in vast amounts of “strategery” around operations, systems, finance, product, marketing, etc. We engage consultants to help us restructure our companies and/or investment bankers to help us acquire new divisions. We hire new people. We fire old people.

The problem with simply applying strategy as we know it, is that it ignores the value of the human network at work. If anything, it cripples the value of this network. In order for internal change to keep up with external change, your people have to change what they are doing, the skills they are learning, and who they are working with.

Modern organizational structures are still not good at enabling such changes because of their dependence upon “command-and-control” mechanisms. This can be problematic because when disruptive innovation occurs or the market context accelerates, a 1–3 year strategic plan can become irrelevant in a matter of months. Strategy and business restructuring can only go so far. Companies need an extra edge if they want to be dynamic enough to deal with today’s speed of change.

To have a dynamic organization, you need dynamic people

What organizations really need are dynamic people or, better put, they need their people to be dynamic. Organizations need intrapreneurs and initiative-takers. They need people willing to try something new and have the internal connections and support to pull it off. They need individuals who can inspire co-workers to go above and beyond!

Underneath the ordinary day-to-day routines, job descriptions, and management miscellanea, these people already exist in your organization. That said, they’re on a very short leash and lack the permission and encouragement to go across organizational boundary lines to do extraordinary things. They are dynamic people, just not at work.

5 tips to unleash your agents of change

Mahatma Gandhi would likely approve of the following liberties we’ve taken with his words:

“Be the change that you wish to see in [your organization].”

The best people in your organization want to make an impact. They want to help evolve your organization, be customer-centric, and win! Here are a few simple steps you can take to encourage people who want to be the change you need in your organization:

  1. Provide transparency across departmental lines regarding project opportunities, learning & development opportunities, needs, and resources. Provide time to appropriately allocate towards non-core activities.

  2. Foster a culture of helpfulness and service oriented toward “internal customers”.

  3. Roll out a peer-based learning/mentoring/upskilling program.

  4. Encourage cross-functional collaboration by publicly highlighting and rewarding the best cross-functional teams.

  5. Hold managers accountable for developing their people via experiential learning, project work, and relationship-building outside of their departments.

“PEOPLE are the people that are going to help you...” — Gary Vaynerchuk

As you put people in a position to evolve themselves and their roles, they will become the change agents your organization needs as it moves into the future.


"Change Things Up"​ To Transform Your Organization

Photo Credit: Alan Levine

Photo Credit: Alan Levine

Summary: Sometimes “changing things up” — switching out routines, trying something new, or maybe simply taking a break — can have interesting, often unexpected benefits at the individual and organizational level. These include new perspectives, skills development, the discovery of latent talent and possibilities, and the ability to come at something fresh. The following are mostly personal anecdotes, but there is a metaphor herein as well for agile organizations that need to change things up in order to deliver for the customer, innovate, and stay competitive.

After a really brain-heavy year, I remember one summer my father found a job for me close to our home on Camano Island, WA. The job entailed replacing old water meters in a neighborhood with a friend of mine from high school. Each water meter was contained in a big concrete box which we had to extract and replace which is all fine and dandy. Except, more often than not, these water meters were underneath gravel driveways that had been driven over for decades and therefore consisted of hard pan clay and rock. So the only way to get through the ground to replace the water meter with pick and shovel. I mean, this was old school, “I’ve been working on the railroad” kinda stuff: physically intense, back-breaking work.

And that’s what I did all summer.

“So, that sounds like an exhausting Summer.”

In certain sense, maybe so. But I beg to differ actually. Why? Because the previous year had been super draining mentally — my brain needed some downtime to collect itself. For me, that summer was actually super rejuvenating, physically vigorous, and I got to hang out with an old friend. I returned to university the following year and did way better than I was expecting.

The analogy I’d draw is that changing things up at work can have unforeseen benefits. By changing things up, I mean learning something new, working with someone new, or (taking a page out of Reshma Saujani’s playbook) trying something new even if you think you might suck at it. Who knows? You might be amazing at that thing! Or you might meet someone who will transform your career! Or you might fall in love with a new direction or area of knowledge that could be key to your future. Or you might just get the break you need to come back to that core thing you do and just crush it.

At the organizational level, "changing things up" can make an organization resilient to volatility in the marketplace. Here's what "changing things up" organizationally often looks like:

  1. Putting people in a position to work cross-functionally,

  2. Providing an adequate amount of autonomy and internal transparency (something Neat Work can help with) so people can avail themselves of the opportunities that surround them, and

  3. Creating a cultural expectation around career growth, helpfulness, and “re-creation” (fun activities that build relationships, spawn opportunities, and create stakeholder value).

So take a chance! “Insert a little randomness” into the flow of things (as Nassim Nicholas Taleb would put it) by changing things up at work. By so doing, your organization will become more resilient to the acceleration that surrounds it. And so will you