The Sharing Economy : Disruption’s Tragic Flaw

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Uber represents a critical second wave. It bypasses old institutional structures not only to distribute information but also to distribute valued human and physical assets  directly to individuals.  It does this by providing a platform that enables drivers to share their underutilized assets with individuals in need of transport. This model is important because the two most significant sectors in need of mutation are health and education, which together constitute 20% of global GDP. In both cases, distributing care and learning directly to individuals will require new ways of organizing people and physical assets, not just digitalized information. This means that there is much at stake in this second wave — and much to learn from this “sharing” model.

One thing that both waves have in common is the shift is away from the mass toward the individual.  This suggests that the essential logic of mutation in our time involves providing individuals with the quality goods, services, experiences, and capabilities that they want, when they want them, how they want them, where they want them—and all at an affordable price.  This reorientation around the individual necessarily implies trustworthy relationships.  It implies a new kind of social contract based on a promise of advocacy and alignment with consumers’ genuine interests. As Schumpeter put it, “ the new consumer’s needs”  are the disciplinary guideline.

Despite the potential of Uber’s sharing model, its actions are full of contradictions.  Uber is under scrutiny for its failure to align with new consumers’ needs.  For example, in India an Uber driver was accused of raping a passenger. This set off a firestorm during which Uber was banned in New Delhi for failing to adequately screen its drivers. The point of screening would be to ensure that drivers’ capabilities align with passengers’ needs—most fundamentally their needs for safety and security. Uber faces opposition in many countries and cities with respect to driver screening and licensing: including Germany, the Philippines, South Korea, Spain, Australia, Belgium, Britain, Canada, Thailand, the Netherlands,  Portland, Oregon, San Francisco, London, and Los Angeles. To be sure, some of this resistance is the result of entrenched interests defending their territory. But genuine concerns about the quality and licensing of drivers cannot be written off solely as oligopolistic sour grapes. The failure to institutionalize around these bedrock customer needs violates Schumpeter’s evolutionary discipline to align with consumers’ needs.

The absence of creative customer -aligned  institution-building leaves Uber vulnerable to a wide range of other violations of the implied social contract. This is the systemic source of the recent scandals that have erupted at Uber over the last few months. For those who have missed the highlights:  News surfaced that Uber casually ignores its own privacy rules by tracking the rides of customers and even displaying them as a form of social entertainment. Other reports suggest the ease with which Uber employees can access private customer data and movements. An Uber executive used the real-time “God View” to track a journalist without her permission.  Another executive suggested funding “opposition research” to silence journalists who wrote negative articles about the company. Uber reportedly ran a “dirty tricks” campaign to undermine its competitor Lyft.  What these accounts share is a picture of a company without moorings in the institutional disciplines that shape the path to mutation.  Uber appears to be at best indifferent toward, at worst contemptuous of, its own customers. One cybersecurity expert suggests that customers disguise their destination when they use Uber, by requesting a ride to a nearby address.

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