*originally published on LinkedIn on Feb 24, 2017 *
Urban landscape around the world is changing very fast. Cities are growing on seams and infrastructure is under tremendous strain. In a populous country like India this issue is even more conspicuous. You visit any big city and the first thing that strikes you is ‘Traffic congestion’. Everyday people are wasting productive man hours on the roads, stuck in traffic. A ‘Freakonomics’ type study on the financial loss due to traffic congestion is sure to throw a massive figure.
Interestingly this is also the era of online ride aggregators. Two of such big companies – Ola and Uber are locked in a battle of supremacy. These aggregators have not only aggregated the cabs but have put many many new cabs on the streets. These companies provide mobility to a maximum of 3-4 people in a cab. The current business model is such that for the consumers cabs are cheaper (or at best, little expensive) than the next alternative of commutation (autos, buses, metros etc.).
Recently I visited New Delhi and to my surprise roads were free of congestion and traffic was free flowing. Then I discovered that 1.5 lakhs cabs were off-duty due to a protest and hence the light traffic. It was indeed a welcome respite from congestion and pollution. People didn’t complain at all, they had resorted to buses and metros.
Cut back to late 1990s’, Kodak was one of the most powerful global brands. It was dominating photography across the globe. Kodak was thriving and happy but it forgot to look ahead and predict the future. Kodak believed that two guiding assumptions with photography are sacrosanct –
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It was not that Kodak was not an innovative company. It innovated a lot in the field of photography but within these two guiding assumptions.
What happened at the the turn of the century was historic. Kodak lost its power and a new shape and form of photography established itself within 5 years or so. Digital photography came of age and mobile phones became the camera in everybody’s hands. The two assumptions had fallen apart. Photography became a commodity, people started clicking pics of everything and everywhere, they didn’t wait for any special moment at all. People got hooked on to the fact that through mobile phones the photos become real and sharable with the whole world instantaneously. Hence Kodak lost the game real quick. What is surprising is that Kodak made a choice not to venture into digital photography somewhere in 1970s-80s even when they had made break-through progress in the field.
I believe that Online ride aggregators will be facing the Kodak moment very soon. Recently we saw Delhi come up with Odd-Even formula to reduce pollution and with time, similar moves will become more common. Urban legislators will realise that private transportation is not a scalable solution and public transportation is the end state solution for mobility. It will not make sense to transport 2-3 people in one vehicle when you can transport 20X or 100X through one unit of public transportation – buses and metros. All the cities are scaling up metro infrastructure and I believe that very soon not only public transportation will be incentivised but private transportation will be dis-incentivised or worse.
Online ride aggregators can choose to be guided by the current scenarios and assumptions or proactively design products for the future – public transportation. Public transportation is equal or a bigger opportunity because technology will be required to provide transportation to many people at a time. This will mean more complex algos but greater economic value creation for all. Till now both the major companies are silent in this regard and they are striving for single-minded growth in private transportation only.
Either the current online companies will have to innovate for the future or an alternative will soon take their place. Kodak moment is knocking on the doors what remains to be seen is whether the current online aggregators will suffer the same fate as Kodak’s.
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