One of the major themes of structural transformation is the tension it can create when older models – whether they be in business or government – clash against a new way of doing business.
It’s happened in Australia, when a dispute broke out earlier this year over Uber and drivers being fined for operating outside of the existing legal structure. And it’s happened again in New York, with peer-to-peer driving service Lyft being refused a right to operate in the city.
Lyft, which operates on a similar model as Uber, which is allowed and operating in the city, was meant to launch last Friday and had a party scheduled. The state’s Supreme Court decided otherwise:
“Today we agreed in New York State Supreme Court to put off the launch of Lyft’s peer-to-peer model in New York City and we will not proceed with this model unless it complies with New York City Taxi and Limousine regulations,” the company said in a blog post.
“We will meet with the TLC beginning Monday to work on a new version of Lyft that is fully-licensed by the TLC, and we will launch immediately upon the TLC’s approval.”
Lyft operates on a slightly different model from Uber. The company promotes its drivers as everyday commuters willing to give you a ride – unlike the sleek, professional cars and drivers offered through Uber. Lyft wants to make you feel as though you’re being driven by a friend, not a chauffeur.
In any case, the inability for regulatory agencies and government to keep up with the pace of technological change is nothing new, and this will continue to be a problem as new form factors such as wearable tech enters the market. (The practical uses of wearable tech in the workplace, such as Google Glass, will no doubt end up causing controversy – as it already has in public).
On a large scale, this yet again highlights the tension between innovation and regulation, but serves as a warning for businesses of all sizes. How will this type of friction block future innovations from reaching the market? Fresh product from both small and larger businesses will run a higher risk of clashing against out-of-date laws in the future – incorporating that assumption into development will become necessary as the pace of development outstrips regulation.