Loading...

Personal Stories and Testing Assumptions

Wednesday, October 22, 2014

by Kent Aitken RSS / cpsrenewalFacebook / cpsrenewalLinkedIn / Kent Aitkentwitter / kentdaitkengovloop / KentAitken


Recently a few of us spent an evening deconstructing the idea of storytelling: why we're drawn to it, how it works, and how we use stories personally and professionally.

(I've written about storytelling on CPSRenewal before (see: Towards a New Professionalism in Government), as has Nick, probably multiple times (see: Purposeful Story Telling).)

We looked at a number of angles, but the one that stuck out for me might be called the stories we tell ourselves. Ashleigh Weeden opened this rabbit hole for me with her fantastic blog post on the subject, and most of my post, today, is just encouraging you to go read it.

Humans have a deep-seated tendency to find patterns, categorize, and sort things in our minds. These can turn into heuristics about how we see ourselves, which could be as simple and innocuous as saying something like "I'm very intuitive." It might be true, or it might just be rationalizing shortcuts on decision-making. In other cases, some stories that may well have been true at some point can outlive their usefulness. And they influence how we approach the world and our jobs, for better and for worse.

Examining our stories is an incredibly useful exercise, a healthy testing of assumptions. But we also noted two things about this kind of introspection during that evening:
  • it's deeply uncomfortable - and full of cognitive dissonance - when we realize that some of the things we tell ourselves and others aren't true
  • it must be highly deliberate, with others challenging us and prodding; it would otherwise be as easy to rewrite our stories with just new, different fictions
I'll forgo the temptation to apply the above to public service renewal and change initiatives.

All of that to say. If you're interested, and you should be, you should read Ashleigh's excellent and courageous post. With the warning that it may lead to an uncomfortable but ultimately worthwhile exercise of introspection. 





Policy Wonk Talk on Uber's Arrival to Ottawa

Friday, October 17, 2014
by Nick Charney RSS / cpsrenewalFacebook / cpsrenewalLinkedIn / Nick Charneytwitter / nickcharneygovloop / nickcharneyGoogle+ / nickcharney


Last week Kent shared some thoughts on Uber's arrival in Ottawa. If you haven't heard of Uber, they are a peer-to-peer ride for fee service that directly connects available drivers with people seeking rides for a fee, levering their respective GPS phone coordinates, processing fares electronically and providing online reputation systems to rate riders and drivers. If you want more information on how Uber works, I suggest watching either Mashable's advertorial video or the Uber driver training video - it will give you a better sense of what Uber is all about.

Given that this is an area I'm interested in and have written about in the past (See: The Sharing Economy, Disruptive Innovation, and Regulatory Oversight) I thought it would be good to come back to it and give it a once over.

If you haven't yet read Kent's reflections (See: Why the Sharing Economy is Inevitable and We Need to Think Differently), I suggest you have a read-through and then circle back here as I'll be revisiting some of his arguments as well as some of my own; the goal of which is to highlight some concerns that policy makers and regulators ought to think about when they are considering how to handle disruptive innovation in established (and regulated) markets.

Just a heads up that this is a long wonkish post. Skip to the bottom for a TL;DR of key considerations.

On the inevitability of Uber and its ilk 

While I agree with Kent's basic assertion that Uber and its ilk are inevitable (and that this inevitability ought to give us pause to rethink governance), I would further qualify that inevitability by saying that it is the larger phenomenon of disruptive innovation that is inevitable and not necessarily the peer-to-peer businesses of the sharing economy that are currently being built. While this nuance is likely to be overlooked, it is one of the most important things to keep in mind when examining the issue. Uber is simply à la mode right now. It is a part of the peer-to-peer trend that represents where businesses are right now, reflects where business have been already and hints at where businesses might go in the future. In other words, when considering Uber, it's important to remember that it is neither the first disruptive innovation the transportation industry has seen nor will it be the last.

Key lesson: If policy makers and regulators react to Uber instead of solving for the larger phenomenon of disruption they will find themselves in the same predicament they face today again five years from now.

On reducing information asymmetry and increasing supply

Kent rightly argued that peer-to-peer businesses correct market failures rooted in information asymmetry by more directly connecting supply and demand. People have historically paid a premium to use taxis because taxis minimize the asymmetry between sellers and buyers by signalling their availability: I'll wait in the taxi stand, you walk over and hop in. It is important to note that Uber doesn't just correct the information asymmetries in this particular market but it also boosts the overall supply of the good in the marketplace which in turn affects the overall dynamics at play in the market (including taxation, which must be dealt with).

Key lesson: Policy makers and regulators need to understand how the elimination of information asymmetries and the introduction of additional supply affect the market and whether or not those effects are a net positive or a net negative.

On the user experience 

With the exception of perhaps walking out of a popular hotel or an airport in a major urban centre, grabbing a cab is literally demand physically LOOKING for supply. A rider needs to either find a taxi stand, call a dispatcher, or wave down a cab. The experience is often one categorized by waiting (when will the cab show up?), uncertainty (will the cab show up?) and competition (what happens if someone takes my cab or my cab takes someone else?). While the experience is functional, it is also opaque and lacking.

On the other hand, Uber has been actively designed around the users from the ground up to be seamless. Open up the app in your smart phone (which you love), request a ride by providing from-to coordinates, get a text message confirming your driver's details within minutes, watch the ETA countdown clock in real time as your driver's GPS coordinates approach your own. You know precisely when your Uber will arrive, you're assured they will arrive and you know they are coming specifically for you. I'm not sure you could ask for a better user experience.

That of course doesn't mean that the user experience once inside either a Taxi or an Uber is any different, at least not while in transit. The good (i.e. transportation from point A to point B) is essentially the same though the experience likely varies as much within the taxi and Uber ecosystems as it does across them - there are all kinds of dynamics at play that could affect your trip. The main points of divergence here seem to be cost, how the transaction is completed and the feedback loop between drivers and riders. On the whole, I'd give Uber the edge on all three of these elements. It's cheaper. It's automated. It's got feedback built in.

The supply side of the equation is a bit harder for me to parse, not ever having been a taxi or Uber driver (though I've spoken to many of the former while I was a doorman at an up-scale hotel and am actively considering exploring the latter). My understanding of the taxi industry is such that there are considerable start-up costs and barriers to entry (i.e. regulation): licenses, insurance, training, trade unions, etc. Whereas Uber provides a fairly straightforward sign up and validation process (which I tested); it has fewer barriers to entry and seemingly (in the US at least) has even done its homework on the issue of insurance.

But what about the user experience of the drivers? Well again, (based on my experience) taxi drivers tend to either find a taxi stand and get in the queue, or wait for call. They move people from A to B often without knowing where the final destination is until that person enters the cab and at times become frustrated with riders taking short trips. They have to handle cash payments as well as debit and credit transactions and file financial records accordingly. They likely work a 12 hour shift and pass or rent their license to another driver who does the same for the remaining 12 hours of the day. Uber, on the other hand, allows you to work when you want, processes payments automatically and directly connects supply and demand when and where it makes sense to do so (for a 20% cut of the transaction, in case you were wondering).

Key lesson: Policy makers and regulators ought to expect disruptive innovation to occur wherever regulation distorts market forces and creates externalities and where technology can be deployed elegantly to more efficiently connect supply and demand and/or improve user experience.

Suggested reading:

On regulating disruption 

Broadly speaking, regulation by its very nature distorts markets and in so doing creates favourable conditions for incumbents and creates barriers to new entry. While regulation can easily be adjusted to reflect sustaining innovations within their portfolio they struggle when asked to balance the potential benefits of disruptive innovation and the public interest. This likely happens for a number of reasons:
  • Governments may fail to differentiate disruptive and sustaining innovations and if they do they decide to treat them in the interest of ‘fairness’ despite the regulation not making sense when applied. 
  • Governments may have vested interests in maintaining enforcement systems that validate and support their existing regulatory regimes (i.e. regulatory capture). 
  • Government interests may be better served by incumbents (at least in the short term) than by disruptive new entrants. Incumbents provide more steady employment, generate higher tax revenues and are already subject to regulation. Whereas disruptive firms often employee fewer people, generate fewer tax revenues (or create new economies that avoid taxation altogether) and view regulation as a barrier.
  • Governments may have to contend with the concerted efforts of the incumbent lobby while new entrants who don’t have the resources to lobby are forced to try to amplify public support for their businesses. 
If you apply what I've outlined above and map it to Uber's arrival in Ottawa, any number of the above could be argued as truisms. In fairness, taxi regulation/deregulation is a complex issue and one that has plagued cities worldwide for some time. There are people on either side of the debate making claims and counter-claims, each with studies to prove that their approach is best. At risk of falling further down the rabbit hole, the issues within the debate tend to fall into three broad categories:
  • prices to riders and costs to operators 
  • licensing regimes / monopoly protections 
  • public safety 
Of the three, the one that interests me the most (and the one we have yet to discuss) is the notion of public safety. It is a top level concern for any policy maker / regulator looking at a transportation array. It's also an element that tends to get sensationalized. People point to extreme cases to prove the exception rather than the rule: would you trust your life to an unregulated Uber driver just because they have a 5 star rating after a dozen trips?

Perhaps it's an unfair question. While I don't think a simplistic online reputation system can effectively replace regulatory oversight as an effective means of ensuring public safety, within this specific context I'm not sure it has to. What are the actual incident rates for car accidents in the city? Is there any reason to suspect that the introduction of Uber will raise the number of incidents? What evidence can be brought to bear to support it?

Even if something does go horribly wrong – and invariably it will – ought we judge every Uber driver based on the actions of a single driver? I'm not sure that taxi drivers would want the same type of judgement thrust upon them given what happened last year. Besides, whether or not you are getting into a taxi or an Uber you are still getting into a car with someone who ostensibly amounts to a stranger. If nothing else, the adoption rates of Uber seem to suggest that people either don't differentiate the risk, don't perceive the risk, or are simply willing to accept the risk associated with using the service. Moreover, at a more fundamental level, you entrust your safety to strangers in cars everyday whenever you share the road with them on your commute into work in the morning and back home at night.

Key lesson: Policy makers and regulators should focus on maximizing the public good and think about how to best achieve that from a citizen centric position, not a government centric one.

On the politics of Uber 


Bluntly, the arrival of Uber in Ottawa likely seems like a no-win situation for politicians having to wade through the policy options. Coming down hard on either side is likely to be met with negative political consequences, as is inaction and even compromise.

Key lesson: Policy makers and regulators ought to expect that politics will play heavily when negotiating government responses to disruptive innovation. Politics matter, to govern is to choose.
Recap: Lessons for Policy Makers and Regulators looking at Disruptive innovation
  1. If policy makers and regulators react to Uber instead of solving for the larger phenomenon of disruption they will find themselves in the same predicament they face today again five years from now.
  2. Policy makers and regulators need to understand how the elimination of information asymmetries and the introduction of additional and/or new supply affect the market and whether or not those effects are a net positive or a net negative.
  3. Policy makers and regulators ought to expect disruptive innovation to occur wherever regulation distorts market forces and creates externalities and where technology can be deployed elegantly to more efficiently connect supply and demand and/or improve user experience.
  4. Policy makers and regulators should focus on maximizing the public good and think about how to best achieve that from a citizen centric position, not a government centric one.
  5. Policy makers and regulators ought to expect that politics will play heavily when negotiating government responses to disruptive innovation. Politics matter, to govern is to choose.





Tiny Costs and Potential Benefits of Helping Each Other

Wednesday, October 15, 2014
by Kent Aitken RSS / cpsrenewalFacebook / cpsrenewalLinkedIn / Kent Aitkentwitter / kentdaitkengovloop / KentAitken

Last year I wrote a post called Painfully Obvious: Find Linksabout seeking out the existing knowledge in a field. While we should be respectful of others' time, the cost/benefit calculation is pretty solidly on the side of reaching out - it only takes a minute to write and read such emails, and the effort only has to work out occasionally to be incredibly worth it (often for both parties, on top of being just generally enjoyable). And people still have the option of accepting or declining.

There's a cost to being too reticent, here. I think we still reinvent far too many wheels.

Looking back, I continue to be amazed by how generous people can be with their time and expertise. It has become our standard to invite authors when we discuss books (which turns into the Impossible Conversations/Monday Book Review series), and I've been surprised at how often the response is resources, regrets based on scheduling, or acceptances. The same goes for some research I wanted to learn more about recently.

However, even with that cost/benefit calculation in mind, and knowing that those I reach out to can certainly decline, I occasionally feel bad about it. It's largely because I feel as though I'm more often on the receiving end of this kind of help and advice, which I chalk up to being relatively early in my career, and somewhat less so to being a generalist. My theory is that balance will shift towards the providing side over time.

It recently struck me that this theory may be true - or it may be a total cop-out.


With That in Mind

If anyone ever thinks that I could be of help - for discussions, resources, or anything - please, please feel free to contact me (there's a Gmail icon at the top of every post).

For the record, I've noted that I often feel unqualified writing and sharing my thoughts publicly (see: On Writing). I'm not suggesting that I have a tremendous amount of expertise. Instead, I'm extending the invitation based on the same principle with which I ask others: because it takes so little effort to offer, and because it only needs to work out and really click once or twice to be worth it. The cost is so low that even if I can provide a tiny benefit, it works.


Post Script

This post is very much so based on my personal approach to navigating government and academia. But it's perhaps worth noting as a reflection that the more comfortable we all get with striking up discussions with those in our fields, the better government will be.

Lastly, a genuinely huge thank you to those described above, kind and generous with their time.

Why the Sharing Economy is Inevitable and We Need to Think Differently

Friday, October 10, 2014

by Kent Aitken RSS / cpsrenewalFacebook / cpsrenewalLinkedIn / Kent Aitkentwitter / kentdaitkengovloop / KentAitken


Last week Uber launched in Ottawa. It's a smartphone-based ridesharing platform that is structured more like a taxi-passenger relationship than a carpooling forum. Drivers got dinged with fines, Uber found workarounds, and we'll see where things stand once the dust settles.

Uber's one of many examples of the sharing economy, and it's one of the brands that has become a lightning rod for attention. For hospitality, it's Airbnb. Kijiji also fits this model, which is sometimes called collaborative consumption or the peer-to-peer economy.

Regardless of the virtues and problems people see in the sharing economy (often fairly, in both cases), here's why I think Uber and its ilk are inevitable, and why Uber is the latest in a long line of canaries in the coal mine for rethinking governance.


Information Asymmetry

Services like Airbnb, Uber, and Kijiji - connecting buyers and sellers, one-to-one - are all natural extensions of traditional markets. What we're learning is that this demand and supply always existed. What was missing was the ability to connect the two. The previous state of affairs should actually be considered a market failure: a inefficient allocation of resources resulting from people not having certain information available to others. At its simplest, "I need X" and "I have X". The digital age has started to fix this information asymmetry.

Pre-internet, hotels actually provided a significant informational service in addition to hospitality. Standards, chains, brands, prominent signage, Yellow Pages outreach, and marketing in tourism guides were all important for people looking to find a place to stay in a different city. So we paid a premium on rooms to compensate hotels for their work towards minimizing information asymmetry between sellers and buyers, which took the form of "We have rooms."

Another example might be banks. The old banks in our towns and cities are opulent, grandiose stone buildings, lined with pillars, laid with marble floors. Consumers paid a premium on interest not to create cushy offices for bankers, but for our own sense of confidence in banks, and in their reliability and permanence. Marble floors have a certain "We'll still be here next year" vibe to them, which was important for those storing their money.

Today, we can focus more so on the core value: a place to stay, money management, or transportation. Advertisement has somewhat gone from a foundational service to a differentiating factor, from the safety row of Maslow's hierarchy to the belonging, self-esteem, or self-actualization rows. That is, from "We have rooms" to "Here's the sort of person you'll be if you stay at our hotel instead of our competition's." The added value of a memorable phone number or a Yellow Pages presence has been leveled.


Weak Sustainability

The reason I think services like Airbnb and Uber are inevitable is that in the long term, it's actually a completely indefensible policy position to stop them.

Sustainability has become a loaded term, but stripped of its political connotations it simply means that an activity isn't destined to ruin by virtue of its own existence. That is, we can keep doing it. Even the cold economical view supports at least "weak" sustainability, or the maximization of value over time. The difference between this view and the environmentalist or "strong" sustainability view is that the former doesn't care whether this value comes from natural capital or man-made capital and technology. But both views have a common principle, which is using resources as efficiently as possible. If there is both demand and supply for additional uses of privately owned goods such as houses and vehicles, we'd be failing both economically and environmentally by artificially limiting that market-driven allocation.

Power tools are perhaps the good example here. A drill might get used for 20 minutes a year, yet every house on a street contains one. To bastardize a cliché: these people don't need drills, they need holes. What's emerging now is the sharing mechanism. The good news is that once the information asymmetry is fixed, the natural resources otherwise becoming drills will still get used, and the money otherwise paid for them will still get spent. Just in theoretically more efficient* ways.


Considerations

The two big curveballs introduced by the increasing prominence of services like Airbnb and Uber are taxation and regulation, the latter including consumer protection and safety. The economist lens might suggest that theoretically, buyers of these services have included those reliability, safety, and recourse risks in their decisions. In reality, we know that things are much more complicated than that.

I don't know the answer. Rather, I think that we should rephrase the question. Right now it's a composite of "Should we allow this?" and "How would we ensure tax revenues and consumer safety?" It needs to become "If this is a natural extension of the entire system on which our economy is built, what does that mean?"

(With, perhaps, a degree of empathy towards those whose livelihoods are reliant on the markets that are experiencing change.)

And it doesn't matter what proportion of a hospitality or transportation market peer-to-peer services consume. Small percentages of large markets, over long periods of time, turn into large absolute figures.


The Canary in the Coal Mine

Uber is a fascinating story because it didn't need to be a shock. An analogue of what happened in Ottawa with Uber last week has been happening in New York City for the last few years with Airbnb. Scrambling regulators, consumers with no clear guidance, providers fined as though by random chance, entrenched interests lobbying and crying the wolfest of wolves.

The pressing policy questions surrounding the sharing economy deserve attention. How does government react?

However, there are more interesting questions, considering Uber as a case study, not a standalone problem. How does government understand and internally amplify signals of change?



*Yes, I am aware of the irony. If you take a completely macro view of efficiency, those long-term investments referenced in my last post become efficient as well.

Wayne Wouters Last Day as Clerk

Friday, October 3, 2014
by Nick Charney RSS / cpsrenewalFacebook / cpsrenewalLinkedIn / Nick Charneytwitter / nickcharneygovloop / nickcharneyGoogle+ / nickcharney


Well, today is Wayne Wouters last day as Clerk of the Privy Council and I have it on good authority that there's a retirement celebration on October 14th that you are invited to. All the details are here, if you have any questions drop me a line. The one thing I will say is that you probably don't want to miss it.

Cheers