Author: Sanaa Wasi, MBA Candidate at Schulich
“Everything that shines is not gold.”
“Do you only love it because you can’t afford it?”
What do the above idioms mean? They point towards the human disposition to desire objects it perceives valuable, but cannot have or are extremely hard to get.
Disruptive technologies – advances that have revolutionized life, businesses, and the global economy. Companies that in the past have capitalized on these technologies have emerged as disruptive brands, and now they dominate their respective industries. Amazon, Google, and Uber are a few examples.
Looking ahead….What are the disruptive technologies of the future? Which companies will embrace them and emerge as leaders? Autonomous vehicles are the undisputed future of mobility. Tesla’s CEO, Elon Musk has a stunning prediction for what cars will be like 10 years from now. Mercedes and other car manufacturers are not too far behind. So when does the revolution begin and are we ready for it? Who will emerge as the industry leader in automotive and what characteristics will define its success? Being first-to-market, establishing high safety standards and excellent performance are definitely competitive advantages. Car manufacturers are trying to strategically integrate these competitive advantages with a robust business model. But is this enough to define an industry leader?
Let’s take a step back and look at most popular disruptive brands of today. Uber – A California based sharing economy firm and a leader in disruptive innovation – is facing a corporate earthquake as the Regulator Transport for London (TfL) has striped Uber’s license prohibiting its operations in London. Uber has faced numerous regulatory battles in multiple U.S. states and countries around the world resulting in a series of bans being imposed on Uber in several parts of the world including France, Spain, Germany, Denmark, Belgium, Hungary, and Netherlands.
Uber has shown exponential growth since its start in 2009. In 8 years, Uber has created tremendous value for more than 2 billion riders in 632 cities worldwide, its corporate employees and investors. The app is free, fast, safe and easy to use. It saves money and time. It provides a cashless transaction experience. The live GPS tracking system enables its riders to estimate wait times accurately and also promotes security. As the drivers are independent contractors and not employees they are not obligated to work from 9 to 5. They have flexibility and can choose their own working hours. They can even select which riders they want to accept and which to reject. It’s a win-win. Uber plays by the rules and does not break laws in any country it operates in. Uber has the perfect business model.
Uber is under fire. The disgraceful stepping down of Ex CEO Travis Kalanick, the use of Grayball – a software that restricts regulatory bodies from accessing the app, sexual harassment allegations and numerous lawsuit by drivers has provided an opportunity to its competitors to cut into its market share. Uber’s mounting scandals expose something seriously amiss – lack of corporate responsibility – and ultimately its license to operate in London has been revoked effecting 3.5 million riders and 40,000 drivers in one of the world's wealthiest cities, which is a massive blow to the company.
Despite being first-to-market, its numerous competitive advantages and a robust business plan, Uber is suffering lost trade. It abides by all laws in the countries in which it operates, however, this is apparently not enough to emerge as an industry leader. Corporate Social Responsibility speaks to what lies outside the boundaries of law and the things which cannot be defined by rules, which are morals, ethics, transparency, and empathy.
Ethics have tremendous power. People, businesses, and governments who operate legally but not ethically only enjoy short-term prosperity. This is true for every decade and era. In the late 1990s Brazil, a developing 3rd world country at the time was sued in the international courts by the United Nations, the U.S. government, and pharmaceutical companies because Brazil was illegally manufacturing patented AIDS medicines in order to control the widespread AIDS virus. In 1992 the United Nations predicted that by 2000 Brazil would have 1.2 Million cases of AIDS, the majority of which will be poor people. The cost of AIDS medicine at the time was higher than the average yearly per capita income in Brazil. Brazil declared this issue a national emergency. It violated the patent law and started to manufacture the AIDS drug locally at a lower cost so that it was accessible to the poor which triggered the lawsuit. Brazil considered it discriminatory that the pharmaceutical companies in the United States were allowed to make profits while the poor in Brazil were left to die as they could not afford the medicine. The lawsuit triggered an uproar in the media, and the case lingered on for ten years. Brazil won the law-suit based on ethical grounds. This is the power of ethics!
Learning from the past and present, the business leaders of the future must rise above the conventional thought process. They move away from “maximizing shareholder value” mentality and embrace the “maximizing stakeholder value” approach proposed by Edward Freeman. According to Freeman, for a business to be successful, it must create value for all stakeholders. He argues that the only way of creating long-term prosperous results is by maximizing stakeholder value. As per Freeman, there is no conflict between serving all your stakeholders and providing excellent returns to shareholders.
What ethical questions to self-driving cars pose? How to self-driving vehicles make life or death decisions? One may argue that it makes logical sense to design the vehicle so that the safety of the passengers inside the car is a priority. After all, when we faced a car accident, don’t we try to save our own life first? However, what if the person you are about to collide with is your family member, or worse, it is your child! Would you want to save your own life or your child’s? If the self-driving car is designed to prioritize the safety of the passengers inside the car, then how will a parent ever live with the fact that he or she killed his or her own child? Who is to take the blame for such an event? Who should be punished? We cannot blame the car as we (humans) have designed the car to behave that way. We cannot even blame the passengers inside the car. Does this imply that death of a child or a pedestrian caused by an autonomous vehicle will be pardoned? Is that acceptable to society?
Until we can answer these questions, we cannot say with certainty that the world is ready for self-driving cars. The ethical and moral implications of the upcoming revolution are far-reaching. Perhaps things would be simpler to understand and easier to justify if we stay in touch with our human side and not let technology completely replace our day to day functions. Just because something is new, sound exciting and look shiny and bright, does not mean it is the solution to our problems.