The technological convergence is demanding real transformations among employers, workers and governments. Those countries that grasp the magnitude of this change in a better and faster way will be able to minimize the impact and better position themselves.

The Fourth Industrial Revolution is showing us that in a context of deep transformations based on technology, the human factor plays a key role. The creative essence of people is already a real competitive advantage to innovate and capitalize the benefits of disruptions.

Technological innovations generate such disruptions, changing economic, political, and social paradigms throughout the world. However, in several occasions, we come across reductionisms that do not seem to be up to the importance of these changes. Uber is an example. An initial analysis would show that it is neither an app nor a taxi service; however, debates on its impact are reduced to either supports or rejections, without truly analysing the situation.

Can Uber be analysed from the current regulations perspective? What is really Uber? What paradigms does it break down? Why? What are the consequences of its evolution?

Uber was created around 10 years ago, as a start-up located in San Francisco. It value proposal included using an app that became an alternative to move around large cities in a fast, scheduled and cheaper way than taking a cab. But, it is way much more than just an app that competes against cabs. It is a firm that applies information on the logistic industry, generating money for reducing information unbalance.

One of the most disruptive uses of business analytics, and particularly of prescriptive analytics, has been “surge pricing”, and the best known example is Uber.

Gustavo Vulcano, Director of Master in Management + Analytics, at the University Torcuato Di Tella, Argentina, shares an insightful explanation on surge pricing. According to Vulcano, Uber makes dynamic adjustments on price based on two parameters: the volume of passengers’ demand in a certain area of the city (it is used in over 600 cities), and the number of available drivers (around a million in the entire world) in the area. Each city is divided into hexagons that include a limited number of blocks, and each of these hexagons are analysed as “heat maps”. The unbalance between the number of services requested and the availability of drivers is painted from intense red (when the unbalance is large) to soft yellow (when the unbalance is small).

The goal is not to increase the price per se, but to minimize the unbalance between supply and demand in the system, which means reducing the presence of intense red. This can be achieved using a price factor that multiplies the base rate by 1.8 in times of high unbalance, and goes back to the base value 1 when the unbalance is compensated. The multiplier factor is announced to the user when he/she requests the service, and the user must approve it prior making use of the service. Clearly, it is more sophisticated and has more added value than a cab service.

“Instead of using numerous employees or huge facilities, this is a rather small organization focused on information technology, which dematerializes intensive physical goods business that characterize the 20st century, and creates new products and income channels in just a couple of months”, say Peter Diamandis and Steven Kotler when describing the features of an “exponential company”. The largest and most valuable transport company in the world does not own a single vehicle. Uber does not need drivers, it needs qualified talent to continue innovating through technology. It needs talent that disrupts its own business.

By the end of 2017, the company purchased over 20,000 autonomous SUV from Volvo. Considering this, doesn’t the debate between cab and Uber drivers seem old and sterile?

It is evident that regulations cannot be defined by favouring old monopolies. The lack of creativity or the prevalence of obsolete status quo by those who must develop the new regulatory frameworks, cannot stop the possibility of innovating, growing and opening new markets.

This digital revolution needs different leaders, who own skills linked to fast adaptations to changes, people who understand that technology is at our service, and does not replace us, that it gives a new shape to work and defines new skills, that questions us and demands transformations. Several countries show the logic of resisting e-mail to protect postmen.

Technology is expecting social change. While certain cities expect Uber to adapt to old regulatory frameworks, large corporations such as Google Ventures, Amazon, Goldman Sachs and BlackRock have invested on it, and with their help, it is becoming of the largest technological companies.

This company that some people define as “illegal”, has made deals with the most important credit and debit cards, with the largest Banks in the world, and with the most relevant mobile phone companies.

How can we develop smart regulatory frameworks for the new forms of labour? How can we avoid informality? How can we develop benefits 4.0 for workers 4.0? How must we train the workers of the future? Who represents them? How are they represented? Employers, workers and governments must start thinking answers for these questions urgently. There are plenty of forums where these topics are debated, sometimes in a superficial way, almost always without achieving changes quickly.

Every business will face its Uber, even Uber itself. Autonomous vehicles are both, an opportunity and a threat. A document by Bloomberg states that autonomous driving will become available by 2020, but it won’t be frequent until 2030. The combination of an electrical and autonomous vehicle will have a huge impact in the energy industry. Changes and more changes, which cannot be addressed using regulatory frameworks from the 20st century.

You may forbid umbrellas, but no one can stop the rain from falling. Those countries that grasp the magnitude of this change in a better and faster way will be able to minimize the impact and better position themselves. Latin America may find the path towards development following this trend.

About Martin Padulla

Founder and Managing Director of staffingamericalatina. Martin Padulla is Sociologist (USAL), MBA (UCA) and labour markets expert. He published “Flexible Work in South America” and “Regulatory framework for private employment agencies in Latin America” two books about the new realities of work in Latin America.

Follow Martín Padulla on Twitter: @MartinPadulla

mpadulla@staffingamericalatina.com

About staffingamericalatina

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