#10 Innovation and Disruption
A play of conflicts in three scales and three acts
Hey there,
Here’s your bi-weekly dose of Makeshift Mobility, my newsletter about innovations in informal transportation.
How are you? Are you as shocked as I am that it’s already July?
Just like that, we’re halfway through a not-so-another year.
Queen Elizabeth may have thought that 1992 was annus horribilis but, with 2020 vision, we can say that this year is annus horribilis horribilis. And we’re not even royals!
Yes, my latin is as pathetic as my punnery but least it’s not as bad as google’s.
Google Translate translates “horrible year” to “anno horribilis,”
but then translates “anno horribilis” to “awesome year.” What??
On to the newsletter.
Your latest issue clocks in at over 1,000 words so better get yourself cup of coffee. (Or, tea.)
I’m serving you innovation conflicts in three scales and three acts:
Coronavirus v Informal Transport
Informal Transport v Digital Goliaths
Digital Goliaths v Global Finance Hegemons
Corona Virus v Informal Transport Systems
We open act one with an insightful chart.
The chart leads us to a story of a government mandating “top-down innovation” vs. the informal transport sector.
We get the chart from Jedd Ugay, Monica Lavares, Jerik Cruz, and Marjorie Muyrong of Ateneo de Manila University. Its part of a forthcoming paper.
The team took aggregate cell phone mobility data and tracked it against the number of COVID-19 cases in three South East Asian countries: Thailand, Vietnam, and the Philippines.
As you can see:
the Philippines had the largest drop in mobility and yet the steepest increase in cases;
Thailand’s caseload has plateaued and mobility is back to 70% of pre-lock down levels (although there are warning signs of a second wave); while,
Vietnam has fully restored mobility. (That Vietnamese response sure is something!)
Informal transportation dominates cities in these countries. Bangkok has its rot doos, tuktuks, and motorapsai; Metro Manila its jeepneys, tricycles, and UV taxis; Vietnam its tuktuks and xe oms.
(In terms of formal transport infra, Thailand’s cities have the most mature urban rail systems. The Philippines has three aging lines in Metro Manila but is planning more, including a subway. Vietnam is just getting ready to open the first metro lines in HCM and Hanoi.)
I think the chart hints that the formality of transportation systems or the maturity and size of transport companies may have nothing to do with the ability to protect users from the virus.
(I hear you say, “correlation is not causation.” Yes, but does it make you go "hmmm.”)
Why is this important?
Jedd and his team are part of Move As One, a coalition that is advocating for a just transformation of the Philippine public transport sector. They are making the case for allowing traditional jeepneys back on the road post quarantine. (Full disclosure, I am a member of Move As One.)
The Philippine government is dragging its feet on restoring jeepney service. (Too busy to be bothered, it seems, from passing a draconian anti-terrorism law.)
Jeepney drivers and their families are starving while the transport agencies seem to be taking the opportunity to ram through its Public Utility Vehicle Modernization Program.
A.k.a. “top-down innovation.”
A.k.a. “mandated innovation.”
Some suspect that the administration is using the crisis to kill off the traditional, micro-entrepreneur led, jeepney sector in favor new franchises that are designed to favor big corporations.
Jeepney operators and drivers have criticized the program for being to onerous to existing providers. It got zero allocation in the 2020 National Budget.
(A bit of a sideshow that might interest you: delivery apps have stepped into the fray, recruiting jeepneys and tricycles into the delivery fulfillment service. They are recruiting in limited numbers. I don’t know if this will pencil out for the participating operators.)
Informal Transport vs. Digital Goliaths
Act two begins via another forthcoming paper, this time from Dr. Apiwat Ratanawaraha.
The Chulalongkorn University prof (and visiting prof to Harvard and MIT) gave a presentation at Cornell’s DCRP last year on Street Smart David vs. Digital Goliath.
Sorry, no recording but Apiwat did share the slides with me.
(Another disclaimer. Apiwat is part of the brain trust of my newly formed company: Agile City Partners. More about that below.)
Apiwat looked at how the moto taxi industry in Bangkok was being disrupted by ride hailing apps.
The moto taxis, more than 100,000 strong, are traditionally organized into wins (associations) that serve a particular soi. A soi is a long narrow street between major arterials. Each win is geographically limited to a specific soi.
If you were a moto taxi driver and you wanted to join a win, you must buy a vest that marks you as a legitimate member of the win.
You should be prepared to shell out significant cash because the number of vests are controlled (ala taxi medallions in US cities). You can rent one or buy one. Some sell for as high as 800,000 baht (USD 25,000).
Or, you could just sign up to drive for a ride hailing app like Uber, or Get, or Grab. They’ve become very popular with Bangkok commuters.
This table from Apiwat’s presentation compares the upsides and downsides of wins (“motorcycle taxi”) vs. the ride hailing apps (“RHAs”).
If you join an RHA, you don’t have to buy a vest and you will not be limited to a soi. This, of course, has not gone over well with the wins. The conflict has bubbled over into actual violence. With fatalities.
Of course, the government has been reticent to step in. The ride hailing apps started appearing in 2016 but Bangkok is only now legalizing them.
The sub rosa conflict which you will be stepping into as a newly minted mor·đeu·sai ráp jâhng driver is the “influence” of the wins (*cough* mafia *cough*) vs. the popularity of the ride hailing apps.
Digital Goliaths vs Global Finance Hegemons
In Act Three, the conflict stars ride hailing apps as they threaten the global hegemony of credit card networks. The hegemons are playing defense, if not catch up.
In the competition to dominate cashless payment, Visa and Mastercard are losing to mobile payment platforms.
Among the players leading the charge are ride hail apps Grab and Go-Jek. You can use their apps not just to pay for your transportation, you can also pay for groceries, food, etc. Nikkei Asian Review tells us more:
“Go-Pay is run by Indonesian ride-hailing company Go-Jek, while Singaporean rival Grab offers GrabPay.
“Go-Pay and GrabPay users can deposit money into their account via bank transfer, at a convenience store or more likely through a cabdrive. [Emphasis mine.] And unlike applying for a card from Visa or MasterCard, which were created by banks, app users do not need a bank account -- just a smartphone.
“Go-Jek and Grab started as ride-hailing platforms, but both now "aim at becoming leading players in payments across Southeast Asia," said Kaori Iwasaki, a senior economist at the Japan Research Institute.
“Credit card operators are not sitting idle. Visa has launched a contactless card for small transactions, including rides on public transportation. The company also said in June that it will team with Line to link the chat app operator's mobile payment platform with Visa’s global payment network.”
Your problem, if you were one of these hegemons (Visa or Mastercard)?
Unlike you, your competitors don’t need to make money off every transaction.
“…when it comes to competing in cashless payments, companies like Grab, Go-Jek and Alipay have one potentially key advantage: They do not need to make money from their mobile payment operations. For them, mobile payments are merely a way to attract users, to whom they can offer fee-based services such as investments, loans and insurance, Nomura's Fuchida said.”
The potential pay off is huge (“yuuuuuuge”) since so much of Asia’s population is un-banked. Check out the chart below.
The apps that help you get tuktuks and moto taxis are also disrupting the global financial order. It’ll be interesting to watch how this conflict plays out.
No worries for you if you’re a global mega-capitalist. You probably have a board seat in all of those players anyway.
Ok, that’s it for this week. Thanks for sticking with me.
Oh wait, there’s one more thing:
As I mentioned above, I’ve started a new venture called Agile City Partners with the amazing Julia Nebrija and Andrea San Gil León.
We’re supported by a fantastic brain trust that includes Carol Coletta, Mary Rowe, Kimberly Driggins, Katja Schectner, Red Constantino, Anthony Townsend, Apiwat Ratanawaraha, and Ruben Canlas.
Our goal is to bring the agile mindset to the cities we love and serve.
Facilitating inter-government or inter-agency work is one of our superpowers. We can make conflict productive!
Hit us up if you need a partner to help you or your city think differently about inclusive transportation, climate policy, urban planning, engagement, and design.
I’m Benjie de la Peña, a transport geek and urban nerd. I live in Seattle, former home of the Capitol Hill Organized Protest zone. #BlackLivesMatter!
I think a lot about strategic design, institutional shifts, and innovation.
I believe makeshift mobility could be the single greatest lever to de-carbonize the urban transport sector -but only if we can organize. If I had my druthers, the world would have a international, inter-city think tank dedicated to improving informal transportation.