Associations and the Future of Transportation

 

Every association that deals with transportation, delivery or the support services built around meeting the needs of human drivers should be on pins and needles right now.

A few months ago, I was the closing keynote at the Mid-Atlantic Society of Association Executives (MASAE) 2016 Association Disrupt Symposium. One of the topics I discussed (and have been discussing since 2013) included companies who are part of the “sharing economy” or exhibit the “collaborative consumption” ethos. Although I believe there are important lessons for associations to learn by observing the manner in which these companies behave in the marketplace, my position has always been that we should apply those lessons in our own way. I caution associations to beware of the temptation to attempt to “model themselves” after ANY emergent companies right now. The point I made regarding Uber in specific earlier this year was this: the fundamental value proposition of Uber – aggregating and deploying independent drivers – is actually doomed.

I acknowledge that seemed like an insane thing to say to an audience, many of whom probably had the Uber app on their smartphones. It’s really easy to look at Uber’s success story and assume they “herald the future” with their specific product and approach. They started in 2009-2010 with $200,000 in seed money and in December 2015 conducted a funding round in which their valuation was pegged at $62.5 Billion. Who can question that kind of success? At face value, it seems like they are here for the long term. But if you look a little deeper, you will see they lost an incredible $1 Billion in the first half of 2015, and another $1.27 Billion in the first half of 2016. So what in the world is going on here?

Well, they are here for the long term but not with their current value proposition. In actuality, Uber has been playing a different game all along. They aren’t “democratizing” the gig economy – they are taking on the entire transportation industry. The pivot is inevitable and self driving vehicles are the key. First – freight. Uber cleverly (and quietly) acquired “Otto,” a company that retrofits existing “big-rigs” (as us’uns call ’em) with automated, self-driving systems. Then just yesterday, in the world of “that can’t possibly happen this soon” we saw history being made with the very first, completely automated delivery of 50,000 cans of Budweiser beer (check out the new home page for “Uber Freight.”)

Second – Uber isn’t after the taxi drivers, but the taxi companies themselves. In May of 2016, Uber started a pilot program with self-driving Ford Focus taxis in Pittsburgh. Ford responded in kind by announcing their plans to mass produce self-driving vehicles and have them on the roads by 2025 (if not sooner). Now, I am pretty sure Ford is basing part of this strategy on projected sales based on individual consumer interest, aka providing the more affordable “regular person’s Tesla.” However, I am also of a mind that Ford is making this aggressive move because of their experience with the sales and maintenance of fleets (government vehicles, law enforcement, etc.) and that is going to impact the automotive repair industry.

Uber’s positioning is NOT based on the traditional idea of competing in a “sector vertical” that a “single association” represents. It’s “systemic.” That’s new. Associations aren’t used to routinely thinking in horizontal and on that scale. They aren’t playing in your members’ sandboxes, they are bulldozing the playground.

I’m not advocating for resistance, although it might seem like that. I’m not sure how you even go about trying to in the face of the savings, efficiency and reduced risk due to human error that self-driving vehicles represent. The freight companies who have the money to retrofit their fleets with Otto or some similar product, will begin to do so regardless of the opinion of the associations that represent them (or their drivers) because they stand to reap the rewards of the cost savings achieved when human drivers are eliminated. That profitability will allow bigger players to increase their grip on the entire industry. Trucks will run 24/7, can be precisely located at any point along the drive and “platoons” of trucks are already showing up to 7% fuel savings when running in tandem. I realize there are lots of “voices of caution” out there claiming the full transition will take “at least ten years” (have you ever noticed it is always, no matter what the advancement, “not going to happen for at least ten years?!?”). Many experts believe “drivers” will continue to be required to be ready to “take the wheel” at a moments notice but really, I think that’s probably more to make the public “feel better” right now, not what will be needed over the long term. (In fact, Uber itself shot that down yesterday. Their driver sat in the back of the truck and simply rode along for the entire trip.) Maybe these experts are correct, or maybe they are continuing to use “predictive” skill sets they developed in a world where change followed more predictable, less exponential curves. Time will tell. Regardless, the trigger point for beginning to consider action is when we cross “might happen” to “will happen,” regardless of the timetable involved.

This is not to say that Uber isn’t trying to still pretend it’s a “traditional” company. It’s out there vigorously competing, fending off regulatory and licensing challenges and engaging in other sorts of activities that appear, at least on the surface, to be what you might expect. However, it is becoming increasingly more likely the sturm und drang being created by the regulatory and legal challenges is just a clever feint. I am willing to bet Uber does not actually care very much about the challenges coming from taxi companies and smaller freight and logistics companies. They are just throwing attorneys and money into these fights to keep us arguing over whether “taxi drivers” are superior to the “average Joe citizen” or squabbling over whether professional drivers make better judgments behind the wheel than artificial brains that process information at the speed of light and never get tired, or distracted – ever. (Driver’s intuition? Also no longer the purview of the human as of this summer – see AlphaGo.) We may be fighting, and in some cases winning, “today’s” battle. But let’s be clear – this war is not winnable over the long term. These battles are distracting everyone from the actual objective – the elimination or drastic reduction in the need for human drivers full stop.

Odds are the Uber app will stay in place, but as Uber purchases its own fleets their need to use “your car” will diminish. For a while, the app will simply morph to one that “summons your car” by itself when you aren’t behind the wheel and then returns it to you after the “customer” has been dropped off. You still make money, but you are no longer having to drive the car. After a while, you won’t even want to and a lot fewer people will need you to. (Automobile “subscriptions” are next. Why buy, maintain and insure when you can subscribe? But that’s a topic for another post.)

The main lesson associations should learn from yesterday’s amazing news is this – in an era of exponential change, staying laser focused on the clean execution on a single value proposition is anachronistic. We need to get used to the mess. Yes, Uber, Lyft and the like arrived on the scene and very quickly grabbed a great deal of mind-share. However, Uber in particular is consciously ignoring the “rules” inherent in what we think of as the traditional organizational development lifecycle and that is making our old approach to “membership” difficult if not impossible. If they were following “normal” business practices they would be hunkering down and moving into “maximization” mode – obsessively focusing on improving their core product, expanding market share and attempting to stem anything that looks like a “loss” and we would have time to “create, market and execute” membership campaigns targeted to that company profile. But not anymore.

So, what are associations supposed to do about shifts like this? Well, the first thing to keep in mind is these new business models based around technological advancements are much more volatile than we are used to. They tend to rise very quickly, and can be hugely profitable over the short term, but not necessarily sustainable over the long term. Trade associations have to be faster on the uptake when new businesses show up, but not bet the farm that any new business type will provide a stable “membership” category that will extend indefinitely into the future. The association focus MUST shift away from “servicing membership categories” to establishing and maintaining a laser focus on meeting needs presented by the entire industry and profession you represent. You must take an integral, systems based approach to strategy.

Second, if you are an association who is beginning to sink a great deal of money into legislative or regulatory battles around “fending off new technology” you need to stay very clear on what your priorities are, cut your losses when you can and be very transparent with your members on what their actual prospects are for the future. In a capitalistic system, you will get no help from those who stand to profit off of the implementation of these new technologies. For every federal, state or local regulatory battle we wage and win against Uber or the like, we have to face the hard truth that we aren’t actually winning anything except a little bit more time before the next big wave hits us. Choose your battles. Prepare your members to lateral out into another line of work whether you are in the transportation industry or another profession that is about to undergo “white collar automation.”

Third – we need to focus on helping humans be better humans no matter what jobs they have. In a few years, we will wonder why in the world we ever wasted so much human talent on sitting behind a wheel or doing some of the more mundane tasks we do. But right now, those humans are at risk during the coming transition. Each one of the individuals we represent or impact is incredibly important and of immense worth. As an association community, I think we need to up our game. We should be showing leadership and helping each other develop human-centered approaches to retrain and transition people into a new world of work and do our best to ensure they have the skills they need to live happy, healthy, productive lives.

Fourth – we need to get better at targeted, future-focused, continuous, strategic shaping processes. (Strategic planning is dead, long live strategic planning.) You don’t have to limit your strategic activities to that “once per year retreat.” The more time you spend discussing the future of your industry or profession and discussing strategic shifts you may need to make while still executing on your current objectives the better. Contact me and I can help facilitate these processes either in person or virtually.

At the end of the day, Uber is only one example in one industry. There are a number of companies on the horizon who will begin to use similar tactics to force associations to use up resources in the short-term as a longer term campaign is being waged towards automation. They know that over time, with enough attrition, we will not have enough fire-power left to oppose them. It isn’t our business model that is irrelevant, in many cases it’s our reason for existence – the human member – that is.

Face everything. Avoid nothing. Stay confident. Better days are coming for us all. We can do this.

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