Drivers are leaving taxi companies in San Francisco en masse to work for app-based ride services like Uber. This is classic disruption technology, a new service supplants an existing one. Uber, and services like it are better than traditional cabs. You use a smart phone to order it, you can watch the progress of the driver as he comes to pick you up, the bill is paid using a credit card and includes the tip, and the receipt is emailed to you. Plus, drivers say they make more and have more flexible schedules.
Kim estimates that a quarter to a third of all taxi-driving shifts are going unfilled. “I couldn’t possibly begin to quantify it,” said Christiane Hayashi, the San Francisco Municipal Transportation Agency’s director of taxis and accessible services. “The taxi companies don’t even know. But what I can see is a serious problem related to driver shortage.”
A disruptive innovation is an innovation that helps create a new market and value network, and eventually disrupts an existing market and value network (over a few years or decades), displacing an earlier technology. The term is used in business and technology literature to describe innovations that improve a product or service in ways that the market does not expect, typically first by designing for a different set of consumers in a new market and later by lowering prices in the existing market.