Why do we resist the change we believe in?

The scene:

It was past midnight on an oddly cold and rainy summer night at the 30th Street Megabus stop of Philadelphia. A bus from Washington DC had just arrived. It was full of students, young tourists, and professionals, including me. As I got out and collected my luggage, I noticed a waitful scene: The bus staff - getting the bus ready for the next trip and waiting (for moving to the next stop?), Passengers - getting out from the bus, opening their umbrellas, dragging their luggage, for a couple minutes along the sidewalk, before taking a pause, and waiting (for someone?); and a string of white, off white and powder blue cabs along the sidewalk with flashing headlights and squeaking wipers, with windows open and drivers looking out, waiting (for riders?).

If the passengers were looking for a ride home, and the cab drivers were looking for riders, and if both were right there - you might think what was everyone waiting for? Along side a dark alley, so late on a rainy day, why were passengers playing with their smartphones, when they should be getting back home? The confusion of course, along with the scene, cleared up in no more than five minutes, when a string of grey-ish cars rushed in, picked up the passengers, and zoomed away. Yes, they were all waiting for their Ubers.

If this scene had played out just five years back; put yourself in the shoes of the cab drivers, and you’d go crazy. You’d be pulling your hair while waiting just next to the those who wanted rides. “Why aren’t they looking at me, but at their phones? Why aren’t they stretching their arms out, but dabbling their thumbs all over the screen? Why don’t they want to go home?”, you’d wonder.

We would indeed feel strange for you if you were in that situation in 2011, but not anymore. On the midnight of May 25th, 2016, waiting at the 30th Street station, none of the cab drivers had any visible emotions on their faces. No one was going crazy trying to figure things out. Every single one of them knew that as soon as anyone coming out of the bus pulled their smartphones out, they’re calling an Uber. They just hoped someone won’t, but most did. If they couldn’t convince them to take a ride, even after being right there, right then, they didn’t know what more to do. They were simply helpless. So, while you might’ve rightly guessed about what the passengers were waiting for, my question now is: “What are the cab drivers waiting for?”

The dumb cab:

I once met a really accomplished professor who used to teach scheduling at an esteemed University (I’ll of course keep both anonymous), but his class covered the demonstration of P3 version of Primavera software instead of P6, which was the market standard then (Note that P6 was launched in 2007, and P3 had been around since 1990s - so we’re talking of generations old technology, in software terms here- In fact, Oracle ceased sales of the P3 in December 2010). His take was that P3 was much simpler, intuitive, and had easier ways to generate output; whereas P6 had managed to make the task more complicated. Basically, that was his reason to not change. Similarly, I’ve met families running roadside mom and pop shops who would not give in to malls, because they felt people would return to a less commercial experience of shopping. And then, we’ve all met someone who’s not on Facebook, because they don’t believe in their privacy policies. The underlining theme I want to highlight here, is that I’ve seen many people not adapting to change, because they were principally opposed to the new paradigm- while it can be debated if they were right in doing so, I can see a case for a fair argument on their side. I wanted to check if the same thing applied in this case: Were the cab drivers who were waiting on the road side, and resisting change, did it because they principally opposed Uber? To get an anecdotal evidence, I took a ‘dumb cab’ ride -

Yes, I did a head tilt and stretched my arm to stop one of the many red and grey cabs, circling around the Union Station. On the back seat, I could read instructions, driver’s certificate, qualifications, a city map, and could watch a tablet size TV with snippets of Comedy Central. Interesting how we aren’t able to do any of these, in an Uber. But well, I also noticed the fare meter in red digits, ticking up every time we got stuck in traffic, which is almost every other block in DC.

“Do you find passengers much more sensitive to every tick up in that meter, since Uber launched?”, was first of the string of questions I asked.

I’ve always loved talking to cab drivers, as they give out the ground realities of the city I’m visiting, and do paint a very raw picture of the industry, and sometimes economy (due to their diverse customer base). But thanks to the DC traffic, this conversation went on for longer than I had thought, and helped me understand his take on the dumb vs smart cab rivalry. What he said, was no different than what a few other cab drivers have told me, in similar conversations: He has had a direct hit in what he used to make, since Uber struck. With the same skills, he was now paid much less, and his potential opportunities were down to a couple. (This is the part you’d assume, but what’s interesting, follows:) He was fascinated by the way Uber & Lyft worked - in that, drivers almost always find rides and their idle time was down to a minimum. He also vehemently agreed to the fact that ‘tapping for an Uber’ is so much more convenient than ‘finding a cab’ for the passenger, who are not seen on the road side anymore. Through the rest of conversation, he did not present even a single argument in favor of the dumb cab industry (which you’d expect him to), and kept telling me positive stories about their friends who have switched to Uber. Imagine a team being outplayed by its opponent so bad, that the losing team is playing to just stay in the game, while admiring its opponent - yes, that’s exactly how this scene was playing out.

This 2ish mile ride, which cost about $15ish (tip extra), did teach me a lot. I confirmed (building up on prior conversations) that in this case, cab drivers were not resisting change on the basis of principle. They, do actually believe in the Uber model. What then, was holding them back?          

“I mean, I’ve been driving for (unnamed) taxi company, since I was 25”, he said, and paused (as if that’s all he has to say on that).

Another driver responded to the same question as:

“Uber is good, but (long pause) taxis won’t just go away, you know (pause). People will always want a taxi (long pause, to indicate the end of an answer)”.

A third category of driver was a bit more confident,

“Uber is a fad. These come and go. It will be gone is 5 years. I don’t want to buy a car for that” (note: no pauses).

I deciphered a couple concrete reasons (among others) to why we resist change, that we believe in:

1) Inertial Complacency:

Just because people have always done something in a particular way, they don’t want to change (remember the guy who said the reason was because he’s always driven for a taxi company?). This makes them conceptual dormants. Late adopters, have a very high conceptual inertia. Change to them, basically, means starting over; and starting over - scares the hell out of them. If yesterday, they were the masters of how things used to be done, today - they will be students, learners, of the new paradigm. The change makes them equals with the new guys, while, they were superior before it (Many older cab drivers not adept with smartphones, feel like they’re being pitched against millennials on that basis, while there’s little respect for their years of driving experience). The only way they think they can remain superior is by letting the change not succeed, and things going back to the way they were. They then try to defeat the change, by not being a part of it. However, in a change as strong as this (Uber), they do realize halfway that there’s no way they can cease the storm by hiding behind a wall. Then, why aren’t they scared enough of being on the losing side? That takes us to the second reason:  

2) Biased optimism:

If you’re an unbiased spectator in a one sided game, you might lose interest and declare a winner even before half-time. If you’re a fan of the losing side though, you have higher (than rational) hopes that your side will bounce back and you might wait till the end of third quarter, before giving up. However, If you’re a part of the losing team (on ground), you always feel that you can get back. And even if it’s clear that you’re going to lose, you fight till the last moment and believe that the scoreboard could be less of an embarrassment. While we can respect the effort, we have to agree that the more lopsided your affiliation is, the more irrational shape your optimism takes. To start with, you feel like you will never lose. And once it becomes clear that you are going to, you try to defend it by not being washed out.

In this experiment (over many such rides), I saw a range of reasons that stemmed out of this, from overconfidence (“Uber will not exist in 5 years”) to unfair optimism (“Taxis won’t just go away, right?”). The spectrum of responses can be said to range from “It is a fad” to “It might defeat me, but not kill me”. Beyond a certain point, their victory was in the fact that taxis will not face a sudden death. This made me feel a bit sorry for this group of drivers, because I could see both of the above factors at work, while knowing that taxis will indeed go extinct, sooner or later. Why do I have the right to make that statement, you ask? Because, I’m a consumer. Consumer always gets to decide who wins (collectively though, I understand).

From my perspective, I see no rational reason for conventional taxis to stay on roads anymore. The problem they existed to fix, has now been solved, in a way hundred times better. Once the innovation delta is that huge, there’s no reason for the previous structure to stay in place, other than to mark time. This is just another example of technology disrupting dormant industries. Algorithm behind matching, routing, tracking, and pooling, is not something a traditional taxi service can match. Pooling especially, is the beauty of the algorithm. It can find multiple riders for the same route, having an interested driver, all going to the same destination, and split fares.

At a consumer level, I have never in any time in history, got better deals than this (I took an Uber ride the next day, for 35 miles into a distant suburb, which went for 1 hr 45 mins due to DC traffic, and it cost $39! (+no tips necessary) - Can anyone beat that?). On a societal level, it boosts productivity, makes the society smarter, and makes optimum use of available resources to reduce cost for everyone involved (even environment). Once you realize these facts, the yester-year taxi system would look dumber than ever before: It doesn’t know where you are (unless you’re right in front of it), you don’t know where they are (remember tens of minutes of wait along road side, to spot a taxi? maybe not), it doesn’t know your taste of music, it doesn’t even know the best route to take you along, you have to literally take out your credit card to pay (jeez), you have to tip (oh, calculations), and if you forgot something in the cab - good luck!

These are my thoughts though, and maybe you share them too. But not all cab drivers are so eccentric, because their measure of optimism is biased. One crucial temperament, thus, to be an early adopter, is to be able to look things fairly, even when your bets are placed on one extreme. We should remember that our success is not always based on our side winning, but us winning - and if we fairly assess that a new winner has emerged, our winning resides solely on how fast we change sides.

The Uber Smart:

While my emphasis was on spotting and highlighting the reasons behind resisting the change (which made the dumb cab example the focus of this post), I also stumbled upon a paradoxical observation, which I found very intriguing. Let’s walk through one of the smarter rides I took -

                                                                                                       picture source: gettyimages

This was an hour long Uber ride from National Mall to a distant town, on a rainy evening. Mr. S (name being anonymous), the Uber driver, turned out to be an interesting subject of my survey. Unlike many other Uber-y experiences, this conversation turned out to be an exploration of ‘The other side of Uber Story’.

He was very frank, and walked me through every single pain point an Uber driver has to go through. For example - i) How the public adverts to lure drivers, which guarantee $30/40 per hour, are very misleading, and ignore fixed costs, ii) How drivers end up buying new vehicles, and crank up tens of thousands of miles on the car in no time by riding for some months, and don’t realize the depreciation costs, iii) How Uber doesn’t care about the drivers beyond the fact that they are getting paid for the rides (no other benefits), iv) How Uber takes the most cut: Takes 25% cut of the total share (v/s 20% by Lyft), and offers much lesser sign up benefits than it used to, and v) How the rate cuts have impacted what drivers take home.

I can go on about other pain points, but let’s just stop at the last one, because I was interested to know if Mr. S. knew anything about Uber’s financial position and their strategy behind cutting rates. Surprisingly, his know how of the situation wasn’t far behind mine. He knew Uber was valued at $66B, as per the last funding round (Yes, he knew that!), and was cutting rates to take market share.

His argument was very fair - He argued that if drivers were the backbone of Uber model (which they are), why is Uber making drivers suffer due to their own competitive tricks? For instance, Uber has been slashing rates sharply since 3 years now. With the 25% share in place, drivers takes home 75% of what the ride is worth. Now, with rates being slashed, drivers have seen their income go down as well. Looking forward, if a driver buys a new car and joins Uber, how in his cash flow analysis, does he factor in the returns he would reap, if Uber keeps cutting rates to win the game? That’s a very fair question. Mr. S’ awareness of the situation was indeed exceptional, and it made me ask about his background. Can you guess where did he use to work before? That’s right. A taxi company. He switched sides in 2011.

Obviously, my next question was, if you’re so opposed to the Uber model, why did you switch, and stay with Uber?

“That’s the way it is, everything will be Uber in some years you know, and I had to. I don’t like them, but you can’t fight them. (pause) Know what I mean?”    

The Principle Paradox

In the dumb cab rides, we met cab drivers who believed in Uber’s philosophy (not yet aware of all the downfalls), but still continued to drive a Taxi. On the other hand, Mr. S, who did not believe in Uber’s philosophy, had switched sides, and stayed with Uber. If you were trying to form a simplistic conclusion, the contrast will unsettle you: Why weren’t they swapping sides? Why?

Because we don’t always resist change on the basis of principles (even though we may say so, or even think we believe so). Our resistance has more to do with how conceptually flexible we are, how comfortable we are to start over as a student, to admit being equals rather than superiors, and finally, to how smart we are to look through the darker side, and part with the winner.

I agree that there’s a dark side to every change as well, and Mr. S in this case, was far more aware of it than myself, but he did have a handsomely low conceptual inertia, and was smart enough to practice his fair assessment, to realize that consumer has chosen Uber to be the winner; and he needs to be on the winning side, sooner or later. On the way, if he doesn’t like the way things are, well - the only way he can change the system is by being in the system (not resisting it).

Take away:

Our actions don’t always go hand in hand with the principles we believe in. Even though we might principally believe in a new trend, our insecurity and resistance to change might guide our actions otherwise - they are often, a victim of conceptual inertia and biased optimism. It is crucial to be aware of what could be preventing us from adopting that little beneficial mutation that might help us survive in the theory of natural selection.

Next time you confront a change (new version of a software, a new trend, etc.), forget which side your bets are placed on, or what makes you look better. Be a fair judge, and assess which way will help the end consumer win. If you find out that you’re not on the right side, take less than a flip second to re-calibrate, be ready to be a student of the discipline again, start over, and please, support the change. It’s better to be an under performer on the winning side, than to lose altogether. Don’t stubbornly resist the change, because the best case in that scenario is being defeated (and not butchered).

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Have you, in your daily lives, come across individuals/project teams resisting change to preserve status quo? What reasons have you discovered for the resistance, and what are your ideas on breaking the ice? Please share them in comments. And, if this post helped you understand the phenomenon any better, please like and share the post. Don’t resist it :)

Notes:

• Wherever I’ve mentioned “Uber” in the post, I’m referring to app based on-demand ride sharing services, and thus, includes Lyft and other similar players. On the same note, wherever I’ve mentioned “Taxi”, I’m referring to the traditional taxi services, which have minimal integration with technology.
• Though I have mentioned only a couple interviews as anecdotal evidence, my cited observation derives from a host of related discussions I’ve had with many drivers over the past year.
• Disclaimer: At the time of this publication, I do not have any equity interest in Uber, Lyft, Medallion Financial, or Alibaba/Tencent/Apple (backers of Didi Chuxing). All my opinions, are as a consumer of their services, and don’t stand to benefit me monetarily in any way.   

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About the Author:

With a Masters in Civil Engineering, and a strong understanding of business strategy; I currently assist managing construction projects, as a Project Controls Analyst. My focus is on Project Planning, Controls, Management, and Analyses.

Also belonging to a third generation of entrepreneurs and business managers, I have a keen interest in analyzing and forecasting businesses. My interests on that front include: forecasting business trends, macro insights, equity valuations, investment research, strategies, and financial planning. In the recent past, I have written extensively on consumer behavior, and analyzed related sectors (technology, retail, and healthcare). If you'd like to follow my writing, please 'Follow' me on LinkedIn, or subscribe here.