The sharing economy and regulation


I recently listened to an econtalk podcast with Mike Munger on the Sharing Economy. This talk focused on new “sharing” services like Uber, AirBnB, and FlightApp. It was a great podcast and definately worth listening to. I had a couple of thoughts while listening.

1) The issue of regulation. Some localities are moving to make it illegal for individuals to use Uber. It reminds of a paper I read recently by Diana Thomas and Peter Leeson titled The Brewer, The Baker, and The Monopoly Maker. This paper looks at the evolution of brewing regulations and policies in Bavaria in the 14th to 16th century. The abstract from the paper:

This paper examines how productive entrepreneurial activities, such as innovation, influence unproductive entrepreneurial activities, such as regulatory rent seeking. We argue that the former may increase the latter. Confronted with a situation in which innovation erodes their monopoly returns, legally protected producers and policymakers reregulate industry to recapture lost rents. Regulation policy under such reregulation tends to be more encompassing, and thus produces more unproductive entrepreneurial activity than pre-innovation regulation policy. This reflects the greater number or variety of producers that new regulation policy must encompass for reregulation to recreate rents. To investigate our argument we consider Bavaria’s brewing industry in the 14th and 16th century.

I see several parallels between these two topics. When innovation occurs (adding hops to the brewing process / using Uber instead of a cab) the monopoly producers (the brewers’ guilds / cab companies) seek to enact legislation to further regulate the industry. How this will play out for Uber, I don’t know. I foresee some reregulation, and whether this be in favor of Uber, will depend on which group holds the biggest prospect of rents for policy makers.

2) The second thought is full utilization of resources. How many of us drive to work with 1 to 5 open seats in our car? How many of us have a guest bedroom that is occupied less than 1% of the year? The primary care clinics in the hospital I work in only sees patients for 1/3 of the day. How can we capatilize on these underutilized resources? There is a lot of wasted capacity…I challenge you to look for ways to fully utilize the resources you have available.

Advertisements

Quote for the day

Today’s quote comes from pages 26-27 of Leonard Weber’s 2001 book, Business Ethics in Healthcare.

The reality of limited resources requires that healthcare providers shift from thinking that they should always try to use the best to thinking that they should try to use the least expensive that works well. Patients are not done a disservice when they are provided with good, competent medical care, even when they are not provided a more expensive intervention that might be marginally better. This recognition of the importance of cost in determining what is appropriate use of medical resources is essential if there is to be just and fair allocation of these resources. Meeting community healthcare needs requires keeping an eye on cost.

A majority of people do not realize that healthcare operates on limited resources. It is easy to forget this when someone else is paying the majority of healthcare costs, i.e. insurance companies, employers, and government. The most expensive does not always equate to being the best. We all must be prudent in how we best spend the limited resources of healthcare. In closing, health is more than healthcare, it also includes such areas as lifestyle, environment, and genetics.

Motivating front-line government service employees

I read an article on Forbes today about motivating employees, To Motivate Employees, Apply This Scientific Rule Of Leadership. In the first part of the article the author provides a list of focus areas leaders should use in obtaining optimal results from their employees.

Coaxing a great performance from your employees requires you to get quite a few things right. Here are five:

1. Proper hiring (the better term is “selection”)
2. Great training and a well thought out program of reinforcement throughout the year
3. A sense of organizational purpose that is made clear throughout the organization
4. Clear service standards that provide guidelines to your employees for situations guaranteed to come up
5. Proper technology that supports, streamlines, and extends the reach of their work

But none of this will take you where you want to go without one more ingredient: employee autonomy.

Employee autonomy in:

• Flexibility in when the job gets done (don’t tell me that parents who need to work an unconventional schedule are lesser workers; it just ain’t true).
• Even more important, flexibility in how the job gets done: both on a day-to-day basis and in having a part in designing the overall structure of the work activities. This is an ethical imperative. If you don’t involve people in designing the jobs to which they devote their waking hours, you’re using employees as mere tools, for their labor. Even though you’re paying them, this kind of using of people is unconscionable.

You want customer relations to be on the shoulders of your employees. But as long as you’re defining every little thing, and rewarding/punishing based on seemingly arbitrary and thus, inevitably, gamed criteria, you won’t get them to carry that responsibility.

Their viewpoint will soon resemble the jaded flight attendant’s attitude on a big, legacy carrier who told me not long ago, ‘‘The more emphatically Management comes up with new i’s to dot and t’s for me to cross, the less seriously I take them. I know these rules will be gone within the year, and a new group of regs will take their place.’’

The first five are fairly straightforward approaches that require some effort from leaders, but the last one, autonomy, is the 500 lb gorilla in the room for front-line service employees in the government. How does a leader/manager provide more autonomy to employees, especially the entry level government service employees where it seems like everything you do is managed by some law, regulation, SOP, etc?

Here are a couple of thoughts worth exploring on how to improve employee autonomy:
1) Providing the opportunity for employees to design the workflow, and provide opportunities to improve it.
2) Provide employees with the flexibility to solve certain problems related to customer service. These would have to be defined by management and a couple of different alternatives that employees could use to address these problems. If you want to encourage customer service, empower them to solve customer problems.
3) Teach employees the boundaries of their job, and allow them to accomplish their job within those boundaries. (This requires a lot of effort and trust from leaders.)
4) Everyone responds to incentives. Incentivize the correct customer service behaviors. If you are going to use metrics to do this, ensure they are the metric that are tied to improving customer service. For an example of how poorly chosen metrics and standards can harm an organization and its customer base, see the VA.

I’d be interested in your opinion.