What rules are worth breaking?

The 21st century business world has witnessed one industry after another miraculous miracle: Airbnb subverts the hospitality industry, Amazon subverts the retail industry… However, when the rules of the game are consciously broken, the company and the industry are at risk.

Subverting rules, there are risks

The business world is based on the subversion of one industry after another. Old rules no longer apply to industries that face challenges.

For example, with Airbnb, the hospitality industry is different from the past; with Amazon, the retail industry has also undergone tremendous changes.

At one level, subversion is not a new concept—it merely interprets the “creative destruction” theory of the economist Joseph Schumpeter in a more modern way.

But on another level, there are other things happening. Many innovators are not only making better products, they are also expressing their own ideas, consciously breaking the rules of the game, sometimes achieving higher returns with less investment, sometimes playing the law, and sometimes going crazy. .

Violating too many rules is actually risky. Think about Uber. A few years ago, the San Francisco-based car service company was a model for emerging economies.

With Uber’s popularity, startups in other industries will describe themselves as Uber in the apparel industry, Uber in the food distribution industry or Uber in the travel booking industry.

Uber’s business model has opened up a new area of ​​providing convenient on-demand car service to customers through simple apps on mobile phones. Customers have enjoyed more efficient rides, and this service has been digitally integrated into their daily lives, and Uber has achieved great success in a short period of time. By 2014, it provides 1 million rides a day. By 2016, Uber will provide an average of 5.5 million daily rides worldwide.

But then, because of a series of mistakes and controversial practices, Uber became a bad role model for its employees, users, communities and the entire car industry.

At the beginning of 2017, because Uber automatically raised prices on the day when the American people protested against the travel ban, more than 200,000 customers participated in the “Remove Uber” parade and stopped using the program and services. A series of controversies led Uber executives to leave in batches, including president, vice president of product and development, head of artificial intelligence labs, and CEO Travis Karanick himself.

Creating and implementing innovative products and services that disrupt the status quo requires creativity, which involves thinking different ways to overcome constraints. Legal and social norms are important tools for constraining individual and corporate behavior. But there is always some power that makes people want to challenge these constraints.

Psychological research shows that there is a certain correlation between unethical behavior and creativity. People who have deceptive behavior in a task are more likely to propose creative solutions in the next task. Researchers believe that this increase in creativity stems from the pleasure of being unconstrained by rules.

Not all rules are worth breaking

Subversive companies like Uber need to change the notion that rules and standards are not important, and instead figure out which rules are worth breaking and why they are worth breaking.

When subverting the status quo, smart startups are better off using scalpels than axes, so as not to cut down on important relationships and essential resources.

Holding the attitude that “these rules are not applicable to us”, coupled with focusing only on results, will inevitably provide a fertile ground for the emergence of a moral crisis.

While corporate culture that pursues success is beneficial in many ways, this culture can also cause unnecessary self-harm, because not all rules are worth breaking – even if it can benefit in the short term.

When key stakeholders find that a good rule has been broken, they will be angry and find ways to retaliate. In the end, the negative impressions of successive crises can accumulate and adversely affect the brand, making it harder for companies to attract and retain high-quality employees, customers, suppliers and communities, all of which are inevitable for the company’s prosperity. less.

For the company, it is far more important than the narrow goal of pursuing shareholder interests. Breaking rules and standards requires a real price, and companies need to bear these costs.

Engage stakeholders

Startups and other companies that want to subvert the status quo and have a sense of responsibility need to understand in depth what rules they want to break. Companies must be able to understand in advance the consequences of breaking certain rules, especially to figure out who will suffer and who will benefit. It is necessary to involve stakeholders in the process of developing new products and services. This allows companies to focus on the ideas of stakeholders and better identify and avoid moral crises. Without the ability to anticipate and circumvent the potential problems of innovation, a company—even a company with great innovative ideas—will suffer from various resistances. Yes, we need to subvert, but let us responsibly subvert.