People in the capital of Indonesia, Jakarta, where public transport is bad and the traffic is very crowded, vigorously welcomes applications driving vehicles like Uber to drive and Gojek to ride motorcycles.

San Francisco-based Uber entered Indonesia in August last year as part of its expansion across the Asia Pacific region. Gojek, a local company that has been operating since 2011, has an average of 200 new drivers per month.

But the app that connects the driver with passengers creates competition for established taxis and motorcycle taxis (informal motor taxi). And they are not happy.

The Organization of Land Transport Owners (Organda) has questioned the legality of Uber cars operating in Jakarta. Last month, Jakarta police seized five Uber cars following the complaint. They have returned.

Jakarta Governor Basuki Tjahaja Purnama also considered that the operation of Uber in Jakarta becomes illegal.

The tension between motorcycle taxi drivers and drivers also boils. Ojekdrivers are reported to have stopped drivers of Gojek, who wore green jackets and striking green helmets, to pick up passengers.

NEW COMPETITORS
Uber and Gojek are basically referral services. The app works with Android, iOS and Windows phones. The GPS capabilities of the smartphone allow drivers and passengers to get to know each other’s location. This will eliminate the question of when the trip will arrive.

Competition from this new technology disrupts the market for traditional players. Given the relatively low price and accessibility of Uber and Gojek, this application enters a head-to-head war with established operators.

Conflict arises because these “modern operators” create competition for “conventional operators” in the same market. This does not apply to relatively similar applications like GrabTaxi, which take advantage of existing taxis.

INNOVATION DISTRUPTIVE
During the internet’s emergence in the 1990s, Harvard Business School professor Clayton Christensen foresees potential market disruptions caused by new technology.

In 1995, Christensen made a speech about technology and innovation that later developed into his theory of “disturbing innovation”. This term is used to describe products and services that use new technologies and business models. This innovation disrupts the market by creating new demand and new consumer types. Eventually this innovation will replace the products and services of established businessmen.

In 2013, Christensen observed the collapse of “defending” companies: companies that do not innovate using new technology, but only improve existing services. An example of this support company is a company that manufactures giant mainframe computers and that manages fixed phones. These companies charge the highest prices to their most demanding and sophisticated customers to achieve the greatest profit.

According to Christensen, the big company collapsed because they were reluctant to open the door to “disturbing innovation”.

Disruptive innovations allow new consumer populations to access products or services historically accessible only to wealthy consumers.

The term “intrusive innovation” is rooted in the theory of “creative destruction” by economist Joseph Schumpeter. This theory illustrates a:

… the process of industrial mutation that is constantly revolutionizing the economic structure from within, constantly destroying the old, constantly creating new ones.
Ujek and Uber is not the typical technology that Christensen mentions. They do not create new markets and value chains. But these applications exist because of the disruptive trend of over-the-top services, where businesses provide services over the internet, bypassing traditional distributions.

MAKE THE BEST OF TECHNOLOGY DISEASE
The task of Indonesia in the coming years is to find a way to elegantly monetize this troubling technological wave.

In my forthcoming research on annoying innovations with Agung Trisetyarso, we found that the disruptive wave of technology has contributed significantly to the recent world economic growth. Our preliminary findings using the Solow growth model show that annoying innovations will create significant capital accumulation, which is more than enough to accelerate global economic growth over the long term.

On the other hand, technological disruption can lead to loss of potential revenue in the short term due to a business shift. The telecom industry is predicted to lose a total of US $ 386 billion between 2012 and 2018 due to over-the-top messaging services such as Skype, WhatsApp and other third party internet voice applications.

Disruptive innovation follows the theory of evolution. Fittest survives. The capital, knowledge, and labor of annoying innovations will remain, while capital, knowledge, and labor in mainstream technology will not go smoothly.

FLEXIBLE REGULATION
Trisetyarso and I estimate there will be 25 billion connected devices and about US $ 2 trillion of world market potential for annoying technology by 2015. It will grow to 50 billion connected devices and US $ 7 trillion by 2020. It can change The way people sell and Buy products and services

The government must catch a wave of technological disturbances. Regulation plays an important role in harnessing disturbing innovations. However, regulation can also hinder innovations that improve quality and low cost in order not to enter the market.

Flexible rules must exist to address this trend. Indonesia’s current regulations are too rigid to adapt to the disruptive influx of technology.

For example, a taxi service in Jakarta is obliged to have a license and pay taxes to the government. Rates / tariffs for taxis in Indonesia are well organized. The rate is determined by the transport ministry and applies to all public transport companies without exception.

Uber considers his business model different from traditional taxi service. This rigid regulation creates barriers for new service providers such as Uber and Gojek.

Rigid rules will only create anarchy of technology that is “a catalyst for change that creates new and different worlds”, citing Jeff Garzik, one of the most prolific Bitcoin developers. In other words, annoying innovations will always outsmart regulators in the end.

So the choice is, are you with us or against us? History tells us that there is always victory.