Disrupting the service sector

Here is an interesting thought – I don’t know how to disrupt the raw labour service sector.

What do I mean by that? Every sector of the economy starts off as labour intensive. Eventually, capital replaces labour, or the majority of it, making the services higher quality and lower cost. 100 years ago, all food was picked by hand. Every single apple, every stalk of wheat, every ear of corn, had to be picked by a person, generally one of low wage. Then smart people invented tractors and eventually combine harvesters. Sure, lots of low wage people were out of work, but they quickly adjusted, and the cost of food went way down.

For a different example, look at horse and buggy. Everyone knows that the automobile put the horse and buggy backbone of transportation out of business. A less-frequently considered element of that is that the horse and buggy drivers were also put out of business. The horse and buggy was a product whereas the driver was a service. It took a higher level of skill and physical strength, as well as comfort managing temperamental horses, than the average person had to drive the buggy. With the advent of the motor vehicle, driving became a skill that nearly everyone could and would acquire. This was a key element of driving the cost of transportation down Рthe elimination of a large portion of the labour component.

There are areas of the “low-cost” service sector that are ripe for disruption, yet I have a hard time, beyond purely sci-fi, envisioning how they will be disrupted. A prime example is moving. 5-7 large, muscular and relatively low-paid men come into your home, pack everything up, and carry it all down the stairs and into the track, then do the process in reverse on the far end. It is extremely labour-intensive, with the exception, of course, of the truck itself. Yet I have a hard time envisioning how to replace 5-7 strong men with 1-2 knowledge-trained men and equipment, in a manner that will work in most homes, reduce costs and reduce times.

There are many such “low-cost” labour-intensive sectors of the economy. I look forward to seeing how they are disrupted.

About Avi Deitcher

Avi Deitcher is a technology business consultant who lives to dramatically improve fast-moving and fast-growing companies. He writes regularly on this blog, and can be reached via Facebook, Twitter and avi@atomicinc.com.
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