
These newcomers’ methods aren’t news anymore: through a mobile application customers can find and reserve vehicles in their immediate area in minutes. From Los Angeles to Sydney and Singapore, these services are shaking up the taxi business and are being met with heavy resistance.
Historically taxis have fought for their place in the urban transportation spectrum by staging strikes and paralysing cities like London and Paris, leaving hordes of passengers stranded. But the taxi industry’s resistance to the rise of Uber and similar services is a futile attempt to put the brakes on innovation. Fortune magazine’s lists compiling the 100 biggest companies from 1900 until today yield only one company that is still in the same business: Ford. 15 others still exist but their activities have evolved drastically. All the rest are gone. The ones that have disappeared were leaders in their markets and had three things in common with today’s taxi drivers:1. Prisoners of a system
2. Stuck in denial
Long waits, rude drivers and lack of route transparency: the shortcomings of traditional taxis are exactly why the new car-sharing services are prospering. Uber founder Travis Kalanick, 37, has said that the idea for his company was born in Paris when he couldn’t find a cab, an experience that seems all too typical. On the internet negative comments about taxis abound. “Drivers should be serving customers, not law-makers,” is one of the usual complaints. Until now taxi companies seem to be ignoring the simple solutions that customers want. In addition, policy-makers are supporting taxi companies’ resistance. Germany has just banned the service and recently a prominent socialist deputy in France, Thomas Thévenoud, submitted a report denouncing Uber’s practices to Prime Minister Manuel Valls with proposals on how to solve the ride-sharing crisis. These included banning the applications that help users find ride-sharing services in their area. But legislation should protect consumers and not industries in decline. Following protests by taxi drivers in London in June, Uber registered an 850 per cent increase in new users. This is proof that yesterday’s keys to success won’t be the same tomorrow.3. Not innovating
While taxi companies are on the defensive, Uber continues to innovate. It recently announced that it will soon offer trips in helicopters — multi-modal transportation Uber style. Investors took notice: the company has an estimated value of $17bn after a massive influx of funds in June. Instead of focusing on how they can respond to their customers’ new needs, taxi companies are coming up with strategies to continue business as usual. Some have recently introduced electronic payment solutions, but let’s hope that is just a first step toward more meaningful change. Like the taxi companies, many businesses in other sectors are adapting to new challenges too slowly. They don’t see the change around them and think that their success is guaranteed due to their historic position in their industries. It is comfortable and reassuring in the short term, but dangerous in the long term. If they refuse to innovate, they will quickly fall behind. Cyril Bouquet is professor of strategy at IMD and Chloé Renault is a researcher, facilitator and graphic recorder. Image source
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