To beat Uber, taxi companies must fight fire with fire
- By Mike Wade
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E-mail Shanghai Daily, November 2, 2015
Uber is hitting headlines daily. Whether you love it or hate it, you can't argue with its success. The rideshare company is valued at more than Avis, United Airlines and Fiat combined.
Few people regarded the taxi business as one that was ripe for disruption, and yet that is exactly what is happening in hundreds of cities across 50 countries.
Uber has found a winning formula: a clear value proposition, ease of use, high service levels, price transparency, choice and attractive rates. Not surprisingly, its approach is spawning a new generation of copycat services across the globe.
This is clearly bad news for traditional taxi companies, and many of them have complained bitterly about the impact that rideshare companies are having on their businesses. In San Francisco, for example, average monthly trips per city taxi have plummeted 65 percent from 1,424 in 2012 to 504 in 2014.
However, just complaining is not going to solve their problems. So, how should traditional taxi companies respond?
According to the seven disruption response strategies developed at IMD's Global Center for Digital Business Transformation (DBT center), taxi companies should start by proactively blocking Uber and other new entrants using whatever legislative and regulatory means available to them. Though this strategy may seem defensive and anti-competitive, it can be very effective.
Recent actions by taxi companies have succeeded in suspending rideshare operations like Uber in Spain, France and South Korea, as well as in multiple cities across the US, India and Germany. In many jurisdictions, taxi companies have a strong case. Uber habitually flaunts safety regulations, driver background checks, business licenses and insurance coverage.
While working to legally block rideshare services like Uber may be effective in the short term, it is unlikely to remain so for long. Although South Korea has temporarily suspended rideshare operations, legislation is currently being prepared to allow Uber-like services in the country. Meanwhile, in other jurisdictions such as Toronto, Canada, legal challenges are failing. Thus, taxi companies must also pursue other strategies.
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