Bob Nixon
Bob Nixon
Sales Director & Co Founder

Bob is the Head of Global Sales, and a co-founder of iCabbi. With a forward thinking mindset, he delivers the second in a series of articles looking at the future of the taxi industry.

Published on 07.02.2017, in News

The evidence that the transportation industry is undergoing the beginning of a paradigm shift is coming thick and fast. This is an area that I’m extremely interested in and passionate about, when most people go home they watch tv, I read whatever I can find on it.

I think much of this stems from my being involved in a family owned travel publishing business when the internet really took hold. The fact that this was the second major shift in the industries model makes it even more fascinating (the introduction of the printing press being the first). What was clear in both shifts of this model was that those who saw, believed and invested - made fortunes;, whereas those that didn’t fell by the wayside.

I’d like to see the taxi industry have the foresight and strength to build a view on what is happening now, what they think is likely to happen in the next 3-5 years, and also a long term view, and to build a strategy around that. It will be difficult, they’ll need to be brave, build strong networks and make decisions that may hit their bottom line in the short term to build value in the long term.

I’m thinking about how study could be done and lessons learned about what happened in major shifts in other industries like publishing, or perhaps the music industry who couldn’t bear the thought of losing 90% margins on the sale of CDs by introducing a “lesser” incremental charging model before it’s time, then they moved too late and missed the chance to be leaders. They lacked leadership:, the taxi industry is going to need real leadership in the coming years.

The clear end goal from my perspective is going to be driverless cars. Although that’s unlikely to have any significant impact until about 5-7 years from now, we can’t say for sure what that will look like. But we do know that vehicle ownership patterns are going to change, how people use cars is going to change, how and where they book and pay for them will change. There are some very, very big players spending huge budgets on trying to ensure that their businesses will be in a prime position to act when the models shift.

Watching what these big players are doing I’ve been thinking long and hard about how what they are doing can be applied on a smaller scale within the taxi industry to ensure that their model is evolving in the right direction to enhance their service, make customers more sticky and to begin getting customers used to new payment models.

Statistics would suggest that most cars lie idle 95% of the time and this has given rise to new apps that allow people to rent their car out during the times they aren’t using it (think AirBnB for cars). While one car manufacturer (Cadillac) has introduced a subscription based service where for $1,500 a month customers can drive any model they like, change it as often as they like and if they travel, can have a car waiting for them at the other side at no additional charge. While the price may be a little lofty, I think it’s clear to see where they are going with this trial.

I’ve mapped out roughly how taxis are owned, used and paid for and added in some potential new models that we are already seeing being trialed by car manufacturers (think Daimler, BMW & Toyota), car hire companies, some private companies and in some cases even apartment complexes. These companies are parking cars in key areas of cities and allowing their members who pay a modest monthly fee to avail of the service and a per mileage fee every time they use a car.

 

So what does this mean for the taxi industry? The likes of Uber and Lyft are now established competitors and the battlefield is well defined at this stage.

 

The companies that are trialing new models are committed to the future and want to take the entire ground transportation industry on by disrupting usage, booking methods and payment models.

Granted the pie will get larger as car ownership drops, but what are taxi companies going to do to maintain relevance? To me they must emulate those other companies and trial new models, whether under their own brand or in spin out companies. They need to be based around some of the ideas above, a little trial here or there while building relationships, affiliations and networks with other like- minded taxi companies in their local area and beyond.

Perhaps trial a rideshare (TNC) programme in a similar vein to Uber but with fully vetted and certified drivers, or do a deal with a large car manufacturer that would see their cars parked around central city areas and starting a pilot point to point car hire programme where customers pay by the hour or with monthly subscriptions and the taxi company would manage the entire pilot (including the cars) and would promote it to their user base.

Like the record companies in the music industry before it was disrupted, the taxi companies currently own the market. They really need to do what the record companies failed to do and innovate and evolve or risk becoming irrelevant.

Highly recommended read for those thinking of innovating "The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail" by Clayton Christensen which uses case studies to explore how companies evolve and react to disruption and the evolution of technology. What I took out of it is that it has been proven time and again when industries are disrupted that the most effective way for incumbents to deal with the situation is to maintain their current business model while funding a new, fully independent spin off business to access the disruptive model. 

bob@icabbi.com

 

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