Uber: more disruption, and another industry that doesn’t know how to respond to it
Today, June 11 will see a strike by taxi drivers throughout much of the EU. The protest threatens to bring many cities to a halt, will certainly cause a lot of problems for people trying to go about their business, and is just the first of a series of acts announced by taxi drivers against changes to the way that they earn their living.
Above all, the strike shows that, like other industries, the taxi sector does not really know how to react to disruptive new technologies, and is therefore going about things the wrong way. From previous studies of how disruption works we can expect the following: strikes and protests, possibly violence, attempts to change the law, and pressure on politicians to protect the industry in question; these mistakes will likely turn the sector’s customer base against it.
The worst way to respond to a perceived threat is by not bothering to carefully analyze it first. If you ask the average taxi driver or read the media, all you will find is a great deal of misinformation. They seem confused among the various options for transportation that are popping up all over the place: BlaBlaCar, Lyft, Uber… so they basically protest for everything, for the sake of protesting. Taxi drivers taking part in these protests do not know who or what they are really up against — and even less their differential characteristics — so are responding blindly, and failing to ask themselves the essential question: why is it that Uber and other companies like it are growing so quickly and are being able to attract so many users?
I have heard taxi drivers say things like: “Uber is shabby, the drivers and cars do not have to pass any controls, and will be dirty and dangerous.” The other charge leveled against Uber is that it stimulates the hidden economy, and that drivers are not properly insured. In short, anybody getting into an Uber is pretty much putting their life on the line.
Let’s bring a little common sense to the discussion: does anybody really think that anybody would use Uber if any of the above were true? The reason its customer base is growing is because people use the service time and again. As for the submerged economy: the client pays via an app, which means it is recorded, which means the company has to pay its taxes. The taxi driver can try to avoid paying his or hers, but that has nothing to do with Uber. On average, there’s probably more hidden economy in regular taxi drivers than among Uber drivers.
There is certainly an argument for Uber being subjected to regulation; and there is certainly something in the argument that a sector hit by taxes and all kinds of regulations should not be expected to stand by and do nothing while a competitor comes in and plays by different rules. If I were a taxi driver I would be unhappy about having to pay more for a license than the cost of an apartment; about having to install meters, printers, and other kit at inflated prices; as well as being subject to all kinds of restrictions; only to have to stand by while somebody else comes along and bypasses them. This is a threat to a large, vulnerable, and very poorly represented group. But the way to respond to disruption is not by repeating the mistakes of other groups in the past.
First, know your enemy: Uber is not a shabby service with unkempt, quasi-criminal drivers without insurance and who don’t pay their taxes. I have used Uber on several occasions, and the service has always been impeccable, usually much better than traditional taxis. From a customer perspective, Uber eliminates uncertainty, is much more reliable, more convenient, easier to pay for, and more like a limo ride than a taxi. I can assure you that I would not think of getting into a vehicle that was either dirty, uninsured, or driven by a thug who doesn’t pay taxes.
Uber is not about a race to the bottom. It may have chosen to enter the Spanish market via Uber X, its low-cost division, but what it is really about is the iconic Uber Black, or better still Uber SUV, and of course Uber Lux, along with Uber Taxi, which operates with licensed taxi drivers. Most customers’ experience of using the service is that the taxi is the “poor man’s Uber”.
And if you are a taxi driver reading this, why not actually try the service, from your customers’ point of view? I advised record industry execs to do the same with Napster back in 1999, to try to get a better idea of its value proposition. Not that they took any notice.
Staging strikes and protests will simply make life harder for ordinary people: the exact opposite of what needs to be done. The right response would be to first understand why people use Uber, and to then begin trying to match its value proposition. Until taxi drivers and taxi companies understand this, all they will do is generate hostility among their customer base. Just look at how the record companies have dealt with disruption in their sector: insulting and persecuting their customers. Now taxi drivers are hoping to win over their clients by blackmailing them and ruining their day. Taxi drivers: we’re not the enemy; and in all likelihood, today’s protests will just push more of us over to the other side…
If you are a taxi driver, then take the time to read some of my other articles about Uber. And don’t stop there. Try to understand the economics of the average Uber driver. Read about what your customers say: put yourself in their shoes, and try to understand why they might prefer to call Uber rather than the same old taxi service; and why they do so time and again, as well as recommending it to their friends. Forget about generalizations and fallacies, and try to understand why Uber is so successful.
In the final analysis, this is about understanding why Uber is now valued at almost 17 billion dollars (although I personally do not share that analysis).
Fighting disruption is very, very hard. But the first thing those doing so have to understand is what they are up against. And until they do, they’re not going to get very far.
(En español, aquí)
