The incumbents finally start moving.

As I learn that my local Taxi company updated their app with similar functions to Uber, I can imagine how happy the internal team must be. They think that they can fend off the agile start-ups by simply stepping up to their benchmark with a me-too app. Worst of all, it just defends and engrains their current business model. This app is about 3 to 5 years late if you ask me. It won’t be enough and its not business model innovation. Here’s why.

It’s not enough because the Uber structure of managing a network of independent drivers and their cars still mean less overhead costs to ensure profits. Uber will be cheaper. The taxi business needs to generate value in their customer experience, not simply from a low price offering.

It’s not business model innovation because the app doesn’t change the means of how the Taxi business generates value is still the same. They are not addressing the fundamentals of their business, they are simply improving existing dimensions of their current service and their delivery mechanism. The customer relationship is merely updated. More importantly, the revenue model is untouched.

In conclusion, it’s important to stay up to date but it’s even more important to stay relevant! We’re talking about a company funded in 1922 with 2500 employees, 1080 cars, and 14% share of the market with 5 million rides per year.  They will have to reinvent themselves every decade or so. So the big question is: what’s next in urban mobility? That’s what I hope the big taxi companies are working on today.

What would I do if I were a taxi business? I would launch a few start ups, spin offs or fund some existing ones. Have about 3 different approaches to urban mobility. Most important, find ways to make these start-up’s business model take advantage of my current taxi system. Learn from their mistakes. Implement changes to the current business before the competition. I would ride both business models in parallel for a few years and then think about merging paths.



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