DRINKING the POISON
I grew up in a small city in
Western Pennsylvania that was, at the time, a thriving center of coal
mining and steel manufacturing. By the
early 1980’s, low cost foreign steel producers had kicked the chair out from
under the area’s economy. I recall a
great deal of acrimony and bitterness as battles raged between owners and union
employees and as politicians tried in vain to put their thumbs in the
dike.
There was one crucial
participant in the problem that was rarely acknowledged: the
customer. That may sound like academic
pabulum, but the fact is that the buyers are the only ones who have the power
of choice. The only action that could
have saved domestic steel production was being chosen by steel customers.
Despite the obstacles of
foreign government subsidies, lower labor and environmental costs, domestic
producers could have sought ways to streamline production, supply and
distribution channels; create incentives for labor productivity; pioneered and
adopted new, efficient technologies.
Labor unions could have worked with manufacturers to meet the
competitive challenges and come away with a stronger, more productive, more
profitable domestic steel industry. They
did not and they went dinosaur. By
putting all the blame for their problems on outside forces and nefarious
“others”; by turning to politicians to use force against those “others”, the
steel industry drank the poison and surrendered its power to change its own
future.
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Fast-forward to a very
different time, place and situation. A
different industry is facing a similar existential threat. Traditional taxi service market share is
dropping like a mudslide in the face of competition from Transportation Network
Providers or TNPs. I drive for Uber, the
oldest and most successful of the new services--“oldest” meaning just over five
years in business. “Successful” meaning
operations in 60 cities worldwide and 2014 revenues projected to top one billion
dollars. Uber is relatively new here in Phoenix, having entered the market last October. Being new, it is common for riders to express
how much they love Uber and/or how much they hate taxis. Riders complain that taxis are expensive,
unreliable and passengers never know what and who will show up at their doors,
if they show up at all. They tell tales
of unscrupulous drivers taking round about routes, texting while driving,
behaving rudely and pulling tricks like pretending their onboard credit card readers
don’t work in order to pocket cash.
Using Uber, the entire
process is done through the smart phone app.
Riders create an account using a credit card, so there is no cash and no
tipping involved. They can see a picture
of their driver, photos of the driver’s vehicle and how previous passengers
have rated their performance. They can
track the progress of the driver as he approaches for a pickup. They can direct him or her to their
destination or the driver will use GPS if riders prefer.
In my experience, the most
critical advantage that rideshare programs offer is the rider’s ability to rate
the driver and the company’s ability to get rid of any driver who does not
please the customer. The fact that the
business model includes incentives for performance is what gives Uber and other
rideshare services their biggest competitive advantage of taxi services. In the taxi world, there are no incentives to
produce anything other than money.
Therefore, cabbies often do whatever they feel is necessary to maximize
their fares.
Like the steel industry of
decades ago, the taxi industry seems determined to place the blame for their
decline on outside forces rather than examine their own programs and look for
ways to improve and be competitive again.
Also like the steel industry, they turn to politicians who have long
regulated and protected them use the power of government force to crush
innovation and maintain the status quo—dingy though it may be. Again, rather than turn a competitive threat
into an opportunity to improve, they drank the poison instead.
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Related Links:
If the idea that the
domestic steel industry could have risen above the challenge of foreign imports
seems to be delusional optimism, please direct your attention to an American
steel producer that has grown to be the nation’s largest, most successful steel
producer—NUCOR http://www.nucor.com/
Here is a link from the
poison drinking file. To emphasize the
fact that the taxi industry has no intention of being introspective or
improving itself, they have hired a DC lobbying/PR firm to create a website
warning the public of the dangers of using rideshare.
http://www.whosdrivingyou.org/
Although their names appear
nowhere on the site, the WHOIS data indicates the site’s proprietor is a
partner in the firm. Their own website
indicates they do a great deal of work for political candidates and
organizations. I’ll leave it to you to
guess whether they are on the right or the left.
And finally, to put an even
finer point on taxi company bullying, there is this from Chicagoland: threats to out gay city aldermen if they do
not ban ridesharing.:
http://chicago.cbslocal.com/2014/03/11/taxi-publication-threatens-to-expose-secretly-gay-aldermen-if-city-doesnt-ban-ride-sharing/
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