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Columnists

Disputes will hurt new taxi business model

The role of CAK is to ensure fair play and not to block digital taxis.  PHOTO | FILE
The role of CAK is to ensure fair play and not to block digital taxis. PHOTO | FILE 

The war between traditional taxis and taxi-hailing service providers is still raging. The competitive environment is not making it easier as prices continue to drop while the cost of fuel is rising.

As a result, some taxi drivers have figured out how to annoy and that will affect the growth of the e-services.

Geoffrey Mwangi, one of the drivers, told me early this week: “We have discarded our values and loyalty to a single e-hailing service provider. We’ve registered with all of them as we don’t want to miss any tech-leaning customer even if it undermines our original partner. Whichever phone from whichever provider rings, it becomes my priority call, he said. It is a form of cheating that may never create a sustainable enterprise.”

The Competition Authority of Kenya (CAK) is wading into the murky environment that is under disruption. Its intervention to protect analogue yellow airport taxis will be counterproductive and tantamount to interfering with customer choice.

The role of CAK is to ensure fair play and not to block digital taxis. The repercussions of such action may be too severe since it will impact directly on tourism, which is recovering from fear induced by travel warnings.

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The taxi drivers will negotiate from a point of strength if they stick to values of their partnerships. Although there is no magic wand to entrepreneurial success, several researchers have established that money is never one of those factors of success. Survival in business depends on small things like embracing unquestionable values, doing things efficiently, avoiding waste of any kind such as time or resources, and seizing opportunity when it comes to you.
Partnerships that service providers sign with individual taxi owners are indeed a marriage that for better or worse they must stick together and deal with the problems as they come.

Without the values that hold the marriage together, it is only a matter of time before a new algorithm deals a blow to the cheating party. If and when that happens, it will be difficult for the taxi owners to go back to their old business model.

Somehow, they’ve got to negotiate with the providers on how to weather the season of cutthroat competition where most are not making money while hoping to entice the market into becoming loyal customers.

In my view, part of entrepreneurial success comes from closely working with partners to build a market, knowledge that quality of service is necessary to sustain an enterprise, and what pricing model works.

Price, quality and service are key in the service industry given the fact that margins could be thin.

The sustained fights are sideshows that will only destroy the enterprise. In the not too distance future, someone will disrupt the industry if the problems persist. The flipside of problems is always an opportunity.

Time and again, we have seen enterprises with huge marketing budgets fail while a competing enterprise without resources succeeds.

There is no magic science to success other than good old service. Customers do not explicitly look for good service but first one’s conduct in the initial meeting does give predictive messages on the type of person you are.

There are, of course, other success factors for surviving intense competition. Key among the success factors is the level of organizational agility. But this critical factor has not been activated by any of the providers. Perhaps they are waiting to see the reaction from taxi drivers.

Mwangi had hoped that with the announcement of higher fuel prizes, the providers would have proactively dealt with the issue of rising costs either by passing the cost to the consumer or recover it from complementary products like advertising.

FASTER DECISION MAKING

Nimble organisations enjoy the benefit of faster decision-making and execution and tend to embrace a high performance culture but this is all theory and never works in our part of the world.

This is a mistake enterprises make when they wait too long to act even when evidence dictates that it is prudent to act. There is wisdom in acting fast to stem a destructive eventuality.

Dilly-dallying, procrastination and other types of indecision are aspects of an unfortunate culture that we have embraced.

Evidence suggests that something will have to happen in order to effectively deal with the discomfort among e-hailing taxi drivers. Ride-hailing taxi drivers cheat because providers have squeezed them into a corner of long-term strategy to remain competitive.

The strategy may be counterproductive in the long run since it erodes values that are the cornerstone of success.

The business model for taxis has changed and attempts to protect what used to be the status quo will fail.

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