Traditional businesses can learn from their disrupters

UBER is hitting headlines daily. Whether you love it (as most customers do) or hate it (as most competitors do), you cannot argue with its success. The rideshare company is valued at more than Avis, United Airlines and Fiat combined. Few people regarded the taxi business as one that was ripe for disruption, and yet that is exactly what is happening in hundreds of cities across 50 countries.

Uber has found a winning formula: a clear value proposition, ease of use, high service levels, price transparency, choice and attractive rates. This is clearly bad news for traditional taxi companies, and many of them have complained bitterly about the impact that rideshare companies are having on their businesses. In San Francisco, for example, average monthly trips per city taxi have plummeted 65 per cent from 1,424 in 2012 to 504 in 2014.

However, just complaining is not going to solve their problems. So, how should traditional taxi companies respond? According to the seven disruption response strategies developed at IMD's Global Centre for Digital Business Transformation (DBT Centre), taxi companies should start by proactively blocking Uber and other new entrants using whatever legislative and regulatory means available to them. Though this strategy may seem defensive and anti-competitive, it can be very effective. Recent actions by taxi companies have succeeded in suspending rideshare operations such as Uber in Spain, France and South Korea, as well as in multiple cities in the US, India, and Germany. In many jurisdictions, taxi companies have a strong case. Uber habitually flaunts getting around safety regulations, driver background checks, business licences and insurance coverage.