Stop resisting digital transformation!

by Matthew Reynolds

The battle between traditional, regulated taxi services and the billion-dollar disruptors has been fierce and hostile. But rather than change their business model and embrace a change that is well-received by customers, the taxi industry has fought back, fighting for territory and legislation change. Although the new, digital players have seized control of the market in many key cities, the taxi industry may have found a way to defeat ridesharing without changing their business model. In Austin, Texas, taxi companies lobbied for a bill that would force all ride-hailing companies to background check their drivers through mandatory fingerprinting. With the approval of the law, Uber and Lyft – two of the biggest players in the rideshare business - both pulled out of the Austin market, citing the rapid driver turnaround and slow, antiquated fingerprinting process as the main factors, reports CNN.

On the surface, this looks like a win for the taxi industry - Uber and Lyft are out of the Austin market. Whether or not they pulled out for this “fingerprinting reason” or for some other reason is really irrelevant. What is relevant, however,is the fact that taxi companies are missing the bigger picture. Ride sharing has changed the game; from our phones, we can order a cab at a cheaper price than ever before. We know what model car we’ll be in and how long until our driver arrives. How long will it be before ride sharing companies figure out a way to comply with fingerprinting? How long are traditional taxi services willing to hold out?

But this is only one industry. Others are finding it much easier to adjust, like the Bank of Montreal, who has embraced change and found ways to incorporate it into new lines of business. Earlier this year, BMO accepted that fintech is here for good and launched the SmartFolio investment service, bringing their portfolio management game into the digital era. BMO, along with countless other financial services companies, have seen digital disruption as an opportunity – not a threat.

If stories like BMO are any indication of what’s to come, fights similar to the taxi industry will only go on for so long before disruption wins. Digitally disruptive companies will always find ways to change the status quo, and unless they embrace change, established companies will become obsolete. Our research with PwC on the 2015 Digital IQ report shows that digital disruption is not only very real, but that adapting to disruption has become mandatory – 71% of digital disruptors continually look for opportunities to digitize the business.

In a time where we can both manage our money and order a cab from our phones, reverting to outdated strategies is a probably a poor decision.

 

Matthew Reynolds is an Editorial Assistant at Oxford Economics, where he aids research programs in a variety of industries.