Reinventing the Taxi Driver

The image makeover of the Taiwan taxi was sparked by the firm that is now the largest cab company in all of the island, the aptly named "Taiwan Taxi."

It started back in 2002, with Ting-hua Technology, a subsidiary of THI Consultants, the leading firm in transportation planning in Taiwan, together with a management team led by Hong -Junze (who holds a PhD in civil engineering from National Taiwan University). Accurately observing that consumers were raising their standards for safety and service in the taxi industry, they imported a satellite dispatch system from Singapore and began to offer cab services that were completely recorded by computer. Their claim to fame was: "You just sit and relax, the 'heavens' are watching over you."

They simultaneously began to assemble a system to manage the drivers. Each new driver was required to observe an employee contract with nearly 100 rules governing attire and appearance, mandating how to speak to customers politely, prohibiting the discussion of sensitive subjects like politics or religion, and much more. Intent on building a highly professional brand image, in the beginning the company interviewed each and every driver individually, eventually hiring 300 people as their initial core.

At that time there was considerable skepticism among insiders in the industry that the firm would succeed. Given the large number of cabs in Taipei, you could always see empty ones plying the streets, so why should customers go to all the trouble of phoning for a cab when they could just reach out and flag one down? But the strategy worked and results were spectacular. By the end of 2004, the dispatch center was receiving more than 10,000 calls a day, leading the industry. This inspired more cab companies to import similar satellite tracking systems and copy Taiwan Taxi's service model.

Then Taiwan Taxi was hit by a series of crises: infighting among shareholders, overly rapid expansion, cashflow problems. After two reorganizations of management, finally in 2005 former Arcoa chairman Lin Tsun-tien took over the helm, and-despite the overall economic downturn-the new team turned the company around. The number of company cabs rose from 1200 in 2005 to 10,000 today, drivers now net an average of at least NT$40,000 per month, and more than 500 drivers have entered the "million-dollar club" for earnings in a single year.

Taiwan Taxi emphasizes quality of service and wants to build up brand reputation. By staking out a niche in "high-tech transport services,"the company aims to completely transform the value of taxi drivers.

What is Taiwan Taxi's secret? How have they been able to corral Taiwan's "urban maverick" drivers, notorious for their unwillingness to be reined in, and get them to conform to the corporate culture seemingly overnight?

Taiwan Taxi executive vice president Joanna Lee recalls that when she first -started working there, Lin Tsun-tien said to her in all seriousness: "Drivers are like the outlaws and outcasts in the novel The Water Margin. Each has his or her own story, and they will each try to stake out their own territory and will even form cliques." The main challenge for management was how to take this group, coming from all different backgrounds and ways of thinking, get cooperation from the heads of the cliques, and from there get every-one to coalesce around the corporate idea.

Lee says that in order to communicate with drivers, you have to learn their language. In general, drivers do not have much formal education, so when you explain things you have to keep it clear and simple. But they also have their soft side-they want people to be attentive to their feelings, not just treat them as cogs in the machine. So to work with them you have to build up mutual respect and trust. At the Taiwan Taxi headquarters on Bin-jiang Street, whenever a driver shows up, every-one there, right up to the chairman, has to call out a respectful welcome to "elder brother" or "elder sister" in order to build up a positive relationship.

Secondly, Taiwan Taxi holds more than 500 training seminars and classes a year to instruct drivers in the corporation's ideals and goals or teach them how to see things from the customer's point of view, as well as "value-added skill" courses like English and Japanese for dealing with tourists. And for those employees who are subject to repeated customer complaints, there is special training in the proper mindset and language to use in dealing with passengers.

Lin Tsun-tien brought with him his prior experience in management of distribution channels, and sees every cab as a "mobile store." Based on this idea, the company proposed installing a credit card machine inside each vehicle, and selling advertising space on the outside. And starting this year each taxi is having- a TV installed that will broadcast commercials and infomercials, and customers will be able to make immediate purchases with their credit cards.

However, when the new policies were initiated, drivers were strongly opposed. They worried that exterior ads would damage the paint on the cars, and that if customers used credit cards to pay it would be the driver who would have to absorb the 3.5% processing fee. There were protests and even threats of mass resignations.

Joanna Lee says that in order to resolve the dispute, they had to continually communicate with drivers and get them to begin to see their cabs as "geese that lay golden eggs." As for the advertising issue, the company promised to pay for completely new paint jobs if ads damaged the paint, and also gave drivers willing to join in the advertising program a reduction of NT$500 per month in fees the company charges to be part of their dispatch service. Only then did they gain the drivers' trust.

Taiwan Taxi has created a corporation that also profits from serving its cabbies, such as by setting up a shopping co-op only for drivers and handling payment transactions through a bank-like counter in-house.

In business generating revenues is only half the game: cutting costs is the other. Lin Tien-tsun recognized that 10,000 drivers actually represented 10,000 families, and economic demand from this "community of drivers" offered the company leverage in dealing with suppliers. The company has therefore directly negotiated group rates for everything from maintenance, car products, and home-use products to loans for new vehicles; these deals enable the drivers to save money, and the headquarters takes a cut of the savings as their fee.

Taiwan Taxi sparked a major makeover of the image of taxi drivers in Taiwan. The photo shows Sun Hongren, a former mechanical engineer who has turned his hand to driving a cab.

Hou Sheng-tsung, an associate professor in the Graduate Institute of Management of Technology at Feng Chia Uni-vers-ity, who has been doing long-term research on Taiwan Taxi drivers, says that they can be divided into three types, depending upon how they cope with technology: rational, intellectual, and emotional. These groups also use their different knowledge to come up with different creative inspirations.

As he analyzes the situation, "rational" drivers mainly have fixed shifts and working hours, and havAbout Taiwane especially rich know-ledge that comes from constantly winding in and out of the city's streets and small alleys.

As for the "intellectual" drivers, who get along quite comfortably with technology, they not only are able to apply the technology effectively, they are the most skilled at figuring out how the computer dispatch system works, like intelligence officers breaking a code, and from there finding the most profitable locations.

One example is Lin Wanzhu, now 52, who is a senior Taiwan Taxi team member with 10 years in the firm. He began educating himself in computer technology in high school, and at age 19 even designed a computer card for students to list their university and departmental preferences when taking the national university entrance exams. However, after the failure of his software design company, saddled with debt, he turned to driving a cab.

He observed that when cabs are dispatched, the satellite system provides the pickup location as well as the gender and general appearance of the client. With his sensitive nose for numbers, he used free time and got together some co-workers. They took different assigned areas, and accumulated a book of the hottest dispatch locations.

Lin, with a real knack for business, divided this book of secrets into two volumes, one for day and one for night, and sold them for NT$500 per copy. Besides printing the books on dark-colored paper to prevent photocopying, he also included a special code number in each copy, making it possible to know who had leaked his secrets by decoding the number.

Finally, we come to the "emotional" drivers. They emphasize giving passengers a dignified and friendly experience, and invest a lot of effort in customer -relations.

Take for instance 57-year-old Kang Shi-neng, who is known in the company as the "driver with the magic touch." He was previously the boss of a textile factory and later an electronics-parts factory, but after the 911 attacks in the US, he lost a lot of money in the stock market, and ended up more than NT$2 million in debt. Being middle aged, he found himself running up against brick walls trying to find a new job, and finally turned his hand to driving a taxi.

He went through quite an internal struggle going from boss to cabby, but then he had a change of heart, put his faith in the philosophy of "servant leadership," and pro-actively altered the idea he had of this job.

He reads widely on current events, and is able to chat with passengers and discuss the latest scandals or amusing tidbits from the news. He also has an eye for detail when it comes to passenger needs, and he often does thoughtful little things for his customers. For instance, he has a hot take-away breakfast waiting for passengers catching an early flight and he sends congratulatory text messages on birthdays. His notebook is filled with dense handwriting, recording the names, telephone numbers, occupations, and hobbies of over 300 clients.

"This is just doing the basics, there's no 'magic touch' about it," he explains. So long as he takes care of all the essential basic tasks, he says, then customers will keep coming back to him, and the money will roll in.

Compared to the average age of 51.3 for taxi drivers in Taiwan, there is a trend toward hiring younger drivers at Taiwan Taxi.

One case in point is 40-year-old Sun Hong-ren. He was previously a mechanical engineer in the Southern Taiwan Science Park, but two years ago, not wanting to be separated from his wife and children, he refused an offer of a promotion to become a factory manager in mainland China and left his company. It was after moving north with his family that he became a cabby.

At first, he looked for jobs as an engineer, and got interviews with three machinery firms. But in each case the company wanted to send him to mainland China, and, unable to find anybody offering him the package he wanted, he decided to become a taxi driver instead. The hours are flexible and he can focus on being there as his two primary-school-aged children grow up. Although his current income is 20% less than it was before, he says: "You can always make more money, but you only get one family."

There are thousands of different types of people behind the wheel of a taxi, but it is not impossible to find new profit opportunities even in an already highly competitive field.

According to the Ministry of Transportation and Communications, for all of Taiwan about 31.7% of taxis have joined satellite dispatch systems or wireless radio systems, an increase of 13% over 2006. Drivers who work for such companies make, on average, almost 40% more than independent drivers.

"The trend from individual drivers to corporatization is the future of the taxi industry," says Hou Sheng-tsung. In particular, under conditions of unequal access to information, collective action through an organization is much more efficient than lone rangers competing on their own.

Hou notes that at present there are 1.22 million taxi rides taken each day in the Taipei metropolitan area, creating economic value of over NT$44 billion per year. Although the taxi industry may look like it is in a slump, in fact there are many opportunities for profitable entrepreneurship.

These days most taxi companies are not only offering emergency roadside assistance to drivers, like delivering fuel or charging car batteries, but are coming up with consumer services like driving cars home for people who are too drunk to drive themselves, or delivering meals to elderly people living alone.

Setting their sights on the trend toward "refined tourism" among local people and also the commercial opportunities presented by the influx of tourists from mainland China, Taiwan Taxi has not only set up a travel website to offer tailor-made and theme itineraries to consumers, the company has also recently gotten together with ez-travel (an online tour agency) to come up with a program called "Taiwan Tourist Taxi." Starting at railroad or high-speed rail stations, visitors can go to one of eight cities in Taiwan and have a choice of 36 routes to follow. Each ride has a designated driver who also serves as tour guide, allowing passengers to travel at their leisure and save the money and energy required to drive themselves.

In the future, drivers will be able to act as local tour guides to foreign visitors, ambassadors of the nation and their cities, helpmates to senior citizens, bodyguards taking kids home from school, and distribution channels for samples of consumer products. In fact, by linking up the Internet and GPS, the vehicles could even form a computing cloud!

In the vision of the future offered by Joanna Lee, she sets three stages of goals for her drivers. The first is to give them a sense of security and eliminate their financial worries. The second is to help drivers find a sense of belonging in the company and among colleagues. And the last is to help them find their identity and dignity within themselves, so they take pleasure in their profession and earn respect from society. From simple transportation worker- to deliverer of services, the taxi driver is going to be completely redefined.