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Why established companies and industries die

Recently in Malaysia Uber has been making headlines because the taxi industry is outraged at what they deem to be unfair competition. The arguments are similar to those made in other countries where Uber has courted controversy. As I am not a lawyer I will not attempt to dechipher the legalities of the argument but I would like to use this story to highlight a fundamental flaw in the way that established businesses attempt to stay relevant.

By focusing all of their attention on attacking Uber the taxi industry has lost sight of the most important thing, their users. Instead of trying to find legal loopholes to ban Uber, the industry should be looking at their users and asking themselves “Why are they leaving us for Uber?
What have we done wrong? What could we do better?”

This is why companies and industries die. They focus too much energy on fighting the competition and not enough on delivering a product that their customers need or desire. If the taxi industry in Malaysia fulfilled their customers’ needs then Uber would find it much harder to compete. Unfortunately the taxi industry has become complacent due to a lack of competition and the general concensus is that it currently offers a terrible product. People use it because of lack of choice and no other reason.

All too often we see seemingly invincible, well established companies disappear because of these very reasons. Incumbent companies become  complacent and stop thinking about their customers and how they can deliver the best product. Then upsprings a (sometimes) new, small, agilecompany that offers the customers what they want and suddenly the well established company loses significance, often fatally so. The case studies are numerous and one example is Blockbuster Vs Netflix.

It’s still not too late for the taxi industry to save themselves, but in order to do so they must forget about attacking Uber and focus on improving their own product and proving to their customers that they can fulfil their needs better than Uber can.

Companies lose relevance, fade away, and die because they stop focusing on delivering something that addresses their customers’ needs. Make sure that this doesn’t happen to you by regularly engaging with your customers, listening to what they say and observing what they do, and acting on this feedback.

This article originally appeared in my old blog on 10 October 2014.

Visit www.findhiong.com to learn more about me.

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