It’s a long post, but really worth the read.
Original post: http://vulcanpost.com/15199/mba-lesson-taxi-driver-ceo/
MBA Lessons From A Taxi Driver To A CEO
I needed to go from Xujiahui to the airport, so I hurriedly concluded a meeting and I was looking for a taxi in front of the Meiluo building.
A taxi driver saw me and drove professionally and stopped right in front of me. Thus followed the story that astonished me greatly as if I had attended a lively MBA course.
“Where would you like to go?”
“The airport please.”
“Good, the airport.” The driver continued his conversation.
“At Xujiahui, I love to pick up customers in front of the Meiluo building. Over here, I only work two places: the Meiluo building and the Junyao building. Did you know? Before I picked you up, I circled around the Meiluo building twice before I saw you! People who come out of office buildings are definitely not going to some nearby places.”
“Oh? That’s very smart of you!” I agreed.
“As a taxi driver, we must also work with scientific methods,” he said.
I was surprised and I got curious: “What scientific methods?”
“I have to know statistics. I have made my calculations. Let me share with you. I drive an average of 17 hours a day, and my hourly cost is RMB34.5.”
Before he could continue, I interrupted: “How did you arrive at that?”
“You just had to calculate: I have to pay RMB380 to the company each day for the renting the car. The gasoline is about RMB210. I work 17 hours per day. On an hourly basis, the fixed cost is the RMB22 that I give to the taxi company and an hourly average of RMB12.5 in gasoline expenses. Isn’t that RMB34.5?”
I was a bit surprised. I have taken taxis for ten years, but this is the first time that a taxi driver has calculated the costs this way. Previously, the taxi drivers all tell me that the cost per kilometer was RMB0.30 in addition to the total company fee.
“Costs should not be calculated on a per-kilometer basis. It should be calculated on an hourly basis. You see, each meter has a ‘review’ function through which you can see the details of the day. I have done a data analysis. The averarge time gap between customers is seven minutes. If I started counting the revenue when someone gets in, it is RMB10 for about 10 minutes. But for each customer who pays RMB10 and takes 17 minutes of time, the cost is actually RMB9.8 (=34.5 x 17 / 60). This is not making money!”
If we were to refer to customers heading to the airport as having a full meal, then customers who are travelling in short distance, 10 minutes for RMB10, then these customers cant even satisfy our hunger at all.”
This was astonishing. The driver did not sound like a taxi driver. He sounded more like an accountant.
“So what you do then?” I was even more interested and I continued talking to the driver. It looked like I was going to learn something new on the way to the airport.
“You must not let the customer lead you all over the place. You decide what you want to do based upon the location, time and customer.”
I was very surprised, but this made a lot of sense.
“Someone said that the taxi driving is a profession that depends on luck. I don’t think so. You have to stand in the position of the customer and consider things from the customer’s perspective.”
What the taxi driver said sounded very much like what many business management lecturers said: “Put yourself in other’s shoe.”
“Let me give you an example. You are at the entrance to a hospital. There is someone holding some medicine and there is someone else holding a washing basin. Which person will you pick up?”
I thought about it and I said that I didn’t know.
“You take the one with the washing basin. If you have a minor complaint that you want to be examined and to get some medication, you don’t usually go to a hospital far away. Anyone who is carrying a washing basin has definitely just been discharged from the hospital.”
The taxi driver continued: “When people enter the hospital, some of them die. Today, someone on the second floor dies. Tomorrow, someone else on the third floor dies. Those who make it out of the hospital usually have a feeling of having been given a second life and they recognize the meaning of life again — health is the most important thing. So on that day a person was discharged, that person told me, “Go … go to Qingpu.” Would you say that he wanted to take a taxi to the People’s Plaza to transfer to the Qingpu line subway? Absolutely not! He would definitely take a taxi and enjoy a comfortable ride.”
I began to admire him.
“Let me give you another example. That day at the People’s Plaza, three customer prospects were waving at me. One was a young woman who had just finished shopping and was holding some small bags. Another was a young couple who were out for a stroll. The third one was a man who wore a silk shirt and a down jacket and holding a notebook computer bag.”
The taxi driver continued, “I spent three seconds looking at each person and I stopped in front of the man without hesitation. When the man got in, he said: ‘Yannan Elevated Highway. South North Elevated Highway .’ Before even finishing, he could not help but ask, ‘Why did you stop in front of me without hesitating? There were two people in front. They wanted to get on as well. I was too embarrassed to fight with them.’ I replied, ‘It is around noon and just a dozen or so minutes before one o’clock. That young woman must have slipped out at noon to buy something and I guess that her company must be nearby. That couple are tourists because they are not holding anything and they are not going to travel far. You are going out on business. You are holding a notebook computer bag, so I can tell that this is business. If you are going out at this time, I guess that it would not be too close.’ The man said, ‘You are right. I’m going to Baoshan.’”
“Are those people wearing pyjamas in front of supermarkets or subway stations going to travel far? Are they going to the airport? The airport is not going to let them enter.”
That makes sense! I began to enjoy this conversation with the taxi driver more and more.
“Many drivers complain that business is tough and the price of gas has gone up. They are trying to pin the cause down on other people. If you keep pinning the cause on other people, you will never get any better. You must look at yourself to see where the problem is. This sounds very familiar. It seems like “If you cannot change the world, then you should change yourself” or perhaps a pirated copy of Steven Corey’s “Circles of Influence and Concern.”
“One time, on Nandan Road, someone flagged me down and wanted to go to Tianlin. Later on, someone else flagged me down on Nandan Road and he also wanted to go to Tianlin. So I asked, ‘How come all you people who came out on Nandan Road wants to go to Tianlin?’ He said, ‘There is a public bus depot at Nandan Road. We all take the public bus from Pudong to there, and then we take the taxi to Tianlin. So I understood. For example, you look at the road that we just passed. There are no offices, no hotels, nothing. Just a public bus station. Those people who flag down taxis there are mostly people who just got off the public bus, and they look for the shortest road for a taxi. People who flag down taxis here will usually ride not more than RMB15. I never return to pick up customers at Nandan Road during that hour anymore. ”
I say that the attitude determines everything!”
I have heard dozens of company CEO’s say that, but this was the first time that I heard a taxi driver say that.
The taxi driver continued his story, “We need to use scientific methods and statistics to conduct a business. Those people who wait at the subway exits every day for business will never make money. How are you going to provide for your wife and kids at RMB500 a month? You must arm yourself with knowledge. You have to learn and acquire knowledge to become a smart person. A smart person learns knowledge in order to become a very smart person. A very smart person learns knowledge in order to become a genius.”
“One time, a person wanted a taxi in order to get to the train station. I asked him how he wanted to go. He told me how to get there. I said that was slow. I said to get on the elevated highway and go this other way. He said that it was a longer way. I told him, ‘No problem. You have experience because you go that way frequently. It costs you RMB50. If you go my way, I will turn off the meter when it reaches RMB50. You can just pay me RMB50. Anything more is mine. If you go your way, it will take 50 minutes. If I go my way, it will take 25 minutes.’ So in the end, we went my way. We traveled an additional four kilometers but 25 minutes quicker. I accepted only RMB50. The customer was very delighted for saving about RMB10. What he didn’t know is that this extra four kilometers cost me just over RMB1 in gas. So I have swapped RMB1 for 25 extra minutes of my time. As I just said, my hourly cost is 34.5 RMB. It was quite worthwhile for me! Win win.”
“In a public taxi company, an ordinary driver takes three to four thousand RMB home per month. The good driver can get around five thousand. The top driver can get seven thousand RMB. Out of the 20,000 drivers, there are about two to three who can make more than 8,000 RMB a month. I am one of those two or three. Furthermore, it is very stable without too much fluctuation.”
By this point, I admired this taxi driver even more.
“I often tell everyone that I am a happy driver. Some people say, ‘That’s because you earn a lot of money. Of course, you must be happy.”
I tell them, ‘You are wrong. This is because I have a happy and active mind, and that is why I make a lot of money.’
What a wonderful way to put it!
“You have to appreciate the beauty that your work brings. Stuck in a traffic jam at People’s Plaza, many drivers complain, ‘Oh, there’s a traffic jam again! What rotten luck!’ You must not have that kind of mindset. You should try to experience the beauty of the city. There are many pretty girls passing by. There are many tall modern buildings; although you cannot afford them, you can still enjoy them with an appreciative look. While driving to the airport, you can look at the greenery on both sides. In the winter, it is white. How beautiful! Look at the meter — it is more than RMB100. That is even more beautiful! Each job has its own beauty. We need to learn how to experience that beauty in our line of work.”
When we arrived at the airport, I gave him my business card and said, “This Friday, are you interested in coming to my office and explain to our employees about how you operate your taxi? You can treat it as if your meter is running at 60 kilometers per hour. I will pay you for the time that you talk to us. Give me a call.”