All Hail Taxi Stockholm

Taxi Stockholm 150000 is a fast-moving leader in an industry famous for its old-fashioned ways. A CEO who knows how to drive change put 3,822 cabbies on the road to the future.

A 10-year-old girl trudges down the lineup of taxis, running a careful eye over the parked cars. Halfway down, she spies a black Volvo with a Taxi Stockholm badge on the door and a smiling uniformed driver, Per Stensioe, behind the wheel. She jumps in the backseat, flips open her cell phone, and calls her mom. Mission accomplished.

"People often choose us even when we're not first in the queue," says Stensioe, a 57-year-old owner-operator who has driven Taxi Stockholm cars for 21 years. "We have a special relationship with our customers."

Break out the aquavit. Taxi Stockholm, a 101-year-old Swedish cabdriver cooperative, has become the largest and most technologically advanced taxi company in the world. Using an automated ordering system, WAP, and the Web to cut response times and improve quality, Taxi Stockholm's 1,508 cars and 3,822 drivers meet 50,000 customers a day. In 2000, the company's drivers completed 9.3 million trips -- a 45% increase over the past four years.

Yet five years ago, the company was just a few fares away from bankruptcy. Deregulation of the Swedish taxi industry, an influx of rival firms, and economic recession had punctured profitability. The 1,069-member co-op knew it was time to face facts: Management by committee just wasn't working anymore. So the cabbies decided to recruit an outsider to rebuild the ailing business. The CEO they chose was Anders Malmqvist, 49, a mechanical engineer who'd never driven a taxi in his life, but who'd learned change management as operations VP for the Gothenburg subsidiary of Waste Management Inc.

Malmqvist set up shop in the headquarters of Taxi Stockholm on Luntmakargatan #64 with the goal of kicking up a customer-centric revolution. His first order of business was to put together a fast-moving, semi-autonomous service unit to work alongside the co-op. Previously, operations had been handled by drivers, who were managed by a chairman elected from within their ranks. The new team was charged with streamlining the operation and focusing on its core offer: "The mass production of taxi services for four passengers in black Volvo cars," declares Malmqvist. It was a pivotal first step. For the first time in its history, Taxi Stockholm earned a triple A rating from the credit-rating agencies -- essential for obtaining financing for the kinds of technological innovations that Malmqvist believed would slam the sluggish cab company into the fast lane.

At the heart of the upgrade is a unique address database. To hail a cab, you simply dial up Taxi Stockholm, and a voice-response system kicks in and pinpoints your location via caller ID, which interfaces with the company's database. With a couple of keystrokes, you confirm your location and instruct an integrated Motorola GPS dispatch system to find and summon the closest available cab. Total time elapsed: about six seconds.

Already, 44% of Taxi Stockholm's calls are being routed automatically. In the works is the addition of new technology that will allow Taxi Stockholm to home in on mobile handsets. By this summer, Malmqvist plans to offer customers a precise taxi ETA every time they call for a cab -- estimates that will take into account congestion and other traffic snarls -- and an automatic call-back function that will confirm each reservation. And by the end of the year, Malmqvist plans to have PCs with Internet connections installed in each cab to give the drivers access to route maps and other information from headquarters.

The innovations have been transformative. Since 1996, annual revenues have increased 33% to SEK 1.5 billion, or about $152 million. And the company has captured 60% of the market -- no small feat, considering that there are 21 cab companies in Stockholm.

Malmqvist's next big challenge: improving the company's fleet-utilization rates. Taxi Stockholm's rates are a paltry 50%, largely because drivers still choose the hours that they work. And idle cars mean stranded customers. Now, in what may be the biggest shake-up yet in the history of the Swedish co-op, Malmqvist has introduced "voluntary" scheduling as part of a new membership agreement. "The only voluntary part is being a member," says Malmqvist, smiling. "My job is getting a fleet out when customers demand it, not the other way round."

Contact Anders Malmqvist by email (anders.malmqvist@taxistockholm.se).

Sidebar: Need a Lift? Follow That Cab

Anders Malmqvist is a driven man. Through his determination, Taxi Stockholm has become the benchmark for taxi firms around the world.

Fill your tank with pride. "This business runs on pride," says Malmqvist. "We are a tribe, and our members wear black jackets that bear the Taxi Stockholm badge. It's not compulsory, but all of our members wear them because they want to be part of the tribe."

Gear up to a higher spec. The number of cars ordered through the Internet and WAP is still small -- less than 1% of the total. But that's okay, Malmqvist says. "Each week that we offer an innovation in splendid isolation is another week to build a special relationship with our customers."

Stick with the old model. Taxi Stockholm remains fiercely true to its cooperative roots -- not out of sentimentality, but because it works. "We have amazing structural capital -- the ultimate network-service company," says Malmqvist. "Because our drivers are also the owners of the company, they're totally dedicated to the brand."

Park in the right space. Under Malmqvist's orders, the firm's HQ is now as polished as its fleet of Volvos. It's a visible landmark for customers, a relaxed haven for off-duty drivers, and, 101 years on, it's still bang in the heart of Stockholm. "One of the old company's greatest decisions," says Malmqvist.

Choose reliability over speed. Productivity rates can be a false god. "Compared to some of our rivals, the productivity in our call center is low," Malmqvist says. "Our workers don't answer as many calls per hour, but that's our choice. The focus of our business is not how many calls we can answer, but how many calls we can place."

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