How Do Car Dealerships Prevent the "Yellow Cab" Syndrome?

Technology, honesty, transparency, convenience and trust were not the primary focus for Yellow Cab taxi company in 2014. Those values were a priority for Uber. Levering those values allowed a 100 year-old industry to be decimated by a start-up competitor in less than 2 years. Is it possible that a similar disruption may occur when Apple launches its Titan EV car in 2024?

How far are some willing to go, justifying slow days of showroom traffic as a result of bad weather, the election, seasonality. market conditions or just bad luck? instead of inadequate virtual retailing models? 39% of mattress sales in the U.S.will be sold directly to consumers’ homes via online sales in 2020. Purple, Casper and Saatva didn’t put City Mattress out of business...they just took close to half of their market share. Kind of like Carvana, Shift and Vroom- they don’t need to sell every used car...they’ll be doing pretty well with ? of our business. 

There are so many examples of business waiting too long to transform. How do you know when it is too soon, versus too late? The challenge is determining whether something is the “flavor of the week”, or a no-turning back industry tipping point. 

Many dealership associates are still in a holding pattern. Holding off on making any process/technology changes until everything goes back to normal. “Once all this uncertainty is over, then we’ll figure it out what we’re going to do.” In times of uncertainty, most will opt for low risk choices. One choice is not making a decision at all, or just playing it safe. These choices are usually a result of the fact that the majority are more worried about what could go wrong, rather than worried about what could go right. By choosing to go low-risk, you do avoid someone telling you later that,, “I told you so.” Or, “You should have checked with me first...I would have told you not to do that.” Hindsight bias has a crippling effect on digital transformation efforts and innovation. 

This same way of thinking is why so many will tolerate much less with newly hired or promoted managers regarding “unique situations'', “market conditions”...aka “excuses”; than there with tenured/veteran managers? What’s ironic is that we often will tolerate much more from our tenured associates, behaviors that we would never tolerate from an outsider defending their own obsolete belief system. 

The question of why so many find themselves in that situation happens to be the same reason that it's so hard to make the decision to “step back” from a slot machine after a significant investment has been made for an extended period of time. it is because we have so much energy invested in a certain process, a certain biased belief or that we're “just due" or “it’s just a matter of time” for some good luck. 

When we win- our brains give credit for winning to skill, not luck. But which requires more skill...discounting a Tundra thousands of dollars, or a Corolla for $500 off? Because we celebrate the profit on the Tundra, but don’t think much about the mini deal on the Corolla. Which one is skill, and which is luck? 

When we lose, we tend to blame bad outcomes on “bad luck”; instead of our lack of skill. This is we continue with our obsolete processes longer than we should, waiting for our luck to “turn around.” 

When people lose, it’s so easy to identify what didn't work. Our brains are able to easily identify when things go wrong. Managers are quick to point out performance flaws, and slow to dig in and deep-dive why positive outcomes happened, when they worked out well. 

These same cognitive biases are why most finance managers attribute their performance to the “luck of the draw”. PVR is off because of the mix of cash deals, leases, etc. While there is some validity to this, does luck or skill determine if your cash PVR is $200 or $1,000?

It’s also why so many sales reps remain focused on walk-in traffic, instead of the much larger quantity of internet, chat or remote/off-site leads. Waiting for ups is like using scratch off lottery tickets as a retirement strategy. Why play those odds, when you have the data already?

Here's the deal...when we win, we think we're smarter than our competitors. When we lose, we think our competition just got lucky...it was just a fluke. We fail to look in the mirror, and address the SKILLS issues, instead of the easier path on blaming poor performance on “bad luck”.

Carvana is a great example of this. The market scoffed at Carvana for the first couple of years, when we should have been studying their business model for best practices...and beating them at their own game. 

The problem is that most will wait to change until the market forces them to change. That is what happened to Nokia and Blackberry when Apple introduced the iPhone. It's about to happen again with Apple's Project Titan autonomous driving car in 2024. THAT is when the “Hindsight Bias” will really kick in. “Who didn’t see that coming?” “Did you think that Tesla would be the only one selling electric vehicles forever? Come on…”

“You should have asked, I could have told you that…”