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HOCHSCHULE RHEIN-WAAL
Rhine-Waal University of Applied Sciences
Faculty of Society and Economics
Term Paper
SS2015
Innovation management (M-EF_11.05)
Prof. Dr. Oliver Serfling
HAILO
In the flow of Digital revolution
Name: Thi Trang Nhung Nguyen
ID: 15714
Due Date: 30th
June 2015

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TABLE OF CONTENTS
1 Introduction................................................................................................................1
2 Description of the Innovation ....................................................................................1
3 Performance measurement and Benefits....................................................................3
4 Limitations, Risks, Problems, Barriers ......................................................................4
5 Lessons learned and Outlook .....................................................................................4

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1 Introduction
Nowadays, the thing scholars called “the third revolution wave” was mentioned everywhere.
Such new technologies derived from development in computing and information and
communication technology (ICT) in the late 20th century, foreshadowed massive economic
makeover (The Economist, 2014). Not only transforming the manufacturing industry, the new
wave of technology has been much clearer for normal people by approaching closer to real life
activities. With the presence in daily–used devices, it brings the old-fashioned activities to a new
path, often more convenient. This case study aims at having a look in one of such innovative
products. In transportation field, or more precisely in taxi industry, we witnessed gradual but
promising changes. Simply saying, catching a hail no more by standing out there on the street
waving your hand, or trying to remember taxi switchboard telephone number. Such handy
application, here saying Hailo, allows people to call a cab from everywhere just by a click. How
would it be called innovative product, the benefits it brought out and its future direction would be
the central questions being dressed out in this brief case study.
2 Description of the Innovation
Hailo is a London-based e-hail cab startup company founded in 2010. This service innovation
aims at better serving people with a need for calling taxi by using wide spreading GPS embedded
in carrying-along devices. Hailo was a good example of a very classic route to innovation: lone
inventors model. It came in from three taxi drivers in London who concerned their own in
bettering the taxi experience (Blackman, 2013). With the help of three entrepreneurs, the taxi
drivers’ idea was brought into reality. It has raised over $100 million from the world’s top
investors. (UK Trade & Investment, 2014). With a near-to-existing technology as well as system
linkages stay almost unchanged, this incremental innovation seems to aim to gradually replace
the old cab hailing method in the places it make presence.
Hailo is available in 5 countries and 11 cities, including London, Madrid, Barcelona, Osaka, and
all across Ireland (UK Trade & Investment, 2014). The idea of Hailo is quite simple. By using
new tech, it helps connecting taxis with customers more efficiently. It was a normal scene that
hundreds of cabs are driving around in busy streets in the city center looking for a waving hand
but not many of them can grab a hand, meanwhile a person in a more secluded place is googling
“taxi number in…” for a hope of a taxi switchboard number or yelling “hey taxi”. Or one person

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is standing close to a taxi A but called for taxi B to come meanwhile at the same time, another
who is not standing so far from taxi B but called A instead. All such scenarios very often
happened all the time all around the world. They resulted in tons of fuel being burnt wastefully
on the street daily, unnecessary cars running on stuck roads, and much waste of time together
with annoyance for travelers. Sometimes, driver can be dishonest while driving but once dropped
off the cab, you may never be able to track or to rate your cab any more. Potential threats are
being faced by both drivers and riders. Such problems causing by primordial matching principle
would theoretically be solved by technologies presented in Hailo and were in fact being somehow
solved in the places it got success.
Taxi drivers can sign up in Hailo network for free and company will store and update their profile
base on later activities. It is also free for user. Simply by downloading app to you smartphone,
and one time register, later on, riders can call a cab just by two clicks: Turn on GPS service and
then “Pick me up here”. When launching Hailo on your phone, you will be automatic pinpointed
by GPS tech and can automatically see on the map where the taxis signed up with Hailo system
are. When clicking “Pick Me Up Here,” the system of Hailo will get your location information,
calculate the optimal way for a taxi to reach passenger by taking into account the taxi’s location
in relation to the rider. The payment was possible by cash or cashless through payment system
embedded in Hailo network. User can later on track their route, taxi number, rate it. Now it is the
best-rated among taxi and ridesharing smartphone applications, with the point of 4.7/5.
Hailo’s idea is basically an improvement for existing taxi product. Looking at Hailo through all
six levers of innovation that has been introduced by Davila, Epstein and Shelton in their paper in
2013, we realized that business model lever stayed the same. Only technology levers had
improvement. As for the company, level of newness is at medium level. They must learn how to
create friendly and attractive user interface (UI), choose platform to build software as well as
build the best algorithms for calculating. Such user-centered product was a result of market-pull
process. However, when being introduced, it was just fresh like a new choice among existed
ones.
However, dominant design pattern can explain how Hailo is innovative. Both the idea of
optimizing taxi system and idea of using GPS are not really advanced. However, through the state
of new contestants continuously entering with various designs, Hailo survived as a conflation of

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most welcomed features from users: fast functioning, friendly UI, convenient use of icons. That
was the reason why Hailo always stayed the best rated application and can spread all over Ireland
and London.
3 Performance measurement and Benefits
Hailo’s business model is a taxi magnet connecting drivers, a step further than normal taxi
patchboard office but still contain some of this old intermediary’s features. It simplifies the
desktop previously stayed in front of the switchboard operators and brings it to the end user. It
creates value by such simplified cab hailing procedure. The convenience it generated was
undeniable. The question is to which level the convenience will be enough for people to change
and how to effectively advertise them to the both two parties of Hailo’s customers.
The way it capture value is mostly by commission. This was exactly similar to all other taxi
intermediaries. Hailo is competing in a two-sided market, and its market model resembles the
“Overlapping readership” model introduced by Amstrong in his paper in 2002. Hailo and its
potential competitors are not direct substitute but drivers may go for both as their intermediaries.
Consumers may be loyal to one provider but some may use both. And the model came to predict
that each intermediary generates revenue only from its exclusive rider. This means the vital
problem of all is to create their own set of faithful customer. The solution for that varies. First
and foremost that all should think about was how to levy the charge. Bolt and Tieman (2005)
stated that skewed pricing strategies are truly return maximizing given that there is steady
elasticity of demand. And under the positive network effect, the elevated participation of the
highly elastic side of the market intensifies market involvement of the other side. Here, 10%
commission lies on taxi drivers.
However, being a general commuter, all they want is to be able to call a cab whatever. This
means even in rush hour, Hailo can still serve the need. Therefore, number of cab matters. Only
when having appropriate number of cab available, commuters may feel such e-hail company
reliable. As being fresh player, to attract more customers from both sides, Hailo first built its own
strong cab team. With each additional driver, no up-front as well as front-end fee was charged.
The commision competition at the beginning can also be used, at least to first build a strong team
of cab.

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4 Limitations, Risks, Problems, Barriers
Hailo’s orientation was improving the experience in affordable yellow cabs. So its direct
competitors are a lot, like mytaxi, easytaxi, etc. Together with close competitor who can easily
and are having idea to jump to yellow cab market like Uber (Blackman, 2013), seems like none
of them are on the leader position or have irresistible competitive advantages. If not to mention
some cities or countries which had their official taxi network like Singapore, U.A.E, this
application has even less space to work. In such extreme competition, collapse of small firms is
foreseeable. Hailo with its current position is still in danger.
Also, people often have big resistance to change. For example, old-fashioned way to stand on the
street waving is still preferable for people who hate smartphones or even when the phone runs out
of battery. Or the resistance of the driver to use smartphone instead of driving around looking for
fares, together with unfamiliar payment system with no tipping (Griffith, 2014)
5 Lessons learned and Outlook
We may say that Hailo was commercialized good but not successfully diffused. After five years
since debuted, number of user were just about one-tenth to one-fifth comparing with close
competitors. The recent lay-off were also be seen from the public as a sign of narrowing down
business (Lunden, O’Hear, 2015). Problem was neither on the user interface design nor on
advantages it provided. The lesson of being swept out of New York said that such company
should concern more about the compability of their own company’s business culture and that of
the destination.
With intense competition, size of the cake for each player would be too little to grow, which can
even cause a diminishing effect on number of user who early adopted the innovation. The reason
is such adopters don’t mind changing and are subjected to easily get bored soon when their needs
are not met. Robinson (2009) thinks that early adopters may affect the thing that the majority of
population perceived about an innovation. So when these people faced away, these new bees’
time could fade away. Therefore, the type of initial user should be cared and used as an important
source for improving innovation. And an early merger can help multiplying one player’s strength
enough to satisfy early adoption as well as loyal customers and then to win the market.

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REFERENCES
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Bolt, W., Tieman, A. F. (2005) Skewed Pricing in Two-Sided Markets: An IO approach,
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