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Matching need: Noni Purnomo on why Blue Bird Group grows with Indonesia

February 14, 2017
Business strategy

Noni Purnomo is president-director of Blue Bird Group, Indonesia's largest taxi operator. With a market share of about 43%, it serves more than 8.5 million passengers a month. Blue Bird Group has extended its services, from taxis to limousines and car rentals, bus charters, logistics, property, IT and supporting services, and heavy equipment. Purnomo spoke to Julian Lorkin at the BusinessThink Indonesia forum in Jakarta.

 

An edited transcript of the conversation follows.

BusinessThink: Blue Bird is a huge taxi company, and it's turned taking a taxi around Jakarta from a calculated gamble into a safe bet. How have you achieved this?

Noni Purnomo: I think that we started to build a brand based on trust since the very beginning. We started on May 1, 1972. The founder was my late grandmother, [which] was  unique at that time – a woman founding a taxi company. Since the very beginning we have really focused on giving the best quality service.

The first thing that we focus on is the integrity of the drivers. Each driver has to go through a really thorough selection [process] – including their behaviour, their aggressiveness, being checked by psychologists, and also their driving technique to ensure the comfort of the passengers.

We really base it on those values – first integrity and hard work, discipline, and also care for others. So I think throughout the years, because of the consistency of building those values, then we [became] the trusted brand in Indonesia.

BusinessThink: The booming population in Jakarta now includes a large section of the middle class, something that you wouldn't have seen maybe 20 or 30 years ago. Plenty of those have moved from taking a Blue Bird taxi into a Silver Bird taxi and some of the other parts of your brand. Why have you decided to diversify into Silver Birds, and into limousines?

Purnomo: I think you touch upon it perfectly, because we recognise the different needs of different segments of our passengers. So the Blue Bird regular taxi caters for the regular users and more of a mass [market]. The executive Silver Bird taxi caters for the passengers who need more comfort, whether it's the leg room or the type of car, because we're using a luxurious type of sedan and also a van. The other difference is the Silver Bird executive taxi can wait for you, while the regular taxi normally just picks up and drops off. So there's a lot of business usage for that.

We try to cater to the different needs of our passengers. And it's not just Blue Bird for a regular taxi; we have Silver Bird executive taxi, we also have a Golden Bird car rental and limousine service, or chauffeur-driven service, which caters mostly for B2B, because a lot of companies need to have operational cars [but] don't want the headache of running the transportation themselves – because they [would] have to take care of the drivers, and take care of the car maintenance. So they outsource it to us. Golden Bird is catering for that, and also for retail, just [as a] new [type of] online transportation company is arising in the world.

BusinessThink: And those online transport companies, of course, would be companies such as Uber and Go-Jek. Are they a threat to your operation?

Purnomo: We've been around for almost 45 years, and in a different era we have faced different types of competition. So we see this as a new type of competition. A lot of people see them as the destructors of old technology, disrupting the industry, but we see it as an opportunity as well. We do need technology to help us enhance our business, whether it's to make our operation more efficient, or to enhance the customer experience itself.

We don't see them as a competitor in the technology side, but we learn from them on how to be able to engage with more customers, and how can we adapt to the new technologies so that the distribution of our vehicles is more efficient – because that way it's better for our company. And so that's where we learn about the easiness of payment, because we still rely a lot today on cash payment. But with the new technology, we can also give options to the customers. So yes, we see them as competitors, but we also see the new digital era as an opportunity.

‘The way we select the people is the best control we have, because we only want to recruit the right people to work in our organisation’ 

– noni purnomo





BusinessThink: And certainly Uber, and Go-Jek as well in Jakarta, have very strong branding; people around the world can recognise them as a company. You've got very strong branding in terms of the Blue Bird companies, but how important is it that somebody down a street can immediately recognise a Blue Bird taxi and will want to get in it?

Purnomo: I think it is very important for us to be the first choice of the customer. And I think the distinctive difference also, because our taxis have an identity so you can straight away spot that this is a Blue Bird taxi, unlike the online taxi companies. They normally don't have a uniform image.

But the distinctive difference about choosing our services is because the customer can have that trust that they know they're going into a car or a taxi that has the same quality, whether it's the driver or the vehicle itself, because we do maintain our vehicles very, very well. We have our own service station and maintenance depot, because the difference between Blue Bird and other taxi companies worldwide is that we own and operate the taxis, and we don't just lease them to our drivers. So therefore every day the car comes back to our depots to be maintained – whether it's just to be washed, or to be [checked] if there are any scratches or things. So the next day, when the car comes out to the road, it looks perfect again.

BusinessThink: And yet if I were an accountant, I would say: "It's much cheaper to outsource these facilities, rather than doing it in-house." How do you balance the desire for quality, to get the best possible quality for the customer, so you have a reliable brand, with at the same point going for the cheapest possible option?

Purnomo: Yeah, we did that calculation. Number one, because of our size – because of the economy of scale – it makes more sense for us to do it in-house. But most importantly, when we look into that issue, we operate in different hours than a normal service station operates because most of our cars come out early in the morning, around 4-5am, and they will come back in the evening. We do the maintenance in the evening, so it's better for us to do it in-house. And also, with our fleet and our mechanics, we have basically one type of vehicle for each category, so our mechanics are really the expert on those models. So in time, it becomes more economical to do it internally.

BusinessThink: You've expanded into Silver Bird and then quite a number of other brands. You're also expanding geographically. The company started off just in Jakarta, but now is well-known throughout most of Indonesia. Why have you decided to go to many other cities? And surely this must be a huge logistical problem in terms of keeping an eye on what all the parts of the company are doing.

Purnomo: We expanded our operations so that we can cover the whole of Indonesia to cater to the needs of the passengers. Even for expats – when they came to Indonesia in the old days, they only had business in Jakarta. Now they have businesses throughout Indonesia, and they want to use the same brand that they recognise, and it's easier also for them to consolidate the payment, the billings and things. So it's so much easier and it's more reliable; it's a brand that they know. So we grow together with the expansion of businesses in Indonesia.

And to control, we rely on technology again, because each of our cars is installed with GPS so that we can monitor the location of each car, and then we installed a call centre, with a monitoring system. We use SAP as a backbone, so we have a national control of every single spare part being changed, because it's cost efficient for us. So we use technology to monitor closely. But most important of all are the people. The way we select the people is the best control we have, because we only want to recruit the right people to work in our organisation.

BusinessThink: You've been recognised by Forbes magazine as a businesswoman in Asia. But how do you juggle all the demands of running a very big company with being a wife, a mother, everything else that you've got in your life?

Purnomo: I think quality, quality time. Quality is more important than quantity. I think it's about how you schedule your time to make yourself feel comfortable. It's not without challenge. I used to be more like a perfectionist in that I wanted to juggle all three balls that you mention up in the air all the time. I mean, even a perfect juggler cannot do that. Then I realised that as a human being we have to recognise our own strengths and weaknesses.

So now I recognise which ball I need to put down in order to keep one in the air. That way I manage the time with my kids, family time, and also work time, including imposing certain rules. As simple as I told my kids, "Unless it's an emergency, during working hours you cannot contact me." But they know if there is an emergency they can contact me any time, and they have a special number for me; so I have two phones.

‘I think the reason why we expand is because we want to take part in the development of Indonesia as a nation’ 

– noni purnomo





BusinessThink: And yet while you're prioritising your tasks during the day, and at the same time trying to ensure you've got some family time in the evening, with Blue Bird you've almost made it more complicated by diversifying into being a logistics company, a transport company, all these other things. First, why, and then what are you going to do in the future? Do you have global ambitions?

Purnomo: I think the reason why we expand is because we want to take part in the development of Indonesia as a nation. And what we're good at is giving reliable transportation services, so we want to extend that into supporting the infrastructure, because we still have a lot of opportunity and challenges in developing infrastructure. That's why we are not only servicing the passenger transport [sector], we are also giving service to the goods transport, which is the logistics.

Logistic costs in Indonesia are still extremely high – it's 27% of the cost of doing business. So we want to take part in that, because I know there is a huge challenge with Indonesia because we have a lot of islands, so it is more expensive. But I am sure with our business efficiency, with the operational excellence that we experience from transporting passengers, we can also adapt it into this logistics services company.

And on top of that, we also have a trading company for heavy equipment, which is part of supporting the building of infrastructure in Indonesia. 

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