Strategy and Tactics – Page 46 – IS Survivor Publishing

IT and IATA share two letters

What makes me mad isn’t that the airlines want to shrink our carry-on luggage. It’s that they think we’re complete idiots.

In case you haven’t run across this little firestorm, the International Air Transport Association (IATA) has announced a new standard. Conforming luggage will be about 20% smaller than what you’re used to carrying on. The IATA’s spokespeople say, “… it will lead to an improved passenger experience.”

Not content to insult our intelligence with that little gem, the IATA went on to say, “The Cabin OK initiative does not require passengers to buy new baggage. Cabin OK is not a revenue generating scheme for the airlines.”

Okay, let’s get this straight. It won’t require us to buy new luggage, because … we can shrink the luggage we own with a hacksaw and duct tape to make it fit?

And if passengers can’t pack as much into their carry-on luggage, none will have to check larger bags … for a fee … to bring enough clothing and shoes for trips our old carry-on luggage was big enough to handle?

I’m surprised they aren’t calling it “best practice.”

Passenger demand for overhead space has increased. The airline industry’s response is to reduce the supply. If you were running a business, would you reduce the amount of something your customers were demanding more of?

This is a clear case of market failure. Among the causes of market failure, in addition to monopolies, tragedies of the commons, and the dollar auction, we can add the failure to think like customers, I guess, or maybe simple denial of the obvious — characteristics with which the airlines long-ago proved they are amply supplied.

For example: With approximately one exception, air carriers argue they have to change ticket prices every 37 milliseconds because the laws of economics compel them to do so.

That this is insane was pointed out quite a long time ago by C Alan H. Hess in his brilliant “If Airlines Sold Paint” (if you haven’t read this, stop now and click the link — you’re in for a treat). That it’s completely wrong is evidenced by which carrier is the most profitable in the industry — Southwest, which doesn’t do this.

And now, not content with pricing that’s merely insane, some carriers now offer multiple pricing tiers, based on position in the plane and whether they provide enough legroom to avoid the need for amputation.

To be fair, position in the plane and amount of legroom are attributes fliers value. But there’s an attribute we all value more: Not being crammed into the furschlugginer center seat.

Do you know of any carriers offering a center seat discount? Me neither. And if any carrier did figure this out, you can bet they’d offer aisle-and-window-seat premium pricing instead … exact same thing, only most business travelers would not be allowed to book a seat labeled “premium.”

Talk to any experienced traveler about their preference for not checking luggage and you’ll find price has little to do with the choice. Most of us are frequent fliers on at least one airline, but still carry our luggage on board, even when the first bag is free.

Why? We both know the answer. We carry our luggage on board to make sure it (1) arrives at our destination; (2) undamaged; and (3) with its contents undamaged, too.

Which leads to the KJR solution: Charge ten bucks per carry on bag — enough to make money; not enough for business travelers to care — and in exchange do what Domino’s Pizza does: Guarantee fast delivery, with the goods in good condition.

If I was confident my bag would be waiting for me in baggage claim when I got there, in the same condition it was when I handed it over, I might even start checking my computer bag, too.

What does this have to do with running IT? Not much. The IATA just ticked me right off and KJR was waiting here for me to write about it.

But there is this, which you can take to the bank: If IT wants its users to behave in a certain way, the starting point isn’t to set and enforce standards.

It’s to look at the world through their eyes, not IT’s, setting standards and writing policies that are more attractive than the alternatives.

Most of the time, in most situations, enforcement is the lazy alternative to empathy.

Platform decisions

We humans like to look at the world through a Good-Guys/Bad-Guys lens (the GG/BG lens, available in Canon, Nikon and Micro Four Thirds camera mounts). It’s a bad lens.

Consider the cases of Apple Pay for iOS and only iOS, and MS Office for iOS and Android as well as for Windows.

There are those among us who, looking through our GG/BG lenses, will applaud Apple for its innovation while excoriating Microsoft for … well, I’m not sure what, exactly, but because Microsoft is the Bad Guy, there will be a reason.

Forget your GG/BG lens, and focus (sorry) with your Business Strategy lens instead (no, no acronym for that, and if the reason isn’t clear, figure it out).

On the surface (as opposed to the Surface™), “strategy” might appear to be the decision as to which platforms to support. Apple’s is to use Apple Pay to further differentiate iOS from Android, while Microsoft’s is to finally support non-Windows platforms, presumably out of desperation.

The view from here: Despite their superficial similarity, the two decisions have nothing to do with each other.

Start with Apple. Its Apple Pay decision looks more like applying old habits to a new situation than like a strategy.

Start with what made the iPhone so wildly successful in the first place. It wasn’t a case of the King Kong syndrome (“It was beauty killed the beast”) although compared to the Blackberry and Treo smartphones it competed with, the iPhone was quite pretty.

No, the big, big deal about the iPhone was that it wasn’t just a product. It was a platform (and Open/Closed Platform Strategies: How, When & Why,” Geoffrey Parker and Marshall Van Alstyne, which explores this subject, is well worth your time).

Apple’s App Store is what made the iPhone a platform, which is what drove the marketshare of Blackberry’s mere products to ever-more miniscule levels.

Apple Pay looks like a replay of Steve Jobs’ legendary argument with his executive team about whether to release a Windows version of iTunes. Only in the replay it’s Android not Windows, Jobs wins, and there is no Android Apple Pay.

Understand, Apple Pay is just a way to pay at the register by pulling out your iPhone instead of a credit card. I guess that’s more convenient(?)

So Apple Pay makes consumers’ iPhones a smidgeon more valuable; Apple makes its money by capturing a smidgeon of the credit-card processing fee; and the banks are willing to give it this slice because Apple Pay is, in principle, a smidgeon more secure than a standard credit card.

Merchants? They mostly care about the expense they’ll incur by equipping themselves to support Apple Pay, if they decide to support it, which depends how many customers they expect will have an iPhone but no credit cards with them.

Off topic: Smelling opportunity, Google has announced Android Pay, which has no user interface, only an API. It’s a platform. In principle there’s no reason Android Pay Apps can’t be written for iOS. Sure, Apple could return the favor, but right now an Apple Pay App for Android seems farfetched.

On topic: Microsoft’s decision to release iOS and Android versions of MS Office.

Once upon a time, MS Office was, for Microsoft, what Apple Pay is supposed to be for Apple right now: A way to increase the value of a platform, in this case Windows, by providing a valuable application that isn’t available on any other platform.

From both a consumer and enterprise perspective, if you want word processing, spreadsheet, and presentation software that renders reliably no matter who you send your documents to or receive them from … if that’s what you want, your only choice is MS Office, and if you make that choice you’re going to run Windows on your PCs.

Or, to be fair, on a Mac, but for the budget-conscious Macs cost more than Windows machines.

It’s a strategy that’s worked for a couple of decades. It’s still working. But it’s had an unfortunate downside: It’s made Microsoft’s desktop Windows team fat, dumb and happy.

No more. Astonishingly, Nadella is the one who has broken Windows’ de facto monopoly on MS Office.

Which leaves the Windows team little choice: It has to start designing an OS and user experience users actually prefer.

From Nadella’s perspective this has to be a gamble. The guess from here: Not taking this step was even riskier.

Your take-homes from all this (you knew there’d be one, didn’t you?): (1) applying old mental habits to new situations is dodgy at best; and (2) few risks are bigger than a culture of fat, dumb and happy.

Plan accordingly.