Tuesday, June 12, 2012

who's in cell four? or why a trip to the airport feels like a trip to 1987

I was planning to go into more detail with this follow-up but it looks like I'll need to settle for the short version (deadlines, deadlines...)

I bought a car a few years ago and was amazed at the innovations I could get for a little over 20K. The engine, the transmission, even the key were based on technology that would have been unavailable or prohibitively expensive a decade earlier. By comparison, when I travel by air I'm amazed at how little innovation I've seen over more than the past quarter century. How do we explain the difference?

We often hear that businesses will automatically innovate if the government just gets out of their way but that's not the way companies works (at least not based on the projects I've been on). For starters, feelings toward innovation are often mixed. Innovation is usually costly and often professionally risky and, since successful innovation almost always has benefits that pay out over a number of years, it is likely that credit for your ideas will go to your replacement.

Businesses therefore need a good reason to innovate, good enough to outweigh the costs and risks. Two of the biggest (and most closely related) factors in the cost benefit analysis are competition and persuadable customers (customers who will buy your product if you take the action and won't if you don't).

For both auto manufacturers and dealers, the level of competition is high, as is the number of persuadable buyers. Customers have a abundance of choices and an open buying window. In this environment, a well-designed feature or clever bit of technology can often cinch a forty or fifty thousand dollar sale.

By comparison, people needing to make long-distance trips generally have extremely limited choices and  a tight buying schedule. The number of persuadables is very small; most are geographically predisposed to one airport and a handful of airlines. If you're counting on market forces to drive innovation in that situation, you don't understand market forces.

upate: sorry, I had originally meant to talk about a matrix of consumer behavior where persuadable customer were in the fourth cell.


  1. Jet aircraft efficiencies are improving: Between 1960 and 2000 there was a 55% overall fuel efficiency gain (if one were to exclude the inefficient and limited fleet of the DH Comet 4 and to consider the Boeing 707 as the base case).


  2. I was focusing on the customer experience side. Cost and safety (which have different economic drivers) have shown a great deal more progress.