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Feb 28

The Paradigm Shift Continues…

Posted by: Mark Solon        
 

Last year, my partner Phil wrote a post about how Derek (our college-aged summer intern) used his iPhone in a creative way when injured in a mountain bike accident. Last week, we once again witnessed Derek demonstrating how today’s younger generation turns to technology first when confronted with everyday challenges.

We arrived at Denver airport after spending a terrific couple of days at Venture Capital in the Rockies (VCIR Winter). Along with Derek and I were my partner Glenn and Chris Bounds, the CFO of Cradlepoint Technology, one of our portfolio companies who had presented at VCIR. While three of us were heading home to Boise, Derek was flying to Salt Lake City (SLC) where he is finishing up his tenure at the University Venture Fund.

When we got to check-in, we realized that we had mistakenly booked Derek’s flight for March 25, not February 25. The agent worked her screen for a few minutes and then told us that the flight that he had hoped to get on was booked and there were no further flights to SLC that night. Derek (who had already whipped out and began furiously working his iPhone in parallel while she was working) politely asked the agent if she had Internet connection on her screen and could she please bring up Travelocity. She looked at him quizzically and turned the screen around to show us all the flights out of Denver that night and that there was indeed no way to get him to SLC that night.

Instead of giving up at that point, Derek called one of his college buddies and asked him to get to work on the Internet as well to help him out. Given that we had to leave at this point to catch our flight to Boise, we bid Derek adieu and as we walked away he was still there pounding away on his iPhone in an effort to get home that night.

More and more, we turn to this first...

Customers are turning to this first...

As we made our way to our gate, Glenn, Chris and I (all in our mid 40’s) talked about how differently Derek handled the situation than the three of us would have. We realized together that Derek trusted the information on his iPhone more than the gate agent, even though she turned her screen around to show him the flights. We agreed that had it been any of us, we would have tried to “work” the agent, not our handheld devices.

The story continues in that Derek’s parents live in Boise and after being unable to get to SLC that night, he ultimately decided to get on our flight and spend the night with them and fly to SLC in the morning. Ten seconds before the door closed, Derek sprinted onto the plane and sat down beside us, bathed in sweat from his mile-long sprint to gate B95 to make the flight. We proceeded to talk about the experience and asked him about his thought process. Here’s what he had to say:

Well, I probed deeper asking if she really had full access to the flight schedules of all other outbound airlines and she said her search results were complete and all-carrier inclusive. Even though the representative told me there were no flights available, I didn’t trust that her system wasn’t biased towards her own airline. Instead of simply accepting an alternative flight through the previously registered carrier, I drew my iPhone and began scrubbing Travelocity and Orbitz for available flights. I figured surely some clever executive on the backend facing declining sales had thought:

“Oh, I have an idea – if a customer has a schedule conflict let’s allow him to reschedule his flight as long as it’s still with us. if he questions further, tell him we’ll check “all” carriers for available flights. But in reality, we’ll only pull flights that are slightly more expensive and at slightly less convenient times than our airline’s flights”. The airline then hires a savvy programmer and one week later the system has an integrated search algorithm that scrubs all available flights on all carriers but only returns flights that fit the “slightly more expensive and inconvenient” criteria. The customer can visibly see the search results with actual Delta, United, Southwest, etc. flights and then simply trusts the system’s validity and decides to reschedule with the original carrier – despite the available but cloaked flights on other carriers.

What’s worse is that I bet the search algorithm may have been integrated without the sales representatives ever knowing, and they earnestly believe they are helping the customer identify the best deal. This is an important side note, although I did trust the helpful airline representative as a person, I did not completely trust the backend framework that produced the actual search results.

I confess, I have no such knowledge of any such airline integrating savvy software processes diminish substitute availability, but think of the various applications such a simple algorithm could be used: purchasing an expensive HDTV and the representative pulls up a screen with distorted “real-time” competitor prices or a car dealership shows inaccurate competitor price listings for the car you’re interested in purchasing. This dilemma has been largely resolved in the online arena, as consumers can quickly compare competing prices of e-commerce giants and discern truth from deceit. It seems this same dilemma of in-store purchase (e.g., at the airline carrier’s ticket counter, etc.) is likewise becoming increasingly subject to the invisible regulating power of mobile information exchange.

To summarize,  in many situations (particularly POS in-store purchasing situations) people have grown increasingly confident in mobile technology to validate the words/opinions of sales representatives. Just as freedom of press has kept public figures and companies in-check for years (by publicizing errors, secrets and scandals) the increasing reliability of mobile technologies (such as RedLaser by Occipital) is beginning to “regulate” and keep in-check consumer purchase points from price gouging and dishonest practices. Mobile technology’s “invisible hand” (credit Adam Smith) regulates by providing visibility into immediate “purchase source substitutes.”

Adam Smith's Invisible Hand At Work

Adam Smith's Invisible Hand At Work

At the end of the day, there’s no denying that we’re going to see advances in mobile technology continue to shape the way we manage our everyday lives. While Derek’s inclination to turn to technology to assist him didn’t work this time, you can bet that it will more and more and the younger generation will be leading the charge. You can’t change the fact that Derek trusted technology more than the person trying to help him. That’s not going to change and companies are going to have to figure out a way to deal with customers who are better armed with real-time information than ever before…

 

One Response to “The Paradigm Shift Continues…”

  1. avatar Peter says:

    Agree that it's an instructive anecdote, but I think perhaps an alternate metaphor applies. It seems more a case of "information wanting to be free" than the Invisible Hand (and now that I'm officially limit-up on cliches for the week, on Monday no less…). Provided that the resource can be perceived as being both credible and thorough, in this case, a threshold which all of the "travel" sites have crossed, it will serve as a useful lever to overcome whatever immovable object or irresistible force it comes up against (and now I really am over the limit…)

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