How Government Can Manipulate Us

US-75This morning, I sat down at my computer excited to fill out a survey I had received over the weekend from the US Department of Transportation. They sent me both a postcard and a letter saying that they wanted my feedback about my “experiences traveling through the US-75 Corridor.” For those of you outside the Dallas Metroplex, US-75 is one of three main north-south running roads which brings drivers to and from downtown Dallas.

The FAQ states that the purpose of the survey is “to learn how Dallas area residents use US-75 as well as other roads and DART light rail in the corridor.”

I went to the website and entered the password they provided me. The first question asked was about how often I travelled the corridor during rush hour. The answer that best represented my usage was “Weekends only.” After I clicked next, I received the following page in reply:

ReplytoSurvey

In case you eyes are weakening like my it reads:

Thank you for your interest in this survey.

Unfortunately, we cannot invite you to participate further because this study focuses on the experiences of people who regularly travel on US-75 on weekdays.

If you would still like to provide feedback, please email comments to dallas@rsgsurvey.com.

So you see, they are not interesting in the opinion of Dallas area residents; they are interesting in the opinions of rush-hour travelers. My bet is that the results of this survey will be used to justify more public transit.

This is the way governments and so-called urban planners operate. They ask obvious questions to a carefully chosen demographic to get the answers they want. For example, this survey I am sure asks about the congestion on US-75 and asks if it would be better to have more light rail service.

I have emailed and asked for the complete set of questions, we will see if I am correct. If you are in the Dallas area, you might want to ask to participate in the survey, you can do so by emailing dallas@rsgsurvey.com.

A Post On, Egads, Effort

images-5Regular readers of this space will know I am not a fan of the cult of efficiency that enraptures most businesses today. In my project management classes I stress that duration is the more important metric both the the professional and the customer.

That said, I would like to update the idea of comparative advantage as originally put forward by economist David Ricardo, but updated for the knowledge worker, especially the small firm. This idea seems to be about efficiency, but if one looks deeper, one will see that it is truly about effectiveness.

Adam Able is the owner/operator of a small IT consulting firm. Adam has been working in his industry for over 20 years and has a wealth of knowledge and domain expertise with the products with which he works. Because of this Adam, can slam out a new customized report in an average of two hours. He can also do an average migration of data in one hour.

Igor Egit is relatively new his profession; he has been at it a little over a year. Igor is not the brightest bulb in the drawer. On average it takes him three hours to deliver a new custom report, 50 percent more than Adam. While Igor does not suck at reports, he is a migration moron and it takes him four hours to develop a workable data migration, 400 percent longer than Adam.

This table shows the comparison.

  Igor Adam
Report 3 2
Migration 4 1
Total 7 3

 

If each does one report and one migration the total is 10 hours and the yield is two reports and two migrations.

Comparative advantage says that while Adam is better at both, and could theoretically do it himself in six hours, he is better off specializing in migrations and allowing Igor to do the reports, even though this runs counter to the idea of efficiency.

This table demonstrates the results of specialization.

Igor Adam
3 1
3 1
6 2

 

Notice again, that the yield is still two reports and two migrations, however, each received an hour of additional discretionary time. In addition, the total effort decreased to eight hours.

Now, some may argue that from an efficiency standpoint, it would be better to have Adam do both, since the total would be six hours not eight. What would that do to Adam’s leisure time? It would reduce it by four hours.

Looked at in this light, we can see that the question is: does it make sense for Adam to trade four hours of discretionary time in exchange for two reports from Igor. This is a value tradeoff that only Adam (and in a sense Igor) can make.

The trap is set, however, if we introduce the idea of a billable time rate to this example. Since it is unlikely that Adam’s rate would be three times that of Igor’s. Adam’s customers will either a) insist that they pay a reduced rate for Igor, or worse, b) insist that Adam himself do the work.

The traps is sprung! Adam, in the name of good service, will acquiesce to the customer. Likely, Igor will be out of a job; and Adam will miss more Little League games.

A Legal, Perhaps, Ethical Gedanken

Disclaimer: I do not believe that the law and ethical behavior are always in alignment with each other.

Now, my thought experiment:

First, a neighbor implies to you that he would have preferred that you had never moved in next door by saying, “I wish that you were removed from the pages of time.”

Second, he purchases a gun.

Next, you have heard that he is looking to purchase a rocket propelled grenade launcher.

Assume that these are legal to possess. In fact, you have these weapons as well.

Are you within your rights to fire your weapons first? If so, why?

On Chunking

For those of you who struggle with ensuring that delegated tasks are completed on time, I have some good news for you. New work by some behavioral economists has shed some light on this difficult situation.

Most of us are familiar with the psychological concept of chunking in large part because of a famous paper published in 1956 by George A. Miller entitled The Magical Number Seven, Plus or Minus Two: Some Limits on our Capacity for Processing Information.

The idea is that our short-term memories can only remember 7 +/- 2 items in a list, such as number, unless we chunk it down into groups of numbers. Some common examples would be phone, credit card and social security numbers.

More interestingly, some behavioral economists have demonstrated that the same concept can be applied to the assignment of tasks. When an assignment is given to a person to complete, it is far more likely to be completed if it is chunked into two or three sub-tasks, rather than just assigned as a single task.

Rory Sutherland refers to this in many of his presentations. Here is one from the APA. He talks about this concept beginning at 2:45, but watch the whole thing it is great stuff!

The lesson here for professionals is this – whenever you give an assignment break into at least two parts, even if it seems somewhat artificial. Some examples:

  • “Enter this data, then call me.”
  • “Review this document for clarity, then email it back to me.”
  • “Create the report layout you want, then convert it to a pdf.”

I believe this will work when you assign tasks to fellow team members, but, more importantly, I believe it will help with tasks that you assign to your customers.

I have begun to experiment with it and it seems to be working.

Pricing That Makes You Go, “Huh?”

images-4So this morning I called to renew my, errr, son’s subscription to the MLB Insiders Club. It gets us him some “free” stuff as well as a monthly baseball magazine. Overall, I think it is a good deal.

I called because the letter I received had no place where I could renew on-line and, well, filling out a form and sending via the USPS is beneath me. I found it odd that you can join the program on-line, but not renew. So be it.

On the mail-in form the prices for renewal were listed thusly:

  • Three years – $59.00
  • Two years – $44.00
  • One year – $24.00

Not bad. This is pretty standard term-based preferred pricing, but here is where is gets weird.

When I called, the representative took my member number and said she would be happy to renew me at the following “rates:”

  • One year – $9.00
  • Two years – $18.00
  • Three years – $27.00

I renewed for three years, but now I am totally confused.

First, why is it cheaper, significantly cheaper, to call to renew as opposed to sending in the form?

Second, why did they present the prices highest to lowest on the mail piece, but lowest to highest over the phone?

Third, in both cases they used even dollar “9” pricing as the base, yet the form used the three-year price as the base and the call-in used the one-year price as the base. Why is that?

Fourth, why is it that via mail, I get a preferred price for a longer subscription, but via the phone, the price is less, but there is no preferred price for multiple years?

Fifth, is this an example of a great price discrimination strategy – charging more to the people who just renew using old technology (i.e., the mail) or an example of a company without a fricking clue as to pricing?

Sixth, why do I even care about this?

Sorry, that last question was my inside voice.

Your thoughts on the first five questions would be appreciated. I’ll reserve the last one for my shrink.

My “Why” – Latest Edition

Two years ago, I posted twice about my Why statement. (See those posted here and here for further explanation.)

Since I am convinced that one’s Why is a ever emerging concept, I thought it would be appropriate to share my latest Why, which is:

I believe that entrepreneurs continue the work of creation. I help entrepreneurs (mostly Sage partners and customers) understand how they create value for their customers  and better capture that value through the prices they set.

Please note that the first sentence is the key. I have been testing this at gatherings such as cocktail parties and even PTA meetings when I am asked the usual obligatory opening question, “So, what do you do?”

I have been replying with my Why. This is usually followed by a quizzical look, but after a brief moment, some variation of the phrase, “Tell me more,” is uttered. This leads to some great conversations. Conversations I never would have had, if I did not start with Why.

New Addition to Ed’s List

During Sage Summit 2012, I received the following email from Tom White of the Florida Office of WAC.

Ed,

With the signing up of my last holdout client to a SLA,  have been now
able to totally discontinue hourly billing. At no time, no how, no where do we bill by the hour.

100% of my client list is on Service Level Agreements. All other billings are either from out fixed price schedule or from
custom fixed price projects.

Regards,

Tom White

This, of course qualifies Tom for Ed’s List.

Tom and his team were previously featured in this space a few years ago.

If you think your firm should be on Ed’s List, please feel free to email me.

Plumbing Prose

I recently retweeted a post about Al the Plumber who is clearly a Firm of the Future.

Early this week I received an email from Kirsten Austin of DCSC Inc. about an experience that she recently had with a plumber who decidedly is not a Firm of the Future.

In order to justify his hourly rate, he has had to become a short story teller of Dickensian proportion. Here is what he come up with to justify a 1.75 hour engagement.

PlumbingProse

“Painstakingly, adjusted the linkage…” I love it!