The Invisible Foot - Garrett Hardin vs The Invisible Hand - Adam Smith

Recently, I came across a reference to Garrett Hardin and his Invisible Foot. Also known as the Tragedy of the Commons, in simplest terms, it is the battle between the individual interest and common good on a resource that is finite. Wikipedia says "It is a structural relationship between free access to, and unrestricted demand for, a finite resource". Its called the Tragedy of Commons because every individual is acting rationally and still ends up destroying the resources and Commons because the resources under scanner are free for everyone to use.

 

The Invisible Foot is often used alongside Invisible Hand by Adam Smith to explain the principles of economics. " The Invisible Hand" says that a person acting in self interest acts as if he is guided by an individual hand trying to work for the good of the mankind. So basically every time there was a breakthrough (evolution or business), the individual did it for his own benefit and ended up benefiting the entire mankind. For example, in Natural Selection - Individual started differentiating itself from others to gain an edge over members of the same species and it ended up making the entire species stronger ( Survival of the fittest). In business, with every new breakthrough product, individuals trying to corner more market share and making money actually helped mankind take a leap (example use of CDs instead of Tapes).

 

According to Adam Smith every subsequent improvement by an individual brings that individual benefits and helps the world to move forward. Here resources are infinite and everyone can capture large market share happily.

 

And according to Garrett Hardin, every subsequent improvement by an individual brings benefits to that individual but degrades the quality of resource. This resource is limited and with every subsequent chunk being taken by an individual reduces the availability and quality of the resources.

 

Both of these are very interesting theories. Both talk about actions of individuals. Hope I could understand them better.

 

Links: Wiki on The Invisible Foot, Wiki on The Invisible Hand, Value Investing Resource Blog

Your iPod is the beginning. Discover the rest.

I bought the iPod few months back and I registered it on their website.

Few days back, I got this mailer from them and obviously it made me happy that I own an Apple product. I might or might not buy the iMac but I am happy that someone out there cares (even though it's an automated, unmonitored mailbox)

Your iPod is the beginning. Discover the rest.

Marketing at its very best. Hats off to Steve Jobs and team. There are few observations.

Customization. The mailer could have addressed me with my name.

Value. Some kind of discount (even 5%) on purchase.

Time bound offer. Buy within next 30 days and get a discount.

Spreading the word. Send this to your friends and help them get discounts.

The Takeaways
Q: Why would someone register a product on the website?
ME: Because Apple offered a free no-questions asked tech support for a year.
Apple: They get to collect data about users and preferences. In some cases it also helps them to check on piracy and smuggled items.

Q: Was registering hard? Was it fun?
ME: No, just enter the ipod serial number, enter your email address and that’s about it. Any customer initiated activity should be simple, fun and fast.
Apple: They just needed to make a simple small form where you are not asked useless questions unless they know a user. First time interaction should be fun, easy and simple.

Q: Was the actual support as good as they promised?
ME: Had problems with the ipod. They exchanged it without even asking a question.
Apple: Another way to keep customers happy.

Related Links
Shankar on Steve Jobs

Another One from Hugh MacLeod at GapingVoid

I am truely amazed at Hugh MacLeod's ability of coming up with masterpieces time after time.

Copied from GapingVoid.com

Marketing Apple

Marketing Apple is about 5 pages long pdf that talks about things that have worked at Apple. I respect that company for all those wonderful marketing ideas and how they create hype before a product is even launched. I think its an interesting read for any one looking out for marketing ideas and new products.

 

However I disagree with one of the observations. Point 2 says "Never be First to Market".

 

I strongly disagree. Ok Apple was never first to market but that doesnt mean being first to market would not work. Todays world is like a flush. The first player comes and customers flock the way water rushes when the plug is pulled. And to complete the analogy, once a customer is hooked, the switching costs are too high to let any customer go. Once you enroll at MDI, you can not tihnk about enorolling at a better BSchool - cos you have paid so much and any other BSchool is only marginally better.

 

They could have talked about solving a problem easier and better and faster. iPod worked becuase it was part cult and it solved the problem of moving around with music better than any other player in the market (check out iPod launch videos on youtube).

 

So basically create something that is attractive, easy for cusotmers to join and has high switching cost for customers.

 

I more or less agree with the other observations.

 

Any comments ... ?

 

P.S.: Talking is way too easy. Getting an idea and opening an enterprise is way too difficult :(

Probably The Best Hospital Signboard Ever

I got this in email today.

UX Pioneers: An Interview with Seth Godin

Yet Another Seth Godin interview.

In his own words, Seth says

Tamara recently interviewed me for UXPioneers. The only reason I agreed to consider it was that a good friend introduced us. Then I read her other interviews and realized that this woman had figured out how to create a very different kind of interview. It was a lot of fun. More relevant, as a reader, is that I actually learned something from reading the other interviews she had done.

I guess this is what happens if you ignore press releases, don't have a traditional editor and aren't trying to appeal to the largest possible audience segment. Either that or if you're a good interviewer.

Link: UX Pioneers: An Interview with Seth Godin

Google: Gmail: How Does An e-mail Travel?

Google asked its users to help them imagine "how an email message travels around the world". They asked users to submit movie clips featuring the Gmail M-velope (). Thousands of users submitted clips and Google edited those clips to make a one minute video on how an email travels around the world.

I would say this is a small step from Google, a giant leap for User Generated Content.

Steve Jobs vs Bill Gates

Another one of those Steve Jobs vs Bill Gates battles - but with a twist. This time we have pics when neither of them were famous. Gates with his PCs (and Microsoft) and Jobs with his Apples (and THINK as background).

I found this on BoingBoing.

P.S.: From now, every post that I copy from other sources would be tagged Copied Categories aka CopyCat

Quote from Benjamin Franklin

In his biography, Benjamin Franklin said ...

...like a man traveling in foggy weather, those at some distance before him on the road he sees wrapped up in the fog, as well as those behind him, and also the people in the fields on each side, but near him all appears clear, tho' in truth he is as much in the fog as any of them.

Delhi Autorickshaw Drivers - A Fare Deal ... ?

Autorickshaw (aka autos) drivers in Delhi have always been notorious for fleecing customers and demanding exorbitant fares from passengers. Autos are supposed to charge by a fare meter (installed on the auto). A fare meter is an essential part of any public transport system. All the autos had a meter but no driver ever used them. Even people in Delhi got used to haggling with the drivers before they took an auto. I have spent good part of 25 years in Delhi and have never travelled in an auto that runs on fare meter. Even Lonely Planet Guide and other Delhi travel advisories told people to fix rate before they get into the auto.

I moved to Mumbai three months back and on a recent visit to Delhi, I was surprised to see that somehow all autos were going by meter. All means all autos on the road. I took autos at 2 AM, 8 PM, 6 AM and all the time I paid by meter. This was something new to me. How can this radical a change happen in less than 3 months? What changed? This is equal to a social epidemic. The very basic behaviour of people (in this case autodrivers) changed in less than three months. What brought about the change?

It took almost a day to figure out and this is what I could find.

In last three months, few things changed.

1. The per kilometre tariff for auto was hiked (from Rs. 4.5 per KM to Rs. 5.5 per KM).

2. The fine on not going by a fare meter was hiked. From Rs. 100 to Rs. 2000. In case of second default, the autos could be impounded.

3. Policemen were given incentives for catching defaulters. I asked a cop, he did not share the exact numbers but he said that if they catch even 5 defaulters a day, they make same money as they would make in bribes in a week.(This is what a cop told me when I acted as an innocent college kid :))

Now these three changes had following effects

1. Auto Drivers: Most of these auto drivers do not actually own the autos they drive. These are rented (Rs. 250 per day). It was easy for most of the drivers to cough up 100 bucks if at all they were caught. They could either pay Rs. 100 or bribe a cop Rs. 50. To compensate, all they needed to do was over charge 2 other customers. Now with fine at 2000, if they are caught even once, they are in a soup (large fine and possibility of not getting the auto for next day). And with super-incentives to cops, chances of getting caught and fined became higher. It also became difficult to bribe cops as they make more money if they issue challans (traffic violation ticket).

2. Cops: Earlier, cops were happy catching autos for petty things (no driving license, improper uniform etc) and getting Rs. 50 as bribe. With high incentives, they cracked down on autos like anything. They stop autos at random and instead of asking the driver, they ask the passenger about the fare and if the meter is being used or not. Suddenly cops were making quick and easy money and above all, this money came in form of awards. This probably became the tipping point and suddenly every auto driver wanted to go by meter.

So basically it took two simple step to solve an age old problem of over-charging. An awesome application of what Robert Cialdini, Seth Godin, Malcolm Gladwell and a lot of other unknown social scientists have been doing (I am taking the liberty of categorizing all of them as social scientists).

Moral of the story is that next time you take an auto in Delhi, make it a point to go by meter (spread the Ideavirus - become a sneezer).

Post BFBV, everything is reduced to application of Mental Models.There are quite a few evident Mental Models in the entire episode. The ones I could spot immediately are

1. Reciprocation – we have increased the fares, now you start using the meters and stop fleecing the commuters.

2. Incentives – catch defaulters and make fast money.

3. Punishments – large (comparatively) and enforced strictly.

4. Positive Feedback Loop – Initially cops made money, they got stricter, autos started going by meter to avoid getting caught, cops getting even stricter with lesser autos defaulting.

If there is a different opinion, please share. Please point out flaws in arguments.

I have also made following two assumptions

1. No one paid fines earlier and most cops were happy to take bribes than issue challans (aka traffic violation tickets)

2. Assumed that this exercise is success. However the effectiveness is yet to be proved. Until commuters start demanding to travel by meter and use of meters becomes a norm, the effects would start fading in some time.

Also posted on PseudoSocial at Delhi Autorickshaw Drivers - A Fare Deal ... ?