A 3-legged entry in the 100M dash.

I ran into an interesting capacity dynamic yesterday when I stopped to run a few errands on the way home at the end of my “official” work week.

My favorite time for an extended grocery run is late Friday afternoon / early Friday evening. Everyone else is on patios, in restaurants, bars or dens unwinding from the work week. Few are thinking about how bare their pantry is or how the fridge only contains condiments – that is a problem for Saturday.

On Friday evening the grocery store(s) I support offer few competing shoppers, though all of the weekend sales are already posted, and scores of people to help should I need something in particular.

Yesterday, however, I also walked across its parking lot to a liquor store. Same time & place, completely different result. The liquor store was a madhouse. The narrow aisles completely cramped with carts not designed for the space, store employees at a near sprint trying to attend to every customer with a question or and keep stock on the floor, every check-out line seven or eight customers deep.

Why don’t these businesses just team up?

They really don’t compete. The grocery store sells little beer, and the only items the liquor store sells that could be found in the grocery store are lemons, limes & Red Bull.

They could be balancing their service capacity with demand much better if they would take the Friday afternoon excess grocery store employees and apply them to the shortage of help in the liquor store. On weekend days and during the week, the flow could reverse to accommodate busy times for the grocery store.

Take it a step further. Move the liquor store from the place across the street into the adjoining retail space, knock out part of a wall and provide an experience where two patrons can sell complementary products through a single shared experience, supported by employees that know their stuff in both, able to offer suggestions on pairings, even “cross the transom” to support a single customer’s shopping experience.

Matching service capacity with demand is tricky in any environment. The natural flows of these businesses are too great a gift to be overlooked. A business can try and make it on its own, staffing for service & knowing full well they’ll have times with both excess capacity and times when they’re dissatisfying customers with inadequate staff. Conversely, they can partner to expand their formats & share labor cost, to make the most of the customer experience and approach the capacity problem creatively.

...but you can choose your business partners.

I wonder if AT&T is feeling the heat.

The best thing to happen to the company in years – exclusivity on a consumer market phenomenon – is breaking the back of it’s ability to deliver on service promises.

First the network problems and the complaints about service coverage. Then the 2GB data plan limit following shortly after the iPad release, effectively decreasing its experience value. Then the botched support on the iPhone 4 release, including inability to fulfill demand for the phones, inability to process orders, inadvertently cancelled orders and unintentionally shared private consumer information.

You have to wonder is AT&T isn’t considering asking Apple to introduce another provider (a competitor), just to prevent a complete service failure. Too much demand is a good problem to have, unless your business is a network-based service, and that demand is both abundant to the point of damaging the experience and comes at a pre-negotiated rate.

I also wonder if Apple feels like it has lost control, and a once-in-a-generation opportunity is being limited by a partner of their choosing.

Most complex services need networks of business partners and intermediaries to manage delivery. Whether it’s iPhone service or the fulfillment of online retail purchases to your home, most businesses put a portion of their customer promises in the hands of someone else to fulfill.

I don’t know specifics on where issues lay between Apple and AT&T, but I have to believe Apple is not seeing their vision of quality & consistency fulfilled by their exclusive partner.

While the selection process is critical (and it is possible that this is where Apple failed) the day-to-day management is much more important. Conflicts are certain to arise over objectives, performance, costs and rewards.

The easiest way to resolve these conflicts is the mundane stuff that most innovators don’t want to suffer through – establishment of expectations, measurement & review of performance – these are key activities businesses should must employ when using another party to be their face to the customer, or even a part of promise fulfillment.

If these are insufficient, sometimes the service owner has to engage more – helping the intermediary provide service the way they expect through standards & training on what it means to serve the customer in their intended. In extreme cases, they may even have to front service enabling technology to make the relationship work (or in Apple’s case, prevent it from failing).

It probably seems unfair that Apple may soon get to the point where it has to invest its own resources in the development of AT&T service capabilities, perhaps even going so far as to own a part of the network

But fairness doesn’t matter when you’re talking about the detrimental impact to the brand that stands on its flagship product that right now is dangerously close to falling far short of its ability to deliver on its substantial promise.

Hohm Improvement.

I’m trying hard to use Microsoft Hohm, but someone is making it difficult.

Hohm is a home energy management service with a lot of potential to help people understand more about their energy use through measurement & analysis and change
their behavior to save money & be a better steward of natural resources.

What makes it “work” is data – specifically a periodic intake of the electricity & natural gas usage information from your home.

The theory goes that Microsoft connects with your local gas & energy supplier, who feeds monthly usage data to the service, and the analysis begins.

The problem is, neither my energy nor my gas provider is linked. When I first signed up for an account, I got a message that Hohm was connecting with new providers by the day. All I had to do was wait and mine would surely get onboard. Half a year later, they’re still not connected, and wanting to see how the service works and realize its benefits, I’ve started inputting my own bill information, manually.

I emailed each of Hohm, KCP&L (my power company) and Atmos Energy (natural gas) to see whether they were working on a linkage that would enable the service to work for me. I received only one response, from KCP&L, stating that they were evaluating a linkage, but had no commitment planned. They pointed me to some helpful energy-saving tips on their website.

There’s plenty of blame to share on this one. (Even ingnoring the fact that hat two of the three inexcusably declined to answer me at all.)

Of course, there is no incentive for my natural gas and power companies to link to a service that allows customers to analyze reduce their energy usage – it represents customers tracking their usage and making better decisions - essentially money out of their pocket. I don’t know which is worse – that the regionally monopolistic utilities so blatantly ignore the desires of their customers or that Hohm didn't have the foresight to see that the main value their new service provides required input of outside parties and working with them ahead of launch to gain their support.

I’m guessing I’m a lead user of Hohm – at least in my market. Microsoft should know that lead users of services aren’t typically as forgiving as they are for software products, where they’ll often tolerate, point out and even help fix problems. With a service, if the process doesn’t work and the customer has no way to fix it, there can’t be a successful encounter. If the failure looks unfixable – as it does in this case with the providers unwilling to connect – the customer will likely abandon it entirely, rather than live with something substandard while they “work out the bugs”.

If your service depends on an intermediary or a 3rd party for fulfillment, make sure that it offers more than a reduction in revenue for them, and if you haven’t fully worked out connectivity processes, don’t launch beyond where you have.

“Internal Revenue” I get, but “Service”?

I made a call to the IRS Friday, having received one of those, “we believe you made an mistake, here is an amount of money owe us, + interest” letters.

My service expectations were low – somewhere along the lines of the 7th level of IVR hell, followed by someone who either couldn’t or wouldn’t respond to my question.

I was pleasantly surprised when my call was answered, by a human, after about 45 seconds, which unscientifically put the IRS in the top 5% for shortest customer service call wait times on this past month.

The answering agent took a minimum of information & quickly found find my case. (Their customer indicator is this handy 7-digit “social security” number. Based on the ease of use, I’m thinking others may begin to adopt this as a standard record locator.)

We exchanged some information, and having identified the source of the confusion, the agent stated, “If that is the case, you don’t owe anything at all.” Some direction on next steps ensued – steps that exactly corresponded to the letter I was sent – and she pleasantly sent me on my way after a total of about 5 minutes on the phone, or, about a half hour less than I was expecting.

Views on fairness in what we pay in taxes & what they’re ultimately used for may vary greatly, but in my encounters, I’ve experienced great service levels from the IRS.

Believe me. I paid taxes for years in Canada. As a civil service organization, the Canada Revenue Agency is far less courteous about it they taking a higher percentage of personal income. While I’ve never compared the codes (too geeky, even for me) my perception through years of use are that Canadian forms are longer & less intuitive than the U.S. as well.

There is power in words used as brands or labels. Perhaps their treatment of customers stems from the differences in their names.

“Canada Revenue Agency” provides their exact purpose & intent. They’re an Agency. Whose purpose is getting Revenue. For Canada.

The IRS has no different an objective.

Yet by adding “Service”, they not-too-subtly remind themselves that the organization is far more likely to be successful by being competent, empathetic, and responsive to the people they take money from, and whom they ultimately serve.

The theatre gets a stadium-style seating upgrade.

I went to my local AMC Theatre for a rare mid-week date with my wife. Its been months since we’ve seen a movie, and we were surprised to be treated to a new part of the box office experience when the attendant has us pick assigned seats from a touch-screen theatre layout.

My wife asked whether ticket price changed based on what we picked, and when the attendant replied that it did not, she openly wondered why the theatre would bother installing this expensive-looking technology and changing the service. AMC claimed it as improvement to the experience, but I think my spouse correctly sensed a coming change, with movement to a pricing method that varies ticket prices by theatre section.

Truthfully, I’d be alright with it, and I’m surprised theatres haven’t made this change some time ago.

The theatre is improving their service process for their own benefit - extracting consumer surplus from the seats they believe people will be willing to pay more for. Sports & concert venues long succeeded in segmenting their audience by willingness to pay for various levels of seating. (Though scalpers do better at understanding & extracting consumer surplus. I’m waiting for the day when the venues "in-source" the scalper business model to gain even more revenue from scarce commodity seats.)

It’s well accepted that mid-theatre seats, centered on the rail seats are the best in the house, while the front row, side angle seats are the worst. Personally, I’d be willing to pay a buck or two more to sit in an area where I won’t have to call a chiropractor the next day.

Will it dissatisfy some? Of course. A majority of customers will be paying more for the same level of service as they received before the change. It may even offend the egalitarian sensibilities of those who prefer the model that rewards personal time investment with the best seats in the house.

But it is fair. Based on what a customer is willing to pay, AMC undercharges for some seats and overcharges for others. Changing the pricing of the seats to gain that revenue isn’t draconian, its good business.

Now, when I start seeing scalpers outside movie theatres, I may reconsider...