For many years, the adage was “do you want it right, on-time or cheap, pick two”. And then somewhere in the 80’s and 90’s, perhaps associated with the dot.com era, marginal costs moved close to zero in some industries. Because of this, we began to expect all three. In fact the new adage became “better, faster, cheaper”. And, some believed we had moved to an era where all three were in fact possible.
Or did we?
I wonder if instead, more and more businesses, driven by customer unwillingness to pay for quality, have simply picked two on our behalf, with the two being cheap and fast. We see this happening in B2B, B2C and B2Self (i.e. w/internal corporate customers) three examples:
- Amazon delivers using their own drivers because they are cheap. Amazon made this choice because they believe what we consumers want from them is fast and free delivery and when quality of logistics suffers (packages left in strange places, in the rain, etc.), we are willing to accept that cost.
- Airlines overbook and sometimes have to deny boarding to passengers or in a recent highly profiled United airlines case, remove passengers to accommodate crew. This recent scandal with United brought attention to the consequences of this (and while this particular situation captured on video was awful, we all know it isn’t just United Airlines that overbooks and removes passengers).
- HR support and IT support is outsourced in many, perhaps most?, large corporations. Ask any employee or user of IT which 2 of the three choices they are getting?
In an article entitled “Why Flying in America Keeps Getting More Miserable” Matthew Yglesias of Vox news sums this up well when he says, decades’ worth of evidence suggests we prefer cheap and safe to pleasant. Pleasant, defined as available seats all the time combined with higher prices to cover the costs, is a price we pretty clearly could bear as a society if we chose to, but as consumers we have collectively and repeatedly chosen not to. Instead, wherever competition has reared its head in the industry, the mass market has aimed for low prices above all else, followed by a vigorous culture of collective complaining when something goes wrong.
Where will this take us in the future…
- Will this trend toward faster and cheaper continue to drive most products and services?
- If it does, will there be exceptions where quality is the driver? The obvious exception is medical products and medical care, or is it?
- Will some markets bifurcate such that parallel services will develop where consumers are willing to pay for quality?
What are the implications for your business?