New York's Taxis and the Power of the Nudge

An NY Times article illustrates the large effects that can accumulate from small nudges that influence behavior:

[T]he back-of-the-cab swipe has emerged as an unlikely savior for New York’s taxi industry, even as other cities’ fleets struggle to find fares in a deep recession.

Overall ridership and revenue have increased. More and more fares are being paid with credit cards, even for shorter rides. And tips for drivers, usually an early casualty of tough times, are up sharply, double over the pre-plastic days.

…

The increase in tips, however, may have less to do with New Yorkers’ generosity than with the preset amounts suggested to passengers on the taxi’s software systems. In many of the city’s cabs, riders are offered options for their tip depending on the length of the ride. For fares under $15, a screen prompts tips of $2, $3 or $4; the numbers can range from 15 percent to 30 percent for higher fares. The presets are used about 70 percent of the time, according to industry estimates.

This perfectly illustrates the notion of giving people “nudges” - little hints about how to behave - and how influential this can be, even when it’s quite transparent as in this case.

The key was making the credit card experience much easier than the usual pain-in-the-neck that it is in other US cities, where the driver reluctantly drags out an old-school mechanical swipe reader, or rubs your card with a pen on a carbon paper receipt.

Although New York was late to bring credit cards to cabs, it leapfrogged ahead by pioneering a customer-friendly system that required no signed receipts, no minimum payment and an interactive device that let passengers swipe the card and add tips themselves.

This has opened up credit card use for short trips. Like Las Vegas’ use of chips, the detachment from physical cash “lubricates”, shall we say, people’s willingness to part with their money.

Once considered a convenient payment method for longer trips, often to the area’s airports, credit cards are now being used for shorter, cheaper rides, the type of $5 rainy-day indulgences that were once handled exclusively with cash.

Amos Tamam, president of VeriFone Transportation Systems, whose card readers are in 6,700 cabs, or about half of the city’s fleet, said his company’s average credit-card fare is now less than $15, down from $16 a year ago.

“The more usage you get with credit cards, the lower the average ticket is going to go,” Mr. Tamam said.

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frog project in NY Times

The New York Times has a nice write-up on a recent frog project: a point-of-sale device for Intel. This thing pushes the idea of a cash register or self-help kiosk off a cliff and is both very interesting and very beautiful. It brings the breadth and depth of information that we take for granted when researching purchase decisions online into the store environment. The article doesn’t go into it much, but this design (though still a concept) is more eco-friendly than conventional cash registers. We did quite a bit of analysis of the eco footprint of conventional devices and worked on the critical areas.

Friedman: The Inflection is Near

In his column today, Thomas Friedman asks much the same question that I did a month ago: can we have an economy without the patterns of spending based off cheap labor and false credit, and which pillages the earth’s resources unthinkingly?

Let’s today step out of the normal boundaries of analysis of our economic crisis and ask a radical question: What if the crisis of 2008 represents something much more fundamental than a deep recession? What if it’s telling us that the whole growth model we created over the last 50 years is simply unsustainable economically and ecologically and that 2008 was when we hit the wall — when Mother Nature and the market both said: “No more.”

We have created a system for growth that depended on our building more and more stores to sell more and more stuff made in more and more factories in China, powered by more and more coal that would cause more and more climate change but earn China more and more dollars to buy more and more U.S. T-bills so America would have more and more money to build more and more stores and sell more and more stuff that would employ more and more Chinese …

We can’t do this anymore.

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Here's an Idea: Let's Make Our Products Worse

How’s this for a strategy: when faced with declining customer base and disruptive competition, make your product worse.

That seems to have been the thinking at the San Francisco Chronicle newspaper for the last few years. Faced with disruptive threats that have hammered its subscription rates (people reading online, getting news from other sources) and classified ads revenue (Craigs list), they have gradually made the paper worse and worse. It is now at its slimmest and lightest (in every sense of the word) that I’ve ever seen it, and I used to deliver it in high school 20+ years ago. (For some reason I still remember the headline announcing when the Dow broke 2,000…)

In the last week they rolled out a new design of the paper which brightens it up and makes it more organized in some ways. But it unfortunately looks more like a small-town paper now, too. Why can’t San Francisco, one of the most influential cities in the country (especially now with the Democratic leadership) have a paper that matches its clout and innovative spirit in other areas? Considering that the Chronicle is smack in the middle of Silicon Valley and Web 2.0, their website comes across like a portal from 1999 that’s trying to be everything to everyone.

In terms of the physical paper, they have been consolidating and trimming sections. These are transparently more about penny pinching than improving the quality of the reader experience. The most ridiculous example is putting the Business section on the back of another section, so that it reads backwards. Since most stories split onto a page inside the section, this makes you go through a counter-intuitive process to find it.

The aesthetic and organizational changes are one thing, but they don’t get to the heart of the problem: the reporting and writing. With a few exceptions they are just not that great. I’ve never seen the Chronicle make a serious effort to, across the board, improve the quality of these core elements of the newspaper. There is almost zero investigative reporting, and the writing is generally not very engaging. A lot of use is made of AP feeds and articles from other papers. I mostly read the NY Times online because it is just much more interesting and enjoyable to read.

Look, these are tough times for newspapers, no doubt about it. Big operations like the Times have much more resources to invent new things. But since when in the Bay Area is being small and under-resourced seen as bad? It’s practically a badge of honor and means that you do interesting things in smart, nimble ways. The Huffington Post is the most innovative online news site, and they are tiny.

When faced with competitive disruption, do you keep digging the path you’ve been going on, or take a step back and re-assess what business you’re really in? The music companies finally seem to be coming around to this; instead of using concerts to promote albums (seeing albums as the main revenue source) they are now using singles to promote concerts (don’t rely on revenue from mp3s, but make revenue up through multiple other sources).

Newspapers need to do the same kind of rethinking.

Visualization of History of Olympic Medals

The New York Times comes out with another great interactive graphic, this time it’s a visual history of the number of medals won by each country at the summer olympics, dating back to 1896. Using a rough layout of a map of the world, the size of each circle represents the total number of medals. Hover over a circle and it pops up the specific number of golds, silvers and bronzes. Drag the timeline slider at the top and you can dynamically see how they change over time.

You can see, for example, the rising dominance of the Soviet Union and East Germany culminating in massive wins in 1980, aided no doubt by the USA’s boycotting of those games. Then China appears out of nowhere at the 1984 Los Angeles games, culminating in its 100 medals (including 51 golds) this year as host.

Actually until I saw this graphic I hadn’t realized Britain, my birth country, had done so well. At 47 medals that’s pretty darn good for a country with twenty times smaller population than China.

View graphic