[… and one of those examples is not using transactive technology to automate individual responses to energy-related variables like price or % renewable! Read on …]
Digital technologies do more than reduce transaction costs. They open up new activities, new behaviors that were not imaginable before but are now valuable and contribute to individual flourishing. Here are three examples that do indeed reduce transaction costs, but do much more as well. They change our opportunity set, and enable us to be creative in experimenting with new ways to live better.
Healthier, less invasively and less expensively: From Mark Perry and his invaluable Carpe Diem blog comes this note about a sand grain-sized sensor that can be embedded in a pill, ingested, and used to communicate internal health condition information to the person’s phone, for use by that person, caregivers, and clinicians. In addition to the “how cool is that?” factor, I am (of course) intrigued by the device’s ability to use stomach acid for power. Battery engineers, take note! Note also the discussion in the comments about colonoscopy risks and costs, and how technologies like this can reduce those.
Can’t afford a PA? How about a PA app? Technology Review compiles a list of phone apps that can turn your smartphone into a personal assistant. Out of them all, Donna’s the one that caught my eye:
Kevin Cheng, a former project manager at Twitter and cofounder of the stealth personal-assistant software Donna, is attempting to do something similar. Though he won’t get into many specifics about what Donna’s capabilities will be at launch, he says she (yes, he refers to the software as “she”) will help you stay organized and punctual by, for example, letting you know when you should leave to get to a meeting on time—a judgment made by analyzing traffic conditions, weather, and public transportation schedules. He expects Donna to be available this fall.
Note also that “[o]ne startup, Happiness Engines, lets users choose among five different robots (options include Robbie, who will “couch every message in an infectious can-do attitude,” and Haley, who is “quick, witty, and with a touch of friendly sarcasm”).” For you Hitchiker’s Guide fans out there, doesn’t Robbie remind you of the computer? What about a Marvin PA?
Your phone can wait in line for you. This Wired article describes an app that gets rid of those hockey-puck pagers at restaurants when you are waiting for a table.
Here’s how it works: You walk into a restaurant and ask for a table. The host gets your name and phone number, enters the information into NoWait’s app on an iPad (or any iOS device), and then sends a text message with an approximate wait time. If you have a smartphone, you are also sent a link that shows you how many parties are in front of you. You’re then free to go do whatever you want in the time NoWait has granted you. You’re confident that a table awaits, and that the pushy family of four hovering nearby won’t weasel their way to the front of the queue.
On the face of it, it doesn’t look like that valuable an innovation, right? Not a big deal, not likely to have a big impact. Guess again.
In return, the restaurant now has a directory of phone numbers and names to which they can send special offers, such as “show this message to your server for half off our nachos.” Hosts also have the ability to do more than signal someone that their table is ready. The NoWait system allows for a conversation — it could be about table selection or unforeseen delays. Customers can even send cancellation notices, so the restaurant isn’t left hanging when they decide they want Japanese food after all. The system also records average wait times, and the number of customers that come back to eat versus those that walk out. Best of all, the restaurant doesn’t have to worry about lost, expensive pagers.
The downside? If there is any for the restaurants, it’s that you might not stick around to drink at the bar. Still, the restaurants that have signed up for NoWait, including selected Red Robin and TGI Friday’s and locally owned establishments in 45 states, apparently aren’t concerned about that.
This innovation illustrates precisely the effect I highlighted above: sure, the technology reduces the transaction cost between producer and consumer and takes some rough edges off of the challenging situation of prioritizing the wait for a scarce resource (i.e., a table at a popular restaurant at a popular time). But it also opens up all sorts of different ways for producer and consumer to interact to create value/mutual benefit. It generates data for the producer that the producer can use to customize and tailor their offerings to different consumers with different characteristics, and it also generates data (such as average wait times) that the producer can use to optimize operations and make strategic decisions about expansion, pricing, and so on.
It’s these seemingly simple technologies that can have the most transformative effects.
That’s the lesson from these three examples for the electricity industry, and the potential that resides in home energy technologies. Technologies that reduce transaction costs and open up opportunities for producers and consumers to take different activities and change their behavior in unimagined ways can be value creating in ways that belie their simplicity. And consumers are increasingly used to using such technologies in such ways, and welcome them because such technologies can enable them to accomplish more, get more out of life, flourish.
Given these examples and our increasing comfort with and enthusiasm for autonomous coordination using digital technologies, this result from a Consumer Electronics Association 2011 study is striking:
… consumers are concerned about the cost of their energy use, yet lack awareness of emerging energy management systems.
While many consumers turn lights off, shop for energy efficient devices and practice other eco-friendly practices, just 10.2 million of 119 million U.S. households are estimated to have enrolled in electricity management programs. Utility companies, the study found, are in the best position to raise awareness of these programs to boost consumers’ understanding of energy consumption.
Currently, energy management systems allow consumers to control their home air conditioning and heating units through a programmable display. In the future, a smart grid would enable consumers to adjust home cooling and heating systems with a smartphone, run their dishwashers at times of low energy costs, or control home appliances remotely, among other applications.
The CEA thinks that the regulated distribution monopolist is in the best position to overcome this awareness gap among homeowners. But they don’t, and regulatory incentives give them little reason to.
One of the best ways to overcome this awareness gap is retail competition, to enable competing firms to offer a menu of retail contracts with different pricing models over time and over fuel source, and to offer complementary home energy management technologies that they think will appeal to consumers. Consumers shopping among those choices would become aware of ways to manage their electricity use differently, would be able to customize a combination of pricing and technology that enable them to accomplish more, get more out of life, flourish, by automating electricity consumption decisions in their homes.
That’s the technological equivalent of having your PA, Donna, in the house full time, running around and turning appliances and systems off, on, and up/down, without your having to lift a finger. Donna can be your electricity PA.