The Psychotic State Intermediaries And The Limits of Organizational Competence I think that I am more of a curmudgeon than a luddite. The two are easily confused sometimes, certainly in someone as grumpy and outspoken as I. Deep down I am not averse to doing things in new ways. I go psychotic only when the novelty wears off, when I realize that the "improvement" has actually made our lives worse. This time I will discourse on some of my recent insights into buying online. When I was a kid, there was a pretty simple way to go to the movies. You went to the theater, you stood on line to buy your ticket, and then you went to see the flick. The line might take moments, or it might take a half an hour. Movies didn't sell out too often, because that would entail lots of people waiting on huge lines, something that they rarely wanted to do. You could generally find a show to go to on a weekend night. Back then the world was a great place for someone like me, a person chronically unable to make a plan, even a few hours in advance. Nowadays things are different. In principle the tried-and-true method will work - they still sell tickets at the theater. But try going around the corner to the Angelica some Friday evening a half-hour before the show. Bloodly little chance of getting in - the tickets will long be gone. What has changed is that now we have a new "convenience": 777-FILM. For a mere $1.50 a ticket we can get our tickets by phone. What has set in is a sort of entertainment arms race, in which everyone starts buying their tickets hours before they intend to to go out. Now, tickets for an even moderately popular show will be gone an hour and a half before showtime, and most everyone who is going has paid $11 (!) for the privilege of seeing it. I suppose this is great for the theaters, but you can imagine that I have a certain nostalgia for the way things used to be. I think of 777-FILM as a wonderful example of a process that is also happening on the web, but is largely unnoticed. I call it re-intermediation. You hear lots of talk about how the web is going to cause dis-intermediation, allowing the buyer to find the seller with no middlemen. There is no doubt some of this going on, but in fact most of the big web success stories are quite the opposite. Viz: *) Amazon.com is not a publisher. The companies it competes with are Barnes and Noble and Borders, not Prentice Hall or Random House - nor even Ingram, who distributes books from the publishers to retail stores. Notable is the absence of the publishers themselves cutting out the retailers altogether, or even of Ingram trying to go retail. *) A large number of the auctions on Ebay.com are actually run by mom-and-pop stores. Ebay, collecting its 5%, is another intermediary in getting the goods to the buyer. *) Drugstore.com is not run by a drug manufacturer. *) You still can't trade stocks on the NYSE or NASDAQ sites, cutting out the brokers. Yes, it's true that the intermediaries are _different_ from the ones we used to deal with (eg. Amazon.com instead of a bookstore on your corner), but we still deal with a retailer and not the publisher. Thus: re-intermediation. One thing that distinguishes cyberspace from the real world is that there seems to be less room for multiple similar intermediaries online. There are, within 10 blocks of my apartment, at least 4 bookstores I can think of. Barnesandnoble.com is learning how hard it is to be the second online intermediary in a category. Now for the psychotic part: I am going to extrapolate. I imagine a future in which the online world is dominated by a few large players in each domain. We will all buy our books online from Amazon, our cars from autobytel, etc. Offline there may be lots of retailers, but it won't be easy to compete with whomever owns your category online. Like the 777-FILM "improvement" with which I started the essay, I imagine that this way of doing business will have its significant downside. Buying online will mean that we will have to deal more and more of the time with a large organization to make our purchases, rather than the simple - and personal - way we made transactions at our local retailers. This month I had a huge insight about the limitations of dealing with a bureaucracy. I made a purchase (on ebay, from an individual) who shipped it to me via UPS. That part went fine. UPS made the first delivery on a Friday. The next day, Saturday, I called them up to find out if I could come to the warehouse to pick up the box. No dice: cleverly, the warehouse is only open for pickup on weekdays from 10 to 6. UPS makes only three attempts to deliver a package. After that, you have five days to pick it up at the warehouse (which, in my case, is way out by Kennedy Airport). So that Saturday morning I told the UPS dispatcher: "If I'm not here on Monday when the package is delivered, do not make another attempt on Tuesday." The operator informed me that if I held it for pickup, I could call in and reschedule the third, and final, delivery attempt. On Monday I worked at home, to be sure that I'd be there to sign for the box. I was perplexed to see the UPS truck go right past my home, to deliver a box down the block. A conversation with the driver indicated that there was indeed no package in his truck for me. Perplexed, I called UPS's 800 number to find out the my instructions not to deliver on Tuesday if I missed the Monday delivery had morphed. They now read: hold the package for pick up on Tuesday. I had my great flash as I hung up the phone. It was not that UPS is a boneheaded company - that realization is doubtless true, but it wasn't general enough to deserve an appellation such as "The Theory Of Organizational Incompetence" with which I have styled my insight. (Though what on earth are they thinking when they limit pickup at their warehouse to the same hours during which they make deliveries?) Here it is: Think of the steps UPS has to go through as an algorithm. There are different types of actions UPS takes, just as there are different programming constructs. In Java we have assignment statements; UPS has the DELIVER operation. UPS, as an organization, can handle loops ("attempt to deliver three times", or "hold for five days"), just like the ordinary CPU. What UPS can't execute is an IF instruction. Clearly, my problem was that the algorithm I tried to have them execute had _two_ possible outcomes: "IF I'm not here on Monday, THEN hold it on Tuesday, ELSE deliver it normally." And that was the rub. Had I wanted something simple to happen, such as "Attempt to deliver my box six times rather than three", I bet they could have handled it (though they would doubtless have been unwilling to do so). My mistake was not knowing the limits of their programming language. The Theory Of Organizational Incompetence: you can't modify the algorithm of big organizations to include a step with an IF. Thus, my Psycotic predictions: When you do business online with with large, specialized re-intermediators, plan on having more and more trouble getting what you want. As the number of redundant dotcoms declines, expect to have less and less choice of the organization you get to deal with. Just be glad that buying movie tickets, even online, is simple.