Old Baggage

I love it when I think of a good business idea and someone has done it already.

I always carry my bags with me on the plane, mostly because I can't stand arriving early to check bags and then waiting after a long flight for my bags to arrive after I do. Besides, the airlines have a terrible reputation for losing bags. Or for sending them the wrong place.

I used to fly from Boston to London and I always was routed through JFK. At JFK, the airline failed every time to get my bag from the plane arriving from Logan to the plane departing to Heathrow. To its credit, the airline always got the bag on the very next flight.

I took advantage of this. When my luggage failed to arrive with me at Heathrow, I got a $100 voucher. I checked into my room, bought $100 of clothes, and submitted my voucher before the airline's London office closed at 1pm on a Saturday. I always flew in on a Saturday so I could catch a show Saturday night and get over jet lag before starting work on Monday. Predictable inconvenience, it turns out, is much more lucrative than unpredictable inconvenience.

My business idea? Why, a luggage service, of course. You would have two sets of luggage or two trunks. One would go to your next destination, the other would go to the destination after that. In between, magically someone would clean all the clothes. It would be possible to travel indefinitely while carrying only a book or an iPod on board to entertain yourself.

Since August 10th last year, when Scotland Yard discovered a plot to blow up trans-Atlantic jets and alerted us to the danger of carrying bottles of aftershave on board, passengers have checked more and more bags. Consequently, the airlines have lost more and more bags. 35 million last year.

If airlines put RFID tags on your luggage, they could track your bags as well as FedEx. Besides the infrastructure costs, RFID tracking would add about $1.00 to the cost of every checked bag. If the market is working efficiently, it probably costs the airlines less than $1.00 per checked bag to compensate passengers for bags that are lost. As with many other insurance type problems, the incentives are backwards for getting airlines to solve the problem. Cheaper to payoff the bag losers than fix the problem.

What can you do? If you check your bags, two things: 1) tag inside & outside, and 2) photograph everything. Luggage handling machines remove luggage tags the same way dry cleaning machines break the buttons on your shirts. These machines should never work that way, but they do. So, put a tag on the inside of your bag in case the machines munch the tag on the outside.

If you own a digital camera, take a picture of everything. Make snaps of your luggage (quick ... can you describe what your luggage looks like?), the luggage tags, and even what's inside your bags. Why? Well, luggage thieves more often take things out of your bag than take your entire bag. They're smart enough to know the value of your underwear. If you have pictures of what was in your bag, you have a better chance of recovering your losses whether you lost your bag or someone took things out of it.

I still like my business idea. The poor man's version is called FedEx. You can have FedEx pick up your bags and deliver them to your hotel. Expensive? What does it cost you in lost time if you carry your own bags and lost money if your luggage ends up somewhere else or gets lost?

An emerging idea is to add other value add services on top of FedEx. If you're feeling a little heavy in the wallet, take a look at services like The Virtual Bellhop and Luggage Concierge. Pricing for these services work like FedEx: overnight delivery is more expensive than 2-day, etc. What I haven't found is the service that cleans in between, but I'm sure these companies would consider providing cleaning for the right payment.

Here's a fun video on emerging technology for baggage handling.

Lean Working Machine

In my recent Internet meanderings, I ran across some intriguing organizational behavior research.

The objective of research in this cluster area is to develop concepts, frameworks, simulation models, tools and techniques that enterprise management can use to design and evolve efficient, adaptive, flexible, agile and reconfigurable enterprises for a new network-centric age (i.e., analogous to a new "enterprise flight simulator" capability). -- Lean Aerospace Initiative, MIT website

Organizations that make or use complex products with long product lifecycles invariably encounter problems of product support as technology progresses by leaps and bounds during the product lifecycle. The most famous examples are high performance defense products like fighter jets. Typical criticism looks something like this:

The Department of Defense, already infamous for spending $640 for a toilet seat, once again finds itself under intense scrutiny, only this time because it couldn't account for more than a trillion dollars in financial transactions, not to mention dozens of tanks, missiles and planes. -- San Francisco Chronicle

While waste is unfortunate, high costs for advanced weapon systems seem unavoidable. When an organization deploys a technically advanced product with low unit volume that requires worldwide support for twenty or thirty years, it is hard to imagine how to keep costs low. Keeping parts available for decades in a distribution system that meets combat requirements costs money. Consider that if any part in a fighter jet or space shuttle becomes unavailable, the manufacturing technology that made the original part may not exist. If any part is not available, the product probably won't work.

In the defense and commercial aircraft industries, two emerging ideas are "product as platform" and "organization as network". As an example of product as platform, consider the 747 jet aircraft, a product that costs $200M-300M. Boeing introduced the 747 in the 1970s, but has built on the product over several generations to meet market needs. Boeing has modified the 747 to carry passengers, cargo, and even the space shuttle. Here's a video that shows the next version of the 747, the 747-8 Intercontinental.



Modularity in everything from seating to entertainment systems allows Boeing to adapt the 747 product as technology evolves without sacrificing investments in airframe, regulatory compliance, and support systems.

Historically, complex products like aircraft were produced by vertically integrated organizations. More and more, though, these vertically integrated organizations have realized that they cannot afford to employ directly all the expertise for all the technology that goes into a complex product. Most have developed networks of suppliers to provide specialized parts like engines, weapons, avionics, and so on. This type of organization has a flexible enterprise architecture.

These organizational changes enhance the ability of long lifecycle products to incorporate new technologies, but introduce a new set of risks. First, suppliers may not provide parts as specified or on schedule. This can create significant financial strain on organization (usually a prime contractor or the product manfacturer) when it fails to meet delivery specs or dates.

Downstream risks are related primarily to product support. Suppliers need to meet requirements for parts stocking and logistics to support the product in the field. The primary organization must manage for the risk that suppliers may be acquired or shut down during the product lifecycle.

Researchers have suggested modeling these relationships as derivatives options. This diagram shows just how complicated these relationships become during a product lifecycle.


Besides managing risk, one of the other large hurdles in the flexible enterprise archtecture is cross-company IT (Information Technology) integration. A famous example of improperly managed cross-organizational IT risk occurred during construction of the Mars Climate Orbiter.

NASA lost a $125 million Mars orbiter because a Lockheed Martin engineering team used English units of measurement while the agency's team used the more conventional metric system for a key spacecraft operation, according to a review finding released Thursday. -- CNN

Cross-organizational IT risk applies not only to design, but manufacturing, logistics, pricing, and support. Again, large organizations building complex products with multi-decade lifecycles require innovative IT solutions to mitigate risks.

Successful introduction of new technology into the market has more and more to do with the capacity of people to provide efficient means to distribute that technology. For instance, Lumexis is a start-up that wants to replace airplane entertainment systems that use copper wires to distribute entertainment to the seat with an entertainment system that uses fiber optic distribution. Switching from copper wires to fiber optics reduces airplane weight so much that airlines would save $250k - $500k per year per plane in fuel costs. Such superior economic performance suggests that the slow adoption of Lumexis' fuel-saving technology is a human adoption problem rather than a technology or economics problem.

"Product as platforms" and "organization as network" are two principles that may help emerging technology, such as that from Lumexis, gain market share more efficiently.

Cleaning The Pipes

I have a friend who owns a 100 year old house in San Francisco. As with many other 100 year old homes in San Francisco, the sewer line at my friend's house started to have problems. In this case, heavy rains caused my friend's sewer line to pool water and create a waterfall in his neighbor's garage.

The plumber who fixed the sewer performed a trenchless repair. This is like having a "sewerplasty" for your home.

In a trenchless sewer repair, the plumber first sends a camera through the sewer pipe to find breaks in the line and determine the line geometry. After fixing broken pipe and clearing out debris, the plumber coats the inside of the old pipe with a new plastic layer. Different trenchless technologies coat the pipes in different ways, but generally they put a bladder in the sewer line to mold some combination of epoxy and fiberglass to the form of the existing pipes.

Trenchless sewer repair requires much less digging than traditional sewer repair. Not surprisingly, it costs 30% - 50% as much as traditional repairs.

Here's a news piece (or promotional video, if you will) about trenchless sewer repair.



I spoke to the plumber who performed the repair for my friend. The plumber told me two interesting things. First, the plumber had tried one trenchless technology and rarely had a successful repair. Later he switched to the trenchless technology that he was using on my friend's house.

Second, the plumber said that he was waiting a couple days to get an inspector who had seen a trenchless repair. He complained that inspectors who had not seen a trenchless repair often had more questions or brought up irrelevant concerns.

Both these points seemed to me like artifacts of the fragmented market that home repair is. They also demonstrate how difficult it is to introduce a new technology into a mature market, even if it saves substantial time and money.

If you look up trenchless technology on the Internet, you'll find that it has many applications beyond home sewer repair. As an emerging technology, trenchless pipe laying and pipe repair could replace traditional pipe installation and pipe repair methods. For instance, it seems possible to make a device whose head has a bore, a camera, and a wireless navigation system, and whose tail has a trenchless pipe system. It could lay pipes in municipalities without digging up streets, sidewalks, and backyards.

If it could be made, what would retard the adoption of this magic urban piping technology? To start with, both things mentioned by the plumber: device certification (which the plumber performed de facto), and education of the regulators. Beyond that, though, labor unions and other entrenched interested, so to speak, would work to maintain the status quo.

An emerging idea is that mature markets need outside stimuli to foster change. Free market theories claim that a market will adjust by itself. At a practical level, the plumber pointed out two reasons why valuable new technologies may flounder in a mature market even when they provide significant economic benefit. The Internet, a free market in constant flux, may provide some clues about how to de-mature a market, or how to introduce free market operations back into sclerotic mature market.