Article

The tipping point

Over time, when conditions are correct, changes can multiply in viral fashion until they achieve a sort of snowball effect-a "tipping point."  KOA Executive Director Greg Swistak examines the kiosk industry's "tipping point."

July 8, 2004 by

During my last visit to Louisville, Ky., I had the opportunity to speak with Bob Fincher, the executive vice-president of sales at NetWorld Alliance and the driving force behind the direct reports the company is publishing in a variety of vertical markets. We were reviewing a story that had the words "tipping point" in the headline, and Bob commented that "you see those words everywhere."

At the risk of sounding uninformed, I confessed that they weren't yet part of my everyday vernacular. Bob said they were the title of a popular business book. It sounded interesting, so on my way home I stopped at an airport bookseller and picked up a copy of "The Tipping Point: How Little Things Can Make a Big Difference," by Malcolm Gladwell.

The concept of the book is pretty straightforward, and I'll do my best to paraphrase it here. It says that when people make even small changes in behavior, they can eventually have a huge effect. Initially, these small changes may be adopted by a small number of people, but over time, when conditions are correct, they can multiply in viral fashion until they achieve a sort of snowball effect-a "tipping point."

When that point is reached, the outcome can be dramatic. Results may be easy to see when tracing small behavioral changes that culminate in, say, a plague epidemic, but what's not so obvious is how those small changes can create business phenomena like the computer revolution or mass adoption of cell phones.

Gladwell cites three principals to make his case that tipping points apply to businesses: the Law of the Few, the Stickiness Factor, and the Power of Context Episodes. He uses a variety of interesting examples to reinforce his theory, including Paul Revere's ride, the creation of the children's TV program Sesame Street, and what happened in NYC after subway shooter Bernie Goetz became a household name.

I personally thought the book was an easy read, albeit a bit long winded with too little meat to digest. I do believe, however, that if you can walk away from a book with one interesting new concept, then the time spent was worthwhile. For me, "The Tipping Point" did have one very interesting nugget, and it applies to the kiosk market.

The author argues that you can only reach a tipping point when all the conditions are right. In the same way a virus can't spread globally unless people travel, the public won't adopt a new technology unless all the conditions necessary for the rapid spread of adoption are met.

Unfortunately, Gladwell doesn't give any tools to assess what conditions are necessary to reach a tipping point or for that matter how to empirically assess if one has already been reached. Having been around this industry for nearly 20 years, I've been through a number of cycles where so-called experts were predicting dramatic growth, and every five years or so the experts went back and with egg on their faces and revised the predictions.

The question I would pose after reading "The Tipping Point" is what was the missing element or elements that prevented us from reaching a tipping point then, and what's different now that will cause rapid adoption.

First, one would have to point to the economy over the past few years as a huge influence on our ability to reach a tipping point. If kiosk deployers do not have the confidence that their investment will have a reasonable return, they are unlikely to commit to a program. Post 9-11, most retailers have significantly reduced capital spending on all but the most essential programs. Kiosks are not an essential item, certainly not in the same vein as having merchandise on the shelves, and many kiosk programs were either cancelled or significantly delayed.

Good news is, budgets for kiosk programs seem to be returning, Wal-Mart, a very conservative retailer by most accounts, recently deployed over 6,000 job application kiosks and is in the process of deploying thousands of additional kiosks in their Connect Centers. Manufacturers that supply products to retailers are spending as well. Henry Products recently deployed hundreds of kiosks to Home Depot Stores with educational information on their waterproofing products.

I would argue that for our business to succeed, users have to prefer to use our products over the alternative. The deciding factors could be the superior service, convenience, or lower costs of kiosks compared to staff or other technology options. As with the rapid adoption of ATMs in the last decade, kiosks are being deployed for all of the above reasons and in many cases are preferred. In airline ticketing, for example, kiosk check-in has become faster by virtue of shorter lines and has helped the airlines to control costs. They have become so successful that in one case, Air New Zealand, is offering its lowest fares only to those using internet booking and ticket retrieval at their kiosks.

Major League Baseball is also deploying kiosks at a number of ball parks. "The kiosk solution is fast and easy for will-call pick-up, and our customers love it," said Jim Alexander of the Pittsburgh Pirates. "We look forward to implementing the advance game-day purchase option, in addition to the other convenience adding technologies the Tickets.com kiosks offer."

Gladwell also talks about something he calls the law of the few: basically, someone has to preach the benefits of use of your product, and that person has to be very influential. One other caveat is that the evangelist needs to be credible. In our case I've been seeing something happening recently that could be our Paul Revere.

As you may have read, McDonalds is in the process of testing pre-order/pre-pay kiosks at some of their restaurants. I have never seen as much interest in a kiosk. The number stories about this deployment far outweigh the scope of the installations to date. It would appear that the notion that you can order your own food, faster and more convenient-and dare I say even receive the correct items?-is extremely attractive to the media. Is it possible that Fox News Service will spread the word of kiosk benefits on our behalf?

Finally, "The Tipping Point" claims there needs to be a Stickiness Factor. In other words, users need to accept the new method as a lifestyle change. Computing magazine called British Airways Employee Self Service (ESS ) program the "Project of the Year." Is there a stickiness factor?

"At the heart of ESS, it is about business change and a self-service culture. It is not technology led; it is business led," says Bill Francis, the day-to-day ESS program manager. "If it's intuitive and easy to use, you find people really start to use it," he said.

I can point to a number of kiosk programs from years ago that were technology driven-in other words, things were done because it was possible, not necessarily because there was a good business model. The programs I spoke about in this story all share two common threads: there is a strong business case, and people want to use them.

Does this mean all the conditions are right for a tipping point? I think we as an industry have achieved a critical mass, and if the economy continues to improve, the next few years will be great for those poised to take advantage.