How Smart Are We?

Talk about trouble with alignment. A Sept. 1 story in Business 2.0 describes retail giant Target’s big miss on deploying credit cards with smart chips to its customers. Target began the phase-out of its less-than-one-year-old system in March, replacing smart cards with ordinary magnetic strip credit cards as customers’ cards need renewing. Although the story describes some real failures of business planning—such as relying on untested assumptions and having executives coming to meetings even after the card’s debut saying, “What’s the business case?”—it could be a glass of cold water in the face of any systemic innovation you may have in mind, particularly if it involves something “smart,” or chipped.

It’s a cautionary tale for sure, with reports of Target spending two years and $40 million on development and implementation, only to fall back to the old dumb cards in the end. According to Catuity, the software company Target hired for the project, there were great functions developed for the card that were never “switched on.” Business 2.0 says Target got as much value from its smart cards as one gets from a Ferrari in a traffic jam. The story offers three reasons the project failed: The cost of operation was too expensive for the returns, it was too complicated for end-users and it offered too few rewards for end-users to bother. Keep these lessons in mind when defending your next project! And if you’re looking into smart cards, as CIO’s Chris Lindquist noted in a Tech Tact column last year, they are going to struggle to take hold in the United States until fraud prompts a move to the greater security they offer.