• How barriers in your IT service are discouraging your users' engagement

    Picture of a street in a southern country, rounded up by several trees

    Today I would like to kick-off on a slightly scholarly note by introducing the concept of transaction costs. The theory was first developed by R.H. Coase in his 1937 paper The Nature of the Firm and further elaborated by O.E. Williamson in The Economics of Organization: The Transaction Cost Approach. Both ended up winning the Nobel Prize in Economics for their contributions in analysing and describing the cost of participating in a market. I would like to apply this concept to using software and discuss some of the transaction costs that may prevent a person from using an IT system. When defining the concept, the economists were focussed on analysing transaction costs such as taxes or price controls. If you consider that economic behaviour is, at its core, the constant decision making of the actors in an economic system guided by the scarcity of certain resources (e.g. food, money, time, attention) and the corresponding incentives of controlling a chunk of said resources (e.g. financial gain, increase in autonomy, less pain), this concept can easily be applied to users of software. Anything that hinders or inconveniences the use of an IT service shall be considered a transaction cost for this exercise.