Tag Archives: Reality checks

February 24, 2015 · 9:27 am

Self Delusion

An article caught my eye the other day. Big headline – Consumers Actually Like Airline Fees, Analyst Contends. You can imagine my skepticism but you also know I’m a staunch advocate for keeping an open mind until we learn all the facts.  Turns out my instincts were pretty good but let’s see what you think.

Stewardess, circa 1949-50, American Overseas, ...

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An analyst from Wolfe Research named Hunter Keay wrote a report called Every Time a New Fee is Announced, a Fairy is Born.  In it he states the following:

Inconvenient truth: customers like fees. Maybe that sentence would be better received if we had said “customers like paying only for what they use.” Well, guess what…that’s the same thing.

He goes on to chide the airlines for not being more like Spirit Air (on whose planes you couldn’t pay me to fly) which charges relatively low base fares and then proceeds to layer on fee after fee.  Mr. Keay believes it’s a huge missed opportunity for airlines to improve their bottom lines.  As one report about this notion said

There is certainly some logic to the idea of saving consumers money on base airfares by stripping away everything but the seat you are required to sit in (though some carriers have discussed making passengers stand), but the problem with this a la carte approach is that the fees rarely match the savings.

In other words, we have yet another example of someone advising businesses to focus solely on their bottom lines rather than on their customers.  I think we’re all aware that fuel prices have dropped.  Anyone heard about an airline revoking the “fuel surcharges” they put in place when prices were sky high?  That’s because they haven’t.  Imagine how you’ll feel when you’re charged a fee to offset the costs of the pilot and flight attendants, much as a restaurant might charge a fee to help cover the costs of service.  Of course in the latter case the need to tip usually goes away.  You won’t see lower fares.

I hope some airline follows this analyst’s advice so we can see how well it works (or doesn’t).  His shining star – Spirit – is consistently rated as the worst US airline and is one of only two airlines flying in the US – Cubana being the other – with a two-star rating.  Profits over people has turned this analyst self delusional.  Customers don’t like fees.  They like excellent service at a reasonable price.  Value, in other words.

That’s my take.  Yours?

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February 17, 2015 · 1:17 pm

Generation Whatever

I’m going to sound like a cranky old guy today which may or may not be an apt description of how I’m feeling. Please don’t confuse the tone with the message. I have been thinking for quite a while about this and I guess it’s time to get it off my chest.

I’m sad for an entire group of young people. Without painting with too broad a brush stroke, there seems to be an entire generation of youngsters I’ve been encountering more and more often that I’ve come to call “Generation Whatever.” Let’s call them “GenW” for short. I’d characterize them as “along for the ride.” They do the work that’s asked of them and not much more. They seem way more interested in what’s happening on their phones than what’s going on in front of them. They’re generally not particularly proactive. This has nothing to do with their smarts – many of the GenW’s I’ve encountered are well-educated and pretty intelligent. No, this has to do with attitude.

One of the things about which I’m proud is that I’m a damn good teacher – references available on request.  Over the years I’ve developed a lot of very fine executives and inherent in each of them was a willingness to learn and a desire to improve.  Lately it seems that when I start down the development path with a number of GenW’s I get their stock answer as we discuss where things can get better.

You realize that inputting data that way will make it difficult to search and compile information later? Whatever.

You used a spell-check but didn’t read it yourself so this newsletter copy uses a homophone of the correct word. Whatever.

I’m not talking about slackers here.  They’re generally not goofing off.  They just don’t seem to have any sort of professional attitude.  Perhaps for many of them it’s just their day job – what they do to earn the money that allows them to pursue what they love.  Maybe they were indulged as children and never made to take responsibility.  Maybe I’m just too damn old but I don’t think so.  I’ve discussed my thinking with other professionals 20 years younger than I am and they share the feeling.

Maybe it comes from a world in which version 1.0 of anything is usually riddled with errors and gets continual updating (How do we test software?  We release it!).  Maybe much of the business world has fallen to lower standards so they don’t feel so out of touch.  Maybe they are really perfectionists who are trying to protect themselves from embarrassment, criticism, anger and the withdrawal of love or approval.  I’m not sure and I’m not sure I care.  All is know is that it doesn’t bode particularly well for any of us in business.

Am I off base here?  And PLEASE – any comments of “whatever” are really not appreciated!

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February 4, 2015 · 11:33 am

It’s Not A Business

Every once is a while someone tells me that they have a great idea for a business. Usually it involves a solution to some problem they’ve been experiencing or maybe it’s a better way to do something. Most of the time what they’ve come up with is, in fact, a pretty good idea. That doesn’t make it a business.

BusinessModel

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Part of what I do with my clients is work on their business models. In some cases we’ve turned their existing model on its head because the way they’ve addressed the problem makes no sense as a business even if the solution is viable. In other cases we’ve had to change the solution itself to make it appealing to investors or, more importantly, to consumers. The important thing is to solve the problem but to do so in a way that assures a return on the time and resources needed to do so.  A business!

What questions do we ask? First, we identify the core problem we’re solving and figure out if there are, in fact, enough people experiencing the same pain that the business isn’t a one-hit wonder. We figure out how much it will cost to produce the solution and then how much the market will pay for the solution. This gets tricky because inevitably the founders think their product is worth a lot more than the marketplace does.

We figure out if the business is seasonal. We look into the universality of its appeal across geography.  We discuss other dependencies – is it tied to weather or some other factor that is completely out of our control.  Did you ever notice how many people who plow your driveway also are in the landscaping business?  That’s eliminating the seasonality to an extent.

When I was figuring out what to do with my life after leaving the corporate world I had a series of honest discussions with myself about a few ideas I had.  I came to the conclusion that most were not “A+” business ideas even though every one of them addressed a need and were a good idea.  Not every good idea is a business, and not every business is based on a great idea.  We don’t need to invent the mousetrap; we just need to make it better and more profitable.  That takes time, common sense, and maybe even some help (hint hint).  You in?

 

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