The Slow Decline of Companies

In Seth Godin's latest blog he mentions how company's almost always melt, they rarely explode. It is almost always the short-term thinking of today that causes the crisis of tomorrow. 

Rarely in the moment, when business is down and your customers are no longer engaged can a corporation look back and find the reason. That's because it's multiple little reasons that were made in years past for short-term gains that lost the customers trust. 

Trust in a personal relationship is hard to regain, but trust in a consumer to business relationship is almost impossible to regain. 

How the U.S. Airline Industry Found Its Edge or Demise?

So what happened? The turnaround can’t be attributed to a bold, Da Vinci-esque initiative such as new carbon fiber aircraft, the pioneering of new markets or even low-cost innovation. Rather, it was the result of something far more modest: the slicing of airlines’ base offerings into customizable “options and extras.” The most famous of these options was checked-bag fees, but most of the recent innovations have focused on “upselling” passengers into an improved experience (e.g., selling fast-track boarding, lounge-access, extra leg room and others).  

This is one of the most interesting articles I have read from Harvard Business Review.  For one, I can't disagree more with the premise.  The premise of the article is that charging fees is a good thing for businesses.  Like many businesses in the "what have you done for me lately" quarterly earnings craze, the airlines have gone with the strategy of making bad profit.  

What's bad profit do you ask?  It's profit that erodes the long term profitability of the business.  Not all profit is created equal.  The airlines have sacrificed customer satisfaction and loyalty for short term profit.  The article argues it saved the industry and these are innovative.  I argue there is nothing innovative about this strategy.  It is lazy. 

As part of this shift, airlines realized that some people didn’t need everything that was included in the sale of a standard ticket; this opened the door to unbundling the “one size fits all” offer — and led to the introduction of fees for checked bags. Many business travelers never check a bag but historically subsidized the substantial cost for leisure travelers who did. Today, those who need the option pay for it. Many passengers grumbled, but the impact has been undeniably positive for the industry. Last year bag fees alone generated $3.6 billion in revenue in the U.S. Imagine where the industry would be without this?

What?  Unbundling?  They didn't unbundle, they added on fees.  If they were truly unbundling, that business traveler referenced above would start paying less for their ticket.  Instead, they kept prices the same or even raised them and tacked on these fees.  I can't comprehend this thought process. 

What really has saved the airline business?  From the outside looking in it seems they have become smarter about their routes.  They have cancelled many unnecessary flights, because most flights I go on are completely full.  That wasn't the case before, and it's not because the customers are excited about paying for baggage fees. 

The airlines seem to have become better at yielding their prices.  I don't know if it was a big practice in the past, but the airlines seem to be much more strategic about their pricing model.   

Articles like these make me wonder what we are learning about customer service.  These strategies allow for an upstart competitor to come in and take major share, think Southwest.  Southwest is growing faster than ever and that is because they don't nickel and dime their customers.  Maybe the other airlines should find their "true innovation". 

Creating Baselines

On Monday Apple introduced a brand new iOS, version 7. While it didn't change the basics of the operating system, it created a new starting point. I call this a baseline. The point in which things will be measured against. The standard if you will.

Baselines are very important to measure your business. I always want to come in to an organization, create a new baseline and innovate from that point. Once innovation has slowed and opportunities start to become scarce, a new baseline must be formed to build the next great iterations. Without the foundation, a house cannot be made.

Apple has created their new foundation on which to build upon. Some don't like it, some love it. In time it will be like second nature and we won't be able to remember when the interface wasn't like this. All companies eventually have to create new baselines, even ones as insanely successful as Apple. This should be embraced, because it takes courage to throw away and start new. The alternative is to slowly fade into mediocrity.

The Power of Subtraction →

This is something I try to subscribe to everyday.  While I don't necessarily agree with all 5 of his subtractions, I do believe that maniacal focus is what it takes to be the best at what you do.  To focus, one needs to subtract all of the noise that consumes businesses.  ​

Customer Experience Should Be Part of Your Business →

Appoint a chief customer officer

Over the past six years, we've seen an increase in the number of companies that have a single executive leading customer experience efforts across channels and business units. Whether firms call them a chief customer officer or give them some other label, these leaders sit at high levels of power in organizations...

There it is again, that title of Chief Customer Officer.  ​It makes a lot of sense.