If This Is Leadership, I’m Not Following
What do airlines, banks, newspapers, speakers bureaus, and publishers all have in common? (This is not a joke, but I wish it were.)
They run their businesses horribly and try to atone for it by gouging the customer, vender, or supplier.
Book publishing, with rare exception, has failed to appreciate, much less leverage, the advent of electronic media. So what do conventional publishers do? They demand that authors buy copies of their own books to reduce the cost of the press run. They refuse to promote books actively, demanding that the author do so. They invest money in promotion with authors who don’t need it (Tom Clancy, Danielle Steele) and don’t invest in new and promising works. They hire such young and inexperienced people to save a dollar, that one permissions editor once told me that she wouldn’t approve production until I had written permission submitted for quotes from Oscar Wilde. The question is no longer, “Where did you go to school?” but “Did you go to school and were you awake the entire time?”
Speakers bureaus, traditional “middlemen” dealing with other “middlemen” (meeting planners, trainers, human resource people) have traditionally received about 25 percent of speaking fees from the speaker, supposedly in return for marketing that speaker. Today, many have raised their rates to 30 percent while reducing their marketing and, instead, charging the speaker. Many bureaus now charge to “evaluate” demo videos, place people in prime spots in a catalog, include people in “showcases” (cattle calls), critique promotional material and so on. Excuse me, but aren’t you supposed to be marketing me for my 25 percent fee?
One bureau, the most unethical I’ve ever seen, actually tried to charge me 30 percent when I beat out a speaker they had nominated to speak at Toyota. I was in their catalog, but they promoted someone else, I still got the job, and they wanted a third of my earnings!
Airlines which have been led abominably and can’t seem to come up with effective labor relations, fuel management, intelligent route structures, efficient baggage handling, and so on, now charge customers for: pillows, food, a few inches of leg room, boarding sequence, the attention of a live agent, seat location, changing a reservation, and so on. One considered charging for lavatory use. Why not just fly us all at gunpoint? The “friendly skies” have become a bad neighborhood.
Banks are now charging some customers for deposits, and for simply holding their money. I have seven-figures invested in a bank where I also had some small accounts I had forgotten about. One would have disappeared in a year simply due to the monthly charges! The bank treats me as separate computer numbers, instead of a major, diversified customer. Your “personal banker” today has a hand in your pocket.
Newspapers plaster ads on the front page, often with stickers that obliterate a headline. Try to complain to the Wall Street Journal or New York Times about your subscription. You can’t talk to actual people, but an automated service will “credit you for one day” if your paper wasn’t delivered. Isn’t the point better, more reliable service and not a buck? Newspapers in many cities now charge for obituary notices. When I asked a local editor how he could countenance that, he said, “Oh, Alan, we all do it.” Oh, I guess I had missed that logic.
Why the rant? Because Pogo ought to be in charge here.
Entire industries often suffer from poor leadership, because the same crowd kicks around at the same levels (a guy who ran several airlines, Dick Wolf, including United and USAir, would paint all the planes as soon as the board confirmed him as CEO). The exceptions (Kelleher and Bethune in the airline business) are easy to note because they stand out in dull crowds.
It’s time to stop blaming and squeezing the client, the customer, the supplier, the talent. It’s time to look in the mirror. You might just see a reflection with nothing there.
© Alan Weiss 2011. All rights reserved.
Laurent Duperval
“You might just see a reflection with nothing there.”
Isn’t that what happens with vampires?
L
Richard Brand
All business, and most definitely all public businesses, are in the net profit business, and quite rightly so.
All you are speculating is that perhaps they could increase their net profit in ways that are also more beneficial for the customer.
Roberta Matuson
I wish you could have been with me at the post office in Mashpee, MA where I encountered the shell game with packing tape. The clerk handed me a piece of paper with instructions to “SELL THEM A ROLL OF PACKING TAPE.” He told me that I was lucky that another customer had left some behind that I could use. He then proceeded to play hide and seek with the tape so that the next customer would have to buy a roll of packing tape.
And the post office wonders (or do they) why FedEx UPS are the shipping companies of choice.
Roberta Matuson
Steven B. Levy
While I wouldn’t suggest that the airlines are well run, their unbundling of services does make sense. It’s an expansion of what they’ve done for years, in a practice you’ve gone out of your way to praise in the past. They have always made nicer seats and better meals available for a price, and you’ve written about happily paying that price. They call it First Class.
If I don’t want a pillow or a meal, why should I subsidize those who do? If I want extra legroom, is it worth something to me?
It’s like buying a car. You have a Bentley because you like the luxury (and, I suspect, the statement it makes), and you happily pay considerably more than most cars cost. I have a mini-SUV because I haul stuff between our house and vacation place all the time — dog, golf clubs, luggage, and kids. Others have a Chevy Aveo or Ford Focus because they want cheap personal transportation, or a Smart Car, or a Lexus, or…. Within the universe of those who can afford cars, people make choices based on a combination of cost and desires, a/k/a the standard buyer / seller relationship. We all assume that a car will get us safely and (with cars under, say, 80K miles) reliably from place to place, just as we assume, with perhaps even greater reliance, that our core airfare purchases a safe flight.
By the way, charging for restrooms would have broken the implicit model, since that’s a service everyone is likely to need. There was no one who said, I don’t think I’ll ever want that, so take it off my basic seat charge. People do recognize the model and react strongly when it’s violated. Baggage charges don’t violate it, Southwest’s ads to the contrary. Charging for a restroom would.
Alan Weiss
Come on! What if I choose not to watch the movie, or don’t want a life vest, or don’t need a blanket? You “unbundle” value, not basic services. Airlines don’t believe they are in a relationship business or even the transportation business. They think they’re in the net profit business. Hence, we’re all treated like cattle.
Tim Wilson
Alan,
I’m a firm believer that we make selections of service providers based on the level of service and value they provide. Back when I did a far amount of traveling I was very impressed with Delta Airlines. Even though I was flying coach, my meal was served on fine china. (I know I’m dating myself) When that happened I could only image what was happening in first class. Whenever I would travel I would insist on flying Delta because my initial experience with them when they starting cutting back I suffered from my own self-delusion that it was temporary. Now you couldn’t pay me to fly with them.
I share your belief that the world’s worst managers end up working for the airlines. Every decision they’ve made has resulted in reduced services and an “I don’t care” attitude by management and their employees. How smart was it of American to extract major concessions from their employees and the next day announce bonuses for management.
Your point about airlines charging to use the lavatory isn’t at all far fetched. There is an airline that charges for overhead storage. In fact the revenue that airlines have received for charging for baggage has resulted in enormous revenue for the airlines.
To be charged for a service that was provided (luggage) and poorly at that (they manage to lose it) and then they don’t improve it (they still lose people’s luggage) is like paying the mugger for the mugging and you’re suppose to say thank you to the mugger.
Alan Weiss
I’m convinced there is a tropism that draws certain levels of ineptitude disproportionally to certain industries and professions. What are the odds that airlines are run so dismally by a normal dispersal of leadership talent?! I remember when Frank Borman ruined Eastern Airlines, with all the precisions and deliberateness of a Swiss watchmaker.
Alan Weiss
Cross-cultural incompetence!
Graham Franklin
Alan,
Unfortunately it is exactly the same in those same industries right across Europe.
Rene' Vidal
If you were to write the definitive leadership development book, it would fly off the shelf. Is this in your publishing pipeline? Sure hope so.
Alan Weiss
That’s very generous of you, but none of my publishers is asking, and that’s a highly saturated field. I wouldn’t rule it out.
Alan Weiss
Richard, profit is a derivative of customers and, with non-commodities, customer satisfaction, referrals, return and so on. I’m not speculating: The better, happier, and longer-lived your customers, the more profit you’ll make. Airlines do very little to stimulate loyalty. Frequent flyer programs are just dumb at this point (and a huge, needless liability).
First class on domestic carriers is good enough, but it can’t compare to Air Singapore or other foreign carriers. I fly Virgin Atlantic mostly, to London, because their Upper Class is good, the trip is relatively short, and they have the best airline club in the world at Heathrow (with empty, private security and immigration lines). I’ll fly the new, giant A380 first class on Qantas later this year to Sydney, because they have one, and the Qantas first class lounge in Sydney is fantastic. But when you remove the pillows (American) to save a few bucks, or serve the meals (United) by how many miles the upgrades sitting in first have accumulated, I have zero loyalty.
Delta has wifi on their planes and 90% of the time the flight attendants are wonderful up front and there’s a private security line. Is that really so hard to accomplish?