We were looking for a place to get a coffee the other day, and it occurred to me that the experience we’ve been having over the past few weeks of trying to identify and evaluate the new (to us) companies that are doing business in our new home makes an excellent demonstration of the supply and integration problems a business moving into a new market will experience at roughly the same point. Vendors we’ve used for years without a second thought are not operating here in central Michigan, and regional players we’ve never heard of are filling those niches. For us, this represents a change in where we go to fulfill various needs, and will probably end up changing our purchasing habits, as some products and services we’ve used are not available, and some possibly superior ones are. In either a business or a personal context, this may be for the better – or not…
To take the obvious example, the regional coffee house chain and Starbuck’s competitor called The Coffee Bean and Tea Leaf has never extended operations this far east; instead, the most common alternative you will find is Biggby’s Coffee. We haven’t seen a Foxhollow coffee hut operation, either; our best guess is that since Foxhollow’s business model revolves around the drive-through coffee operation, and most coffee house operations here (including many of the Starbuck’s) already have drive-through windows, there would be no special advantage for Foxhollow to come here (and no special incentive to purchasing a Foxhollow franchise here). Similarly, Peet’s Coffee has a couple of stores in Illinois and Colorado, and six in Massachusetts, but is otherwise located entirely on the West Coast…
Now, I don’t drink enough coffee to make my selection of vendors a major issue, but for some folks not being able to get your morning cup of Peet’s (or Foxhollow) is a critical issue. Imagine, then, if you were trying to open a branch of your business in East Lansing, and one of your most common vendors was not operating anywhere within 200 miles or so. You could have your supplies shipped in from Chicago, or shipped overnight from the West Coast, but either option would add delay time and increased cost to your operation. You could attempt to find a local vendor who could fulfill your needs and hope that your local customers were accept the change (or won’t know any better), but you can’t be sure if this will work. Maybe you should have thought about this before you attempted to enter this new market…
On the other hand, coming to the Upper Midwest we have also found an old friend still operating. In Southern California the Bob’s Big Boy chain is all but extinct, having lost market share to a huge range of newer companies offering informal dining (and hamburgers) to the same market segment. There are only a handful of these operations in Los Angeles County, for example (fewer than half a dozen locations in a county of over 10,000,000 residents), but there are over a hundred of them in Michigan, and we’ve run into more of them just wandering around Greater Lansing than there are in all of L.A. If we had some major use for these operations we’d be in a great new position. Similarly, if a new city contains a huge range of old familiar vendors (many more than in your previous locations) then perhaps this was an ideal area for expansion…
Then there’s the potential for finding new vendor types altogether. Since coming to the Midwest we’ve encountered a large number of casual dining restaurants called Bob Evans. They’re incredibly commonplace to people familiar with the region, but completely new to a pair of Californians. They show some similarity to an IHOP operation, or a Denny’s (both of which are also in this market, albeit in relatively low numbers), but what it most closely resembles is a Cracker Barrel -- something which is also unknown on the West Coast. We’ve already found the Bob Evans chain handy for late breakfasts and light lunches, and very convenient (given their high numbers). When you move into a new market, it’s important to keep an eye out for new suppliers and new applications you can use them for…
Now, if we can just find SOMEWHERE to get a cup of coffee…
Wednesday, July 30, 2008
Sunday, July 27, 2008
The Ethics of Bailouts
Regular readers of this space will remember back in June when I mentioned a bailout package that was expected to pass in Congress, effectively offering $4 billion in aid to people being foreclosed out of their homes. This has now happened; the bill passed today, and the President is expected to sign it quickly now that his domestic policy advisors have found a way to blame the delay on Democratic leadership in Congress stonewalling for six years (even though they’ve only had control of Congress for 19 months at this point). We’ve already covered the ethical issues inherent in the bailout, in the sense that it provides wildcat speculators and unscrupulous lenders with as much relief as it does legitimate homeowners and innocent people hurt by the mortgage crisis. But the current set of legislation brings up an even thornier issue…
As noted in an article posted today by the Associated Press, two of the big winners in this maneuver are going to be Fannie Mae and Freddie Mac, the giant mortgage companies threatened by the ongoing crisis. Instead of having an additional wave of foreclosures wipe out their assets (and stick them with real estate they can never recover their losses on), the new bill will allow millions of borrowers to refinance their loans, in many cases receiving better offerings from the Federal Housing Administration. This will, in turn, save thousands of jobs, calm housing and money markets (foreign and domestic), and prevent additional ripples in the economy. All of this is to the good, but critics of the measure have been pointing out that Fannie and Freddie have made (and continue to make) huge profits when real estate markets are good, and have used their money (and political clout) to resist the sort of government regulation and oversight that would have prevented the mortgage crisis in the first place…
Which brings us to our ethical conundrum: if these companies not only fell victims to a crisis they helped to create (by precipitating the mortgage crisis with sub-prime loans) but also helped to undermine, prevent or destroy the Federal regulations that would have prevented the crisis in the first place (with lobbying and other political maneuvering), does the government now have an ethical responsibility to bail them out of their own folly? Even granted that the over-all effects will serve the short-term interests of the country, is it worth the potential long-term risks of large companies doing asinine things, blithely certain that if they manage to create an international financial crisis, the U.S. government will jump in and bail them out?
The problem with most preventative measures is that while the potential risk of harm in the future is not known, the definite harm of spending large amounts of money in the future to prevent that risk IS known. Thus, many people will choose to gamble on a future disaster not happening so that they can spend money on other things in the present. If our government routinely steps in to prevent those disasters from ever coming home to roost, then why should any business venture spent its own money in the present to prevent a potential crisis in the first place?
Of course, the concrete side of this issue is that the bill in question will prevent thousands of people from losing their jobs, millions of people from losing their houses, and (at least potentially) all of the rest of us from having the current recession get even worse. The question is, if the people who caused this mess effectively dug their own pit and willfully jumped into it, do we have an ethical responsibility to make sure they don’t do it again? Or should we just take care of all of the ordinary people threatened by the crisis and not worry about the future?
It’s worth thinking about…
As noted in an article posted today by the Associated Press, two of the big winners in this maneuver are going to be Fannie Mae and Freddie Mac, the giant mortgage companies threatened by the ongoing crisis. Instead of having an additional wave of foreclosures wipe out their assets (and stick them with real estate they can never recover their losses on), the new bill will allow millions of borrowers to refinance their loans, in many cases receiving better offerings from the Federal Housing Administration. This will, in turn, save thousands of jobs, calm housing and money markets (foreign and domestic), and prevent additional ripples in the economy. All of this is to the good, but critics of the measure have been pointing out that Fannie and Freddie have made (and continue to make) huge profits when real estate markets are good, and have used their money (and political clout) to resist the sort of government regulation and oversight that would have prevented the mortgage crisis in the first place…
Which brings us to our ethical conundrum: if these companies not only fell victims to a crisis they helped to create (by precipitating the mortgage crisis with sub-prime loans) but also helped to undermine, prevent or destroy the Federal regulations that would have prevented the crisis in the first place (with lobbying and other political maneuvering), does the government now have an ethical responsibility to bail them out of their own folly? Even granted that the over-all effects will serve the short-term interests of the country, is it worth the potential long-term risks of large companies doing asinine things, blithely certain that if they manage to create an international financial crisis, the U.S. government will jump in and bail them out?
The problem with most preventative measures is that while the potential risk of harm in the future is not known, the definite harm of spending large amounts of money in the future to prevent that risk IS known. Thus, many people will choose to gamble on a future disaster not happening so that they can spend money on other things in the present. If our government routinely steps in to prevent those disasters from ever coming home to roost, then why should any business venture spent its own money in the present to prevent a potential crisis in the first place?
Of course, the concrete side of this issue is that the bill in question will prevent thousands of people from losing their jobs, millions of people from losing their houses, and (at least potentially) all of the rest of us from having the current recession get even worse. The question is, if the people who caused this mess effectively dug their own pit and willfully jumped into it, do we have an ethical responsibility to make sure they don’t do it again? Or should we just take care of all of the ordinary people threatened by the crisis and not worry about the future?
It’s worth thinking about…
Saturday, July 26, 2008
Sometimes You’re the Windshield…
It’s worth pointing out that sometimes, there’s just not much you can do about the problems your business is going to encounter. Sometimes, there’s just going to be a stoned screech owl nesting in your Christmas tree, or some state law that hasn’t been enforced since 1793 that outlaws your new business operation from accepting any money for your services, or some evil genius who has just inserted a “wizard” subroutine into some Microsoft product that will render your entire industry obsolete. And sometimes, it’s going to be turkey vultures…
A story being reported this week in the a Milwaukee Journal Sentinel tells the story of the Orthopedic Hospital of Wisconsin, which has had the unusual experience of having at least three nesting pairs of turkey vultures take up residence on the ledges and windowsills of the building. It’s bad enough to drive up to a hospital in which you are going to receive treatment and see a flock of vultures circling overhead, but apparently some of the patients have been complaining about waking up in the morning (or worse yet, after surgery) and finding a vulture perched on their windowsill…
Now, it’s important to realize that vultures are not known to pose any threat to human life whatsoever; they only eat things that are already dead, and have never been known to even approach a live human. Turkey vultures don’t even carry any forms of disease that could be transferred to a human host; despite their rather demonic appearance (red, wrinkled bald heads, black feathers, impressive beaks and talons, and beady red eyes) these birds could not possibly harm anyone at the hospital. It’s also worth noting that it’s an orthopedic hospital; most of the people there are going to be receiving treatments that have an almost zero chance of a fatal outcome. Still and all, there are probably going to be those people who will panic and run home upon seeing one of these birds. Or at least take their business somewhere else…
In the study of Institutional Failure, which is a specialty under the discipline of Strategic Management, all negative events that can impact your business are considered to have a greater or lesser degree of predictability; that is, some things (like a competitor inventing an alternative product or just reverse-engineering yours) are fairly predictable, while others (like a scientific breakthrough that eliminates your entire industry) are rather less so. Exactly how one goes about determining how likely a specific event is to happen makes up a large part of the studies I am starting on, and I won’t weary the reader with the details here. I’ll just note that a major factor in the survival of any business is how well you can anticipate the threats to your business – and which ones you develop plans to deal with…
Some events are so unlikely as to be not worth bothering about; events planned for Los Angeles in August are not going to be snowed out, for example, nor is your new aircraft design likely to be endangered by an unprecedented marine sponge migration. There have been any number of “Winter Festival” events that have been spoiled by unusually warm (or, at least, snow-free) winters over the years, however, and the second B-1 bomber prototype was destroyed by a flock of snow geese making a completely unprecedented migratory flight in the middle of the summer, to take only the obvious example. There is also the case of a well-know lawnmower company that almost went under because they attempted to introduce a line of snow blowers during a run of unusually warm winters...
In my working life as a manager and a management consultant I have done a lot of strategic planning, and I am always amazed by how many people spend their time and effort worrying about the trivial, the bizarre, and the completely unlikely, while losing track of things that can actually do them in. If your hospital provides the best care available for orthopedic patients, people are going to come there no matter what is perching on the windowsills, and if it is possible for bird strikes to disable your airplane, you must take into account that sooner or later, someone is going to fly it into a flock of birds. But sitting around and whining about things is not going to help much with either problem. Just keep in mind that in business, as in any other aspect of life, some days you’re the windshield, and some days, you’re the bug…
A story being reported this week in the a Milwaukee Journal Sentinel tells the story of the Orthopedic Hospital of Wisconsin, which has had the unusual experience of having at least three nesting pairs of turkey vultures take up residence on the ledges and windowsills of the building. It’s bad enough to drive up to a hospital in which you are going to receive treatment and see a flock of vultures circling overhead, but apparently some of the patients have been complaining about waking up in the morning (or worse yet, after surgery) and finding a vulture perched on their windowsill…
Now, it’s important to realize that vultures are not known to pose any threat to human life whatsoever; they only eat things that are already dead, and have never been known to even approach a live human. Turkey vultures don’t even carry any forms of disease that could be transferred to a human host; despite their rather demonic appearance (red, wrinkled bald heads, black feathers, impressive beaks and talons, and beady red eyes) these birds could not possibly harm anyone at the hospital. It’s also worth noting that it’s an orthopedic hospital; most of the people there are going to be receiving treatments that have an almost zero chance of a fatal outcome. Still and all, there are probably going to be those people who will panic and run home upon seeing one of these birds. Or at least take their business somewhere else…
In the study of Institutional Failure, which is a specialty under the discipline of Strategic Management, all negative events that can impact your business are considered to have a greater or lesser degree of predictability; that is, some things (like a competitor inventing an alternative product or just reverse-engineering yours) are fairly predictable, while others (like a scientific breakthrough that eliminates your entire industry) are rather less so. Exactly how one goes about determining how likely a specific event is to happen makes up a large part of the studies I am starting on, and I won’t weary the reader with the details here. I’ll just note that a major factor in the survival of any business is how well you can anticipate the threats to your business – and which ones you develop plans to deal with…
Some events are so unlikely as to be not worth bothering about; events planned for Los Angeles in August are not going to be snowed out, for example, nor is your new aircraft design likely to be endangered by an unprecedented marine sponge migration. There have been any number of “Winter Festival” events that have been spoiled by unusually warm (or, at least, snow-free) winters over the years, however, and the second B-1 bomber prototype was destroyed by a flock of snow geese making a completely unprecedented migratory flight in the middle of the summer, to take only the obvious example. There is also the case of a well-know lawnmower company that almost went under because they attempted to introduce a line of snow blowers during a run of unusually warm winters...
In my working life as a manager and a management consultant I have done a lot of strategic planning, and I am always amazed by how many people spend their time and effort worrying about the trivial, the bizarre, and the completely unlikely, while losing track of things that can actually do them in. If your hospital provides the best care available for orthopedic patients, people are going to come there no matter what is perching on the windowsills, and if it is possible for bird strikes to disable your airplane, you must take into account that sooner or later, someone is going to fly it into a flock of birds. But sitting around and whining about things is not going to help much with either problem. Just keep in mind that in business, as in any other aspect of life, some days you’re the windshield, and some days, you’re the bug…
Friday, July 25, 2008
Meanwhile, back in the Public Sector…
If you spend enough time reading, writing and learning about business, you’re going to encounter a lot of really stupid ideas coming from the Private Sector. You’ll see things like the mortgage industry “adjusting” the rates on a whole bunch of adjustable rate mortgages at bad moments, resulting in a huge number of foreclosures that need never have happened, personal bankruptcies, failed lending institutions and a general increase in our current economic crisis, all because these lenders could not be bothered to consider if the small increase in income they would get by “adjusting” the interest rates would be worth the potential risk. You’ll encounter half-baked business promotions like selling pizzas for 23 cents and not being ready for hoards of people showing up, resulting in riots. You’ll hear accounts of customer service personnel who are not only stupid enough to continue mispronouncing the customer’s name after being corrected three times, but are also stupid enough to then question if they are actually talking to the customer himself…
You will even find documented cases of companies (not just individuals, but actual corporations) playing “practical jokes” on paying customers…
But as bad as all of these stories (and three dozen others that you can review by selecting the tag for “Stupidity” at the bottom of this post) are, there are cases in the public sector each year that are at least as bad, if not worse. Take, for example, the case being reported this week by The Edmonton Sun website, about a performance artist who received a grant for $55,000 from the Canada Council for the Arts (the Canadian equivalent of the National Endowment for the Arts in the U.S.) to build a 300-meter inflatable yellow banana and place it into geostationary orbit over Texas…
Needless to say, a project like this would cost a lot more than $55,000; about $1 million more, in fact, when the cost of lifting the banana into Earth orbit and then inflating it is included. The artist claimed to have failed in his attempts to raise the rest of the money, and announced that therefore there would be no orbital banana. But since CCA policy does not require the grant recipient to actually produce anything, there is no obligation on the “artist” to return the grant money. As far as I can tell, he has produced nothing except a project proposal and a press release, and walked off with the money…
You have got to wonder what, exactly, the granting agency was thinking on this one. In the U.S. the NEA is fairly loose with its money; so long as the work (or in this case, installation) produced is vaguely artistic and bears even a nodding relationship to the work described in the proposal, they’ll probably be okay with it. And they don’t seem to be all that picky about what constitutes something “artistic,” either; I call to mind projects using human waste products as art supplies that were both approved for grant money and enthusiastically received. But even under an NEA grant, you still have to actually produce SOMETHING more than a press release…
Now, I understand the importance of fostering an artistic community, promoting the creative and conceptual freedom to pursue non-traditional art forms, and supporting free thought. I will even, for the sake of argument, accept that art projects that appear completely absurd to a layman like me might have some artistic merit under some strange definition that includes human waste products as anything anybody would ever want to see. But if we’ve reached the point where explaining your idea for an art project but not actually doing one is worth $55,000 to an otherwise rational government agency, then it’s time I dusted off my proposal that the NEA pay me $55,000 to jump around a major metropolitan area pelting randomly selected people with chunks of rump steak and yelling “Ya-HA! Ya-HA!”
Or, I suppose, I could just ask the Canadians to support my project…
You will even find documented cases of companies (not just individuals, but actual corporations) playing “practical jokes” on paying customers…
But as bad as all of these stories (and three dozen others that you can review by selecting the tag for “Stupidity” at the bottom of this post) are, there are cases in the public sector each year that are at least as bad, if not worse. Take, for example, the case being reported this week by The Edmonton Sun website, about a performance artist who received a grant for $55,000 from the Canada Council for the Arts (the Canadian equivalent of the National Endowment for the Arts in the U.S.) to build a 300-meter inflatable yellow banana and place it into geostationary orbit over Texas…
Needless to say, a project like this would cost a lot more than $55,000; about $1 million more, in fact, when the cost of lifting the banana into Earth orbit and then inflating it is included. The artist claimed to have failed in his attempts to raise the rest of the money, and announced that therefore there would be no orbital banana. But since CCA policy does not require the grant recipient to actually produce anything, there is no obligation on the “artist” to return the grant money. As far as I can tell, he has produced nothing except a project proposal and a press release, and walked off with the money…
You have got to wonder what, exactly, the granting agency was thinking on this one. In the U.S. the NEA is fairly loose with its money; so long as the work (or in this case, installation) produced is vaguely artistic and bears even a nodding relationship to the work described in the proposal, they’ll probably be okay with it. And they don’t seem to be all that picky about what constitutes something “artistic,” either; I call to mind projects using human waste products as art supplies that were both approved for grant money and enthusiastically received. But even under an NEA grant, you still have to actually produce SOMETHING more than a press release…
Now, I understand the importance of fostering an artistic community, promoting the creative and conceptual freedom to pursue non-traditional art forms, and supporting free thought. I will even, for the sake of argument, accept that art projects that appear completely absurd to a layman like me might have some artistic merit under some strange definition that includes human waste products as anything anybody would ever want to see. But if we’ve reached the point where explaining your idea for an art project but not actually doing one is worth $55,000 to an otherwise rational government agency, then it’s time I dusted off my proposal that the NEA pay me $55,000 to jump around a major metropolitan area pelting randomly selected people with chunks of rump steak and yelling “Ya-HA! Ya-HA!”
Or, I suppose, I could just ask the Canadians to support my project…
Wednesday, July 23, 2008
Just Another Day
We bought a house today. It sounds so simple, doesn’t it? Like you walked into a shop, browsed through a couple of aisles, found something you liked, and whipped out your credit card. Actually, considering that we’ve only been in this State for a bit less than two weeks, it probably does look that simple, at least from the outside. But the fact is, our current home-buying venture was so front-loaded that it’s a wonder the whole thing didn’t tip forward onto its metaphorical face, and it serves as an excellent example of how doing something with style, precision and speed is usually just a matter of really good preparation…
And of selecting the right business partners, of course. In this particular case, I can’t take a lot of credit for the fact that 13 days into our time in Michigan we’ve already selected, made an offer on, inspected, agreed to terms and conditions, and closed escrow on a house; most of the heavy lifting was the work of two (or four) other people. First, of course, was our wonderful California-based Realtor team, Steve Smith and Martha Alonzo, who not only sold our house in Redondo Beach in a market where nothing seems to be selling, but also vetted Realtors here in Central Michigan to find us someone truly exceptional…
Second, Karen Fisher-Austin, our local Realtor (who is, in fact, truly exceptional), started sending us property listings two months ago, including pictures, comparable property information, and virtual tours. Starting with this small mountain of data, Angie and I spent several weeks pouring over the property listings for East Lansing, as well as looking around the neighborhood and surrounding areas on Google Earth and other sites. As a result, we arrived in town already knowing the dozen or so properties we wanted to visit, and were able to select one in just four days…
Most of the credit for our success has to go to my wife, who put her amazing abilities as a manager and administrator to work on this project, starting with the initial contact phone calls back in Redondo and following through to getting all of our documents together at the end of the close meeting today. Now I suppose I could ask for some credit in having the impulse that led to our meeting Martha, the gall to ask our California realty team for help finding an agent in the upper Midwest, or the good sense to have married somebody this amazing in the first place, but the fact is I’d have done all of it anyway; I’m just lucky that my emotional choices have worked out in so many other dimensions…
It has often been said that it’s better to be lucky than good, and goodness knows I’ve proven the truth of that more than once. But it is also commonly remarked that we make our own luck, and while it might look like in this case we were lucky to blow into town and fall directly into what we were looking for, the truth is that Angie and I have spent long days, difficult nights, and a week on the road getting to this place, and none of the things we’ve done are anything that another home buyer or seller (or pair of them, anyway) couldn’t have done…
Now, I’m not going to tell you that selling a house in a declining market like Los Angeles is easy; or that packing up a large house, arranging movers, contacting an agent in your new city, learning the terrain, finding a new home, purchasing a house, or moving in are necessarily easy. I am saying that even a task as complex, arbitrary and emotionally difficult as moving to a new city can be done with speed, efficiency, and style – provided you also have a good plan and the right people to help. If you need a good Realtor in LA or East Lansing I can refer you to one, and if you need a good plan, I can probably help walk you through the process. But if you need a partner as good as mine, you’re going to have to get your own…
And of selecting the right business partners, of course. In this particular case, I can’t take a lot of credit for the fact that 13 days into our time in Michigan we’ve already selected, made an offer on, inspected, agreed to terms and conditions, and closed escrow on a house; most of the heavy lifting was the work of two (or four) other people. First, of course, was our wonderful California-based Realtor team, Steve Smith and Martha Alonzo, who not only sold our house in Redondo Beach in a market where nothing seems to be selling, but also vetted Realtors here in Central Michigan to find us someone truly exceptional…
Second, Karen Fisher-Austin, our local Realtor (who is, in fact, truly exceptional), started sending us property listings two months ago, including pictures, comparable property information, and virtual tours. Starting with this small mountain of data, Angie and I spent several weeks pouring over the property listings for East Lansing, as well as looking around the neighborhood and surrounding areas on Google Earth and other sites. As a result, we arrived in town already knowing the dozen or so properties we wanted to visit, and were able to select one in just four days…
Most of the credit for our success has to go to my wife, who put her amazing abilities as a manager and administrator to work on this project, starting with the initial contact phone calls back in Redondo and following through to getting all of our documents together at the end of the close meeting today. Now I suppose I could ask for some credit in having the impulse that led to our meeting Martha, the gall to ask our California realty team for help finding an agent in the upper Midwest, or the good sense to have married somebody this amazing in the first place, but the fact is I’d have done all of it anyway; I’m just lucky that my emotional choices have worked out in so many other dimensions…
It has often been said that it’s better to be lucky than good, and goodness knows I’ve proven the truth of that more than once. But it is also commonly remarked that we make our own luck, and while it might look like in this case we were lucky to blow into town and fall directly into what we were looking for, the truth is that Angie and I have spent long days, difficult nights, and a week on the road getting to this place, and none of the things we’ve done are anything that another home buyer or seller (or pair of them, anyway) couldn’t have done…
Now, I’m not going to tell you that selling a house in a declining market like Los Angeles is easy; or that packing up a large house, arranging movers, contacting an agent in your new city, learning the terrain, finding a new home, purchasing a house, or moving in are necessarily easy. I am saying that even a task as complex, arbitrary and emotionally difficult as moving to a new city can be done with speed, efficiency, and style – provided you also have a good plan and the right people to help. If you need a good Realtor in LA or East Lansing I can refer you to one, and if you need a good plan, I can probably help walk you through the process. But if you need a partner as good as mine, you’re going to have to get your own…
Tuesday, July 22, 2008
Some Simple Ideas
We are still adjusting to our new surroundings in Michigan, and as a result we have been wandering around looking into businesses both new and familiar. Most of the national chain companies you would expect to find anywhere have already colonized Michigan, but the regional businesses one would expect to see in the Southwest are absent here, and not all of the same niches are being filled. The business climate of the upper Midwest seems to be different from any of the other regions I have visited, and even some of the familiar companies are doing things differently here. I have already noted several relatively simple concepts that are unheard of in Los Angeles, and yet appear to have great potential, especially in this environment…
Take, for example, the sandwich company known as Jimmy Johns. They appear to have franchised operations running in about 35 states, including California, but have not reached the West Coast cities yet. It’s a fast-food sandwich company that would compete for market share with Subway, Quiznos, or Blimpie. But where the competition has attempted to widen their product line, offering salads, soups, wraps, hot/toasted sandwiches, cookies, and other products, Jimmy John’s appears to have narrowed their focus to just making sandwiches (and chips and drinks, of course). Instead of offering a wider range of food products, the company concentrates on speed and high-quality ingredients. As a result, their production time is faster than any of the competition, and the limited number of traditional sandwiches they do offer taste better than any of the competing products…
Now, this is hardly an advanced, high-tech concept. The company has effectively abandoned those segments of the lunch market that want salads, wraps, soups and the like to their competition, and is instead offering a lunch service so fast that anyone should be able to make use of it, and food that is generally superior to the competition’s equivalent. If you are looking for any of those other food products you would probably not select this chain, but if you just want a simple turkey sub, for example, I can’t imagine why you would go anywhere else – especially on a short lunch break. It’s unusual to see a company electing to emphasize both speed and quality in their business model, but within this context it works very well – and it’s worth noting that the Jimmy John’s we visited was also cheaper than the competition (presumably because of the simpler equipment and supply requirements)…
The other new idea we encountered last week was even simpler: a large, empty room with seating for about thirty or forty people around several large tables. What makes this a business concept is that the room is located in the basement of the Barnes and Noble location just off campus in East Lansing, and signed “Spartan Reading Room.” It’s a study center, ostensibly for students from the giant university across the street (Michigan State’s athletic teams are called the “Spartans,” and therefore so are all those who attend the school), but actually open to anyone who wants to come down there and quietly read or study. It’s probably not much of a draw during the summer, when school is out and the town’s population has dropped by more than half. But I’ll bet you can’t get a seat down there during finals week each semester, and it’s probably a hugely popular location any time the library is crowded or the weather is bad – which is going to be fairly often…
Now, I realize that both of these are relatively simple concepts, and may not be anything that your business can make use of. But they do beg the question: what simple innovations could YOU come up with, if you thought about it? In both cases, we’re talking about simple ideas that do not cost the company anything to provide (in the first case they actually lower operations costs), but offer increased value to the customer. It’s an idea worth thinking about…
Take, for example, the sandwich company known as Jimmy Johns. They appear to have franchised operations running in about 35 states, including California, but have not reached the West Coast cities yet. It’s a fast-food sandwich company that would compete for market share with Subway, Quiznos, or Blimpie. But where the competition has attempted to widen their product line, offering salads, soups, wraps, hot/toasted sandwiches, cookies, and other products, Jimmy John’s appears to have narrowed their focus to just making sandwiches (and chips and drinks, of course). Instead of offering a wider range of food products, the company concentrates on speed and high-quality ingredients. As a result, their production time is faster than any of the competition, and the limited number of traditional sandwiches they do offer taste better than any of the competing products…
Now, this is hardly an advanced, high-tech concept. The company has effectively abandoned those segments of the lunch market that want salads, wraps, soups and the like to their competition, and is instead offering a lunch service so fast that anyone should be able to make use of it, and food that is generally superior to the competition’s equivalent. If you are looking for any of those other food products you would probably not select this chain, but if you just want a simple turkey sub, for example, I can’t imagine why you would go anywhere else – especially on a short lunch break. It’s unusual to see a company electing to emphasize both speed and quality in their business model, but within this context it works very well – and it’s worth noting that the Jimmy John’s we visited was also cheaper than the competition (presumably because of the simpler equipment and supply requirements)…
The other new idea we encountered last week was even simpler: a large, empty room with seating for about thirty or forty people around several large tables. What makes this a business concept is that the room is located in the basement of the Barnes and Noble location just off campus in East Lansing, and signed “Spartan Reading Room.” It’s a study center, ostensibly for students from the giant university across the street (Michigan State’s athletic teams are called the “Spartans,” and therefore so are all those who attend the school), but actually open to anyone who wants to come down there and quietly read or study. It’s probably not much of a draw during the summer, when school is out and the town’s population has dropped by more than half. But I’ll bet you can’t get a seat down there during finals week each semester, and it’s probably a hugely popular location any time the library is crowded or the weather is bad – which is going to be fairly often…
Now, I realize that both of these are relatively simple concepts, and may not be anything that your business can make use of. But they do beg the question: what simple innovations could YOU come up with, if you thought about it? In both cases, we’re talking about simple ideas that do not cost the company anything to provide (in the first case they actually lower operations costs), but offer increased value to the customer. It’s an idea worth thinking about…
Saturday, July 19, 2008
Public Remarks
Suppose for a moment that you had been arrested, tried, and ultimately convicted for driving while under the influence, and were awaiting sentencing for this crime. If the court is satisfied that you are properly contrite and will never take such a stupid, risky action again, there’s a good chance that you might be let off with two years probation and a suspended license; you would almost certainly avoid any serious jail time. On the other hand, if the court believes that you are not sorry for what you’ve done or even that you are not taking the proceedings seriously enough, you could easily receive two years in prison. If that were the case, would you post pictures of yourself partying and drinking, possibly dressed up in costume as a prisoner, in a public place? Where anybody, including the judge and the prosecutor, could see you behaving like an unrepentant alcoholic idiot?
There was a very interesting article being reported on the Associated Press wire today about a series of cases in which the defendants did just that. Of course, the public place in all of these cases wasn’t a bulletin board at the supermarket, or a classified ad in the local paper. Rather, these people placed these possibly damaging photographs of themselves on the Internet networking sites, Facebook and MySpace. In all of the cases referenced, the intent was innocent enough: the pictures weren’t compromising or pornographic; the people in them weren’t doing anything more illegal than under-age drinking (and generally not even that). These were just people sharing pictures of themselves with family and friends; they clearly didn’t expect to have anyone beyond that small circle of acquaintance see these pictures. But they forgot one of the most important properties of the Internet…
When you post information, including pictures, to any public web site, you have to assume that anyone who really wants to can access that information, and that not all of those who do are going to mean well toward you. Posting pictures of yourself behaving in anything other than a properly contrite and penitent manner while you are awaiting sentencing for a crime is completely idiotic; refusing to take down such pictures after being advised to do so by your attorney is so far beyond asinine that I can’t even think of a bad metaphor to explain how stupid it is. These pictures had no bearing on the guilt or innocence of the people who posted them, and should not have affected the sentence they were given, but a factor that goes into any sentencing is the court’s opinion of the defendant, and these people had done the cyber equivalent of misbehaving on the courthouse lawn the night before that opinion was reached…
Now, I’m not suggesting that any of you would do anything this stupid, particularly in a business context; no one out there is likely to post damaging information about their companies, their personnel or themselves on a public website. I’m just pointing out that regardless of whether or not there should be a presumption of privacy on the Internet, there generally isn’t one – and any website that you can specifically use to share information with other people can not have one. If your business depends on presenting any sort of professional image, you must assume that images or video of yourself that contradict that image can damage your business, and that anything you post to the Internet can return to cause you trouble in the future. Networking sites are only the latest and lowest denominator of the problem; anything you make available to the public in this fashion will remain in play indefinitely…
In the long run, all you can do is put the company’s best foot forward and hope for the best. If your employees are professional and contentious, you should be able to afford the worst of these problems. Just remind them to take down their party pictures before their court date comes up…
There was a very interesting article being reported on the Associated Press wire today about a series of cases in which the defendants did just that. Of course, the public place in all of these cases wasn’t a bulletin board at the supermarket, or a classified ad in the local paper. Rather, these people placed these possibly damaging photographs of themselves on the Internet networking sites, Facebook and MySpace. In all of the cases referenced, the intent was innocent enough: the pictures weren’t compromising or pornographic; the people in them weren’t doing anything more illegal than under-age drinking (and generally not even that). These were just people sharing pictures of themselves with family and friends; they clearly didn’t expect to have anyone beyond that small circle of acquaintance see these pictures. But they forgot one of the most important properties of the Internet…
When you post information, including pictures, to any public web site, you have to assume that anyone who really wants to can access that information, and that not all of those who do are going to mean well toward you. Posting pictures of yourself behaving in anything other than a properly contrite and penitent manner while you are awaiting sentencing for a crime is completely idiotic; refusing to take down such pictures after being advised to do so by your attorney is so far beyond asinine that I can’t even think of a bad metaphor to explain how stupid it is. These pictures had no bearing on the guilt or innocence of the people who posted them, and should not have affected the sentence they were given, but a factor that goes into any sentencing is the court’s opinion of the defendant, and these people had done the cyber equivalent of misbehaving on the courthouse lawn the night before that opinion was reached…
Now, I’m not suggesting that any of you would do anything this stupid, particularly in a business context; no one out there is likely to post damaging information about their companies, their personnel or themselves on a public website. I’m just pointing out that regardless of whether or not there should be a presumption of privacy on the Internet, there generally isn’t one – and any website that you can specifically use to share information with other people can not have one. If your business depends on presenting any sort of professional image, you must assume that images or video of yourself that contradict that image can damage your business, and that anything you post to the Internet can return to cause you trouble in the future. Networking sites are only the latest and lowest denominator of the problem; anything you make available to the public in this fashion will remain in play indefinitely…
In the long run, all you can do is put the company’s best foot forward and hope for the best. If your employees are professional and contentious, you should be able to afford the worst of these problems. Just remind them to take down their party pictures before their court date comes up…
Friday, July 18, 2008
Be True to Your School
No, this post is not intended as a reference to the Beach Boys song of the same name, although it sometimes seems that the band members understood the idea better than a lot of people who are actually in the Education business do. I refer here to the community involvement – and community loyalty – that pervade the relationship between Michigan State University (hereinafter MSU) and the Greater Lansing, Michigan, area. One expects the area immediately adjacent to a major university campus to cater to the students who attend the school, since they represent a major customer group. You would therefore expect to see school colors in evidence, and some school-themed business units, at least within walking distance. But this is not always the case, and the contrast between Greater Lansing and some other major university towns I have visited deserves a closer look…
As you travel around East Lansing itself, you are almost immediately struck by the pervasiveness of MSU colors and symbols. Banners featuring the school’s green and white (most often a white “S” on a green field, or a green “S” on a white field) fly from homes, retail stores, restaurants, gas stations, and other locations all over town, including many with no obvious connection to the University. Even the local McDonald’s franchise nearest the campus is painted green and white, instead of the company’s more common brick and brown tones. The commercial district just north of campus (along Grand River Avenue) contains the usual number of stores featuring green-and-white merchandise and other MSU-related products, but even at distances that students would not normally travel one is likely to find businesses with an MSU theme…
This stands in start contrast to the area around UCLA, to take the obvious example. There are a few places in Westwood Village itself that feature blue and gold colors and products, but even during Homecoming week it is highly unusual to find banners or flags flying, and there certainly aren’t any fast-food operations painted in Bruin colors. The same is true of Westchester, California, where you will find no businesses tying into the presence of Loyola Marymount University, or Malibu, where there are no obvious connections to Pepperdine, or for that matter Downtown Los Angeles, where you will only find references to USC if you look for them very carefully indeed…
Now, in fairness, this is partially because of the very fact that the Greater Los Angeles area is home to at least 20 institutions of higher learning (it depends on how you want to count them – and how you define Greater LA), not one huge university that dominates the landscape. But much more to the point is the way in which people in the Lansing area take pride in “their” school (whether they attended it or not), and the way in which MSU is part of the local landscape – providing jobs directly, consulting with local businesses to increase productivity and with local government to develop and preserve jobs, training medical, veterinary, educational and management personnel, and providing a focus for local interests ranging from agricultural innovation to college sports. If the people in Greater Lansing are good to their school, it is only fair to say that having MSU here has been very good for the people of Greater Lansing…
Which raises the obvious question of why other institutions are not as involved in their communities as this one. Is it simply the nature of the big city; the tendency to mind your own business, not get involved, and look out for “number one?” Is it the arrogance of big city leadership, believing that they are too wealthy, too important, or too powerful to let a bunch of “ivory tower” types tell them what to do? Is it the lack of a sense of community common to the big city sprawl, which makes the people who live there reluctant to become part of anything beyond their own interests? Or is it something lacking in other universities (or their management teams) that places less importance on community involvement than this institution does?
So far, I have no answers for any of these questions. But my initial impression, that I chose well when I decided to make this school My School, is growing stronger…
As you travel around East Lansing itself, you are almost immediately struck by the pervasiveness of MSU colors and symbols. Banners featuring the school’s green and white (most often a white “S” on a green field, or a green “S” on a white field) fly from homes, retail stores, restaurants, gas stations, and other locations all over town, including many with no obvious connection to the University. Even the local McDonald’s franchise nearest the campus is painted green and white, instead of the company’s more common brick and brown tones. The commercial district just north of campus (along Grand River Avenue) contains the usual number of stores featuring green-and-white merchandise and other MSU-related products, but even at distances that students would not normally travel one is likely to find businesses with an MSU theme…
This stands in start contrast to the area around UCLA, to take the obvious example. There are a few places in Westwood Village itself that feature blue and gold colors and products, but even during Homecoming week it is highly unusual to find banners or flags flying, and there certainly aren’t any fast-food operations painted in Bruin colors. The same is true of Westchester, California, where you will find no businesses tying into the presence of Loyola Marymount University, or Malibu, where there are no obvious connections to Pepperdine, or for that matter Downtown Los Angeles, where you will only find references to USC if you look for them very carefully indeed…
Now, in fairness, this is partially because of the very fact that the Greater Los Angeles area is home to at least 20 institutions of higher learning (it depends on how you want to count them – and how you define Greater LA), not one huge university that dominates the landscape. But much more to the point is the way in which people in the Lansing area take pride in “their” school (whether they attended it or not), and the way in which MSU is part of the local landscape – providing jobs directly, consulting with local businesses to increase productivity and with local government to develop and preserve jobs, training medical, veterinary, educational and management personnel, and providing a focus for local interests ranging from agricultural innovation to college sports. If the people in Greater Lansing are good to their school, it is only fair to say that having MSU here has been very good for the people of Greater Lansing…
Which raises the obvious question of why other institutions are not as involved in their communities as this one. Is it simply the nature of the big city; the tendency to mind your own business, not get involved, and look out for “number one?” Is it the arrogance of big city leadership, believing that they are too wealthy, too important, or too powerful to let a bunch of “ivory tower” types tell them what to do? Is it the lack of a sense of community common to the big city sprawl, which makes the people who live there reluctant to become part of anything beyond their own interests? Or is it something lacking in other universities (or their management teams) that places less importance on community involvement than this institution does?
So far, I have no answers for any of these questions. But my initial impression, that I chose well when I decided to make this school My School, is growing stronger…
Monday, July 14, 2008
Fireworks
One of the common fallacies that continue to get on my nerves is that just because you have been to a place you understand what life there is like. A visit to another city can tell you a lot about life there; if your business model depends on cold outdoor temperatures you should really visit a new market in the summer time before you start operations there, for example. But the fact is, spending a few days in any far-away place does not make you an expert on that place; it just makes you another tourist...
Case in point, consider the retail channels for fireworks that you will see as you make your way across the country. As noted in my post for Independence Day, fireworks are not legal in most of Los Angeles at any time, and are not usually for sale even in areas where they are legal except for the two weeks before the 4th of July. Get out on the road, however, and things start changing...
On our recent drive from LA to East Lansing we started off with billboards about how fireworks are illegal in California, but there were small (temporary) fireworks stands all over Arizona, and permanent stands along the road in New Mexico. By the time we got to Oklahoma they weren't just stands anymore; they were permanent building the size of a supermarket, and on the way to St. Louis there were two stores the size of warehouses...
Now, I don't mean to suggest that fireworks or their retail outlets are any significant part of the national economy, or any basis for a business model. What I am suggesting is that people from New Mexico through upper Indiana are accustomed to being able to purchase a consumer product that people in parts of California never see as often as they like. Something that we consider a once-a-year special is a common part of their lives. It makes you wonder how many other products we could say that about...
The bottom line is, it's not the big differences in market conditions that can slip past you; it's the minor differences in the way life is lived somewhere beyond your home turf that can make you realize that being a tourist just isn't enough...
Case in point, consider the retail channels for fireworks that you will see as you make your way across the country. As noted in my post for Independence Day, fireworks are not legal in most of Los Angeles at any time, and are not usually for sale even in areas where they are legal except for the two weeks before the 4th of July. Get out on the road, however, and things start changing...
On our recent drive from LA to East Lansing we started off with billboards about how fireworks are illegal in California, but there were small (temporary) fireworks stands all over Arizona, and permanent stands along the road in New Mexico. By the time we got to Oklahoma they weren't just stands anymore; they were permanent building the size of a supermarket, and on the way to St. Louis there were two stores the size of warehouses...
Now, I don't mean to suggest that fireworks or their retail outlets are any significant part of the national economy, or any basis for a business model. What I am suggesting is that people from New Mexico through upper Indiana are accustomed to being able to purchase a consumer product that people in parts of California never see as often as they like. Something that we consider a once-a-year special is a common part of their lives. It makes you wonder how many other products we could say that about...
The bottom line is, it's not the big differences in market conditions that can slip past you; it's the minor differences in the way life is lived somewhere beyond your home turf that can make you realize that being a tourist just isn't enough...
Sunday, July 13, 2008
The Ethics of Bargaining
Some people will insist that you should never pay the asking price for anything; if the seller won't negotiate with you that's fine, do what you want, but you should always try to bargain. In some cultures haggling is considered an art, and people will be most disappointed in you (if not offended outright) if you don't at least try to cut a better deal. In the U.S. most people will expect that the seller will add to the price, to make more profit, and that the buyer will offer less than the asking price, to save money. No harm is done, and no one's feelings are hurt, either way. But what happens when you know this isn't the case?
Take the case of someone who is selling a house after a messy divorce. If they have bad memories of the place, they may have set the price too low; do you have a duty to tell them they have done so and suggest that they raise the asking price? Or do you have an obligation to your family to create as much wealth as possible, in which case you should just take the deal?
On the other case, suppose someone has done badly in the settlement, and is pricing the house too high in an attempt to raise more money. Should you offer a price you feel is reasonable, even though you know the seller needs the money more than you need this house? Or should you just reject the deal as too expensive and move on? Does it matter if the seller is distraught over the breakup and is not thinking well?
Most people will tell you that both the buyer and the seller have a legal (and in the case of an agent or representative, a fiduciary) responsibility to determine what a fair price actually is; they can each offer value or concessions as needed to close the deal. Offering less money in a weak market or charging more in a strong one is just a matter of adapting to changing conditions, and should not carry any emotional freighting. But that is definitely harder than it looks...
People develop very strong feelings about their homes, and may have emotional reactions to the haggling that have nothing to do with the actual merits of the deal. Sometimes this will also extend to buyers who have decided that a given structure is their "dream house" and are willing to pay far too much for it. If the person with whom you are doing business is making decisions based on emotion rather than finance, do you have any responsibility to deal fairly with them? Or should you just assume that they are adults and let them do what they're going to do?
It's worth thinking about...
Take the case of someone who is selling a house after a messy divorce. If they have bad memories of the place, they may have set the price too low; do you have a duty to tell them they have done so and suggest that they raise the asking price? Or do you have an obligation to your family to create as much wealth as possible, in which case you should just take the deal?
On the other case, suppose someone has done badly in the settlement, and is pricing the house too high in an attempt to raise more money. Should you offer a price you feel is reasonable, even though you know the seller needs the money more than you need this house? Or should you just reject the deal as too expensive and move on? Does it matter if the seller is distraught over the breakup and is not thinking well?
Most people will tell you that both the buyer and the seller have a legal (and in the case of an agent or representative, a fiduciary) responsibility to determine what a fair price actually is; they can each offer value or concessions as needed to close the deal. Offering less money in a weak market or charging more in a strong one is just a matter of adapting to changing conditions, and should not carry any emotional freighting. But that is definitely harder than it looks...
People develop very strong feelings about their homes, and may have emotional reactions to the haggling that have nothing to do with the actual merits of the deal. Sometimes this will also extend to buyers who have decided that a given structure is their "dream house" and are willing to pay far too much for it. If the person with whom you are doing business is making decisions based on emotion rather than finance, do you have any responsibility to deal fairly with them? Or should you just assume that they are adults and let them do what they're going to do?
It's worth thinking about...
Saturday, July 12, 2008
On Being a Landlord
Actually, I was going to call this post "On being a twit," but let's not be narrow. We're in Lansing, MI and we were supposed to rent a house the day we got in for however long it might take to find, purchase, and move into our new house. Unfortunately, the person who was supposed to show us the rental (the owner's mother, it seems) flaked out on us. And if that wasn't enough, the owner is still talking about charging us for 2 full months, instead of the 30 or so days (divided between July and August) we're actually going to need...
It's a stupid and remarkably arrogant thing to do, and makes very little sense in this real estate market. If there are dozens of people who want to rent this house, then it might make some sense to insist on the money, but it's still a bad idea (putting the screws to your customers just because you can is bad business practice - because you never know when they might return the favor). If we are the only potential tennants, then this move risks flushing $650 or more when we decide to walk away...
And we might do just that. We're staying in a Marriott Suites while we wait, and it's really nice. Small, of course, but we don't have much with us, and out room has everything we need for a few weeks, including workout facilities and unlimited high-speed Internet access and cable TV (not to mention maid service and utilities included), which is more than I can say for renting someone's house. Especially if our landlord is an arrogant twit whose local agent is a flake...
Even worse, when you compare paying for 2 months of rental plus utilities, cable and Internet (not to mention linens and cleaning service) the Marriott isn't that much more expensive. Our prospective landlord is already violating the First and Second Laws of Business (not taking our money and pissing us off), but now he's offering less value for the money, as well. If the Marriott was going to be $6,000 (compared to $1,300 for the 2-month rental) the landlord would still be ahead, but the price is actually just over a third of that...
Of course, the landlord in this story isn't really a real estate investor; he's not even a businessman. He's a teacher, which explains why he's off on a trip for the summer. Which I think is the point, really. You don't need to be a clever businessman to be a landlord. But you shouldn't be a twit, either...
It's a stupid and remarkably arrogant thing to do, and makes very little sense in this real estate market. If there are dozens of people who want to rent this house, then it might make some sense to insist on the money, but it's still a bad idea (putting the screws to your customers just because you can is bad business practice - because you never know when they might return the favor). If we are the only potential tennants, then this move risks flushing $650 or more when we decide to walk away...
And we might do just that. We're staying in a Marriott Suites while we wait, and it's really nice. Small, of course, but we don't have much with us, and out room has everything we need for a few weeks, including workout facilities and unlimited high-speed Internet access and cable TV (not to mention maid service and utilities included), which is more than I can say for renting someone's house. Especially if our landlord is an arrogant twit whose local agent is a flake...
Even worse, when you compare paying for 2 months of rental plus utilities, cable and Internet (not to mention linens and cleaning service) the Marriott isn't that much more expensive. Our prospective landlord is already violating the First and Second Laws of Business (not taking our money and pissing us off), but now he's offering less value for the money, as well. If the Marriott was going to be $6,000 (compared to $1,300 for the 2-month rental) the landlord would still be ahead, but the price is actually just over a third of that...
Of course, the landlord in this story isn't really a real estate investor; he's not even a businessman. He's a teacher, which explains why he's off on a trip for the summer. Which I think is the point, really. You don't need to be a clever businessman to be a landlord. But you shouldn't be a twit, either...
Friday, July 11, 2008
Cavemen, Lizards and Customer Service
You've seen the commercials; we all have. Guys dressed up as cavemen (somehow unchanged and undetected living in the modern day) take offense at being called primitive and stupid, while elsewhere a CGI gecko with a Cockney accent talks about saving people on their auto insurance and even less probable things happen, all with the "15 minutes could save you 15 percent" tag line. Meanwhile, you've probably wondered (as I had) how an insurance company that operates directly over the Internet (without the more traditional offices and agents) would function when faced with an actual claim...
As it happens, GEICO stands for Government Employee Insurance Company, and was in fact founded in 1936 under the concept of selling auto. insurance to government employees. The company's founder believed that these people would make better customers, both in the sense of making fewer claims and also in the sense of defaulting on their payments less often, than the general public. When the statistics finally disproved this belief in the 1970s the company apparently gave up and started selling policies to anyone who could qualify for one...
I first went to GEICO on a referral from another company. I had called Progressive for one of their multi-company rate comparisons, and they told me that GEICO had a better rate than anything they could offer me. This is supposed to impress me with their honesty and candor, and make me want to buy their product regardless of the price differential. This kind of backfired on them; I was impressed, all right, but GEICO was offering the same coverage for half the price...
In itself, this wasn't really surprising; the company has always used the money they save on infrastructure (by having no field offices and almost no field agents, for example) to offer extremely low premiums, and this basic business model works even better in an e-commerce context than it did before the Internet age. Some older customers are put off by the lack of a traditional agent whose name you know (and who, presumably, knows yours), but younger customers (who mainly communicate by email themselves) are less likely to care about traditional marketing efforts like "personalized" form letters on your birthday and so on. The real question is, how do you handle a claim without agents or claims adjusters?
We got the chance to find out when a truck kicked up a huge rock that broke out windshield in Albuquerque on Sunday. Not only was it a claim, but we were 800 miles from our official address and 1400 miles from our new home in Michigan. We called the GEICO service line and explained the situation, but it didn't seem to phase them. They set us up with an appointment at an approved repair shop for the day after we arrived in Lansing, offered to wave the deductible if it turned out to be a repairable break.
It remains to be seen if the repair side will run smoothly; I'll keep you posted. For now, let's just say that while GEICO's marketing may be a bit goofy, their customer service people are not. And if their operations people can live up to this level, then it's no wonder they've taken over so much of their industry...
As it happens, GEICO stands for Government Employee Insurance Company, and was in fact founded in 1936 under the concept of selling auto. insurance to government employees. The company's founder believed that these people would make better customers, both in the sense of making fewer claims and also in the sense of defaulting on their payments less often, than the general public. When the statistics finally disproved this belief in the 1970s the company apparently gave up and started selling policies to anyone who could qualify for one...
I first went to GEICO on a referral from another company. I had called Progressive for one of their multi-company rate comparisons, and they told me that GEICO had a better rate than anything they could offer me. This is supposed to impress me with their honesty and candor, and make me want to buy their product regardless of the price differential. This kind of backfired on them; I was impressed, all right, but GEICO was offering the same coverage for half the price...
In itself, this wasn't really surprising; the company has always used the money they save on infrastructure (by having no field offices and almost no field agents, for example) to offer extremely low premiums, and this basic business model works even better in an e-commerce context than it did before the Internet age. Some older customers are put off by the lack of a traditional agent whose name you know (and who, presumably, knows yours), but younger customers (who mainly communicate by email themselves) are less likely to care about traditional marketing efforts like "personalized" form letters on your birthday and so on. The real question is, how do you handle a claim without agents or claims adjusters?
We got the chance to find out when a truck kicked up a huge rock that broke out windshield in Albuquerque on Sunday. Not only was it a claim, but we were 800 miles from our official address and 1400 miles from our new home in Michigan. We called the GEICO service line and explained the situation, but it didn't seem to phase them. They set us up with an appointment at an approved repair shop for the day after we arrived in Lansing, offered to wave the deductible if it turned out to be a repairable break.
It remains to be seen if the repair side will run smoothly; I'll keep you posted. For now, let's just say that while GEICO's marketing may be a bit goofy, their customer service people are not. And if their operations people can live up to this level, then it's no wonder they've taken over so much of their industry...
Wednesday, July 9, 2008
Where’s the Line?
Since we’re picking on air travel and measuring slippery slopes lately, let’s consider an issue that comes up any time you fly anywhere: just how awful does someone have to be before the airline is justified in throwing them off the airplane? I’m not talking here about someone claiming to have a bomb, assaulting a Flight Attendant, or trying to rush the cockpit and break down the door; those things are all Federal crimes, and the means for dealing with them already exists – assuming that the individual’s fellow passengers don’t assume that he or she is a terrorist, decide that a possible chance of being killed stopping the offender is better than certain death in another 9/11 suicide scenario, and beat the unfortunate annoyance to death in the aisle. What about cases where things aren’t so clear?
There were two events in June that illustrate the point rather well. In the first, a woman on a flight from New York to San Francisco decided to light up a cigarette on a no-smoking airplane, and when prevented from doing so, became combative and belligerent, screamed racial epithets at the flight crew, and eventually punched a flight attendant in the face. Efforts to restrain the woman were ineffective, and the pilot elected to land in Denver and have law enforcement remove her from the airplane. It’s doubtful that anyone on board was actually endangered by this episode, and once the offender had been tethered to her seat, her continued screaming, stomping and kicking the bulkhead was probably not interfering with the safe operation of the aircraft. Still, I don’t suppose anyone on board would have objected to the unscheduled landing, except for the fact that it made the flight more than 3 hours late…
Then a few weeks later, a woman was on a short-haul flight to New Jersey with her autistic son when the toddler lost it completely and had a “total meltdown” on the aircraft. Airline personnel attempted to treat this like any other misbehaving child, but their training did not cover handling severe autistic episodes, and efforts to get the boy to stay in his seat, stop thrashing madly about, and stop screaming just made things worse. When the child’s mother was unable to stop the meltdown, or even keep her son from “rolling around on the floor” of the aircraft during the roll out and taxi, the pilot aborted the takeoff, returned to the gate, and had law enforcement escort mother and child off his plane. All parties involved acknowledged that the cheers of the remaining passengers when the police arrived, while understandable, did not help the situation…
So where do we draw the line in these situations? An agency offering public accommodation (like an airline) can not simply ask people with disabilities (like autism) not to come aboard; the law requires them to make “reasonable accommodation” for those people. But if an individual’s condition is so severe that they can’t maintain control during a short airplane ride, at least to the extent of not endangering other passengers during the takeoff, then they really should not be on an airplane. If they use the Americans With Disabilities Act to force the airline’s hand, then they are, at best, taking unfair advantage of a law meant to prevent actual discrimination of the disabled. And if a child without any disabilities is behaving like this, I’d have to say that his or her parents probably should be arrested for something, if only being a useless excuse for parents…
In the case of the out-of-control smoker, we actually have another slippery slope to consider. On being interviewed in the Denver jail, the offender in this case claimed not to remember anything about the episode because of the three vodka drinks she had obtained during the flight, and promptly blamed the airline for not cutting her off. She later admitted to having a few beers (4 or 5) on the ground before the flight, as well. Depending on the exact size and content of the drinks, that would mean a BAC of between .15 and .30, which would qualify as public intoxication almost anywhere in the U.S. But the problem is, there’s no FEDERAL law against public intoxication, and airlines are not equipped to detect/prevent this behavior anyway. I don’t think requiring the flight attendants to give people a breath test before selling them a drink is a good idea, but neither do I think prohibition in the air is a good idea. So when should airline personnel cut someone off, and who gets to decide?
I could go on, but you get the idea. Clearly, when a passenger’s conduct endangers the health and/or safety of his/her fellow passengers, the airline needs to pitch that individual off of their aircraft as quickly as possible. As always, the problem is finding that line, and choosing the person to decide when a customer has crossed it…
There were two events in June that illustrate the point rather well. In the first, a woman on a flight from New York to San Francisco decided to light up a cigarette on a no-smoking airplane, and when prevented from doing so, became combative and belligerent, screamed racial epithets at the flight crew, and eventually punched a flight attendant in the face. Efforts to restrain the woman were ineffective, and the pilot elected to land in Denver and have law enforcement remove her from the airplane. It’s doubtful that anyone on board was actually endangered by this episode, and once the offender had been tethered to her seat, her continued screaming, stomping and kicking the bulkhead was probably not interfering with the safe operation of the aircraft. Still, I don’t suppose anyone on board would have objected to the unscheduled landing, except for the fact that it made the flight more than 3 hours late…
Then a few weeks later, a woman was on a short-haul flight to New Jersey with her autistic son when the toddler lost it completely and had a “total meltdown” on the aircraft. Airline personnel attempted to treat this like any other misbehaving child, but their training did not cover handling severe autistic episodes, and efforts to get the boy to stay in his seat, stop thrashing madly about, and stop screaming just made things worse. When the child’s mother was unable to stop the meltdown, or even keep her son from “rolling around on the floor” of the aircraft during the roll out and taxi, the pilot aborted the takeoff, returned to the gate, and had law enforcement escort mother and child off his plane. All parties involved acknowledged that the cheers of the remaining passengers when the police arrived, while understandable, did not help the situation…
So where do we draw the line in these situations? An agency offering public accommodation (like an airline) can not simply ask people with disabilities (like autism) not to come aboard; the law requires them to make “reasonable accommodation” for those people. But if an individual’s condition is so severe that they can’t maintain control during a short airplane ride, at least to the extent of not endangering other passengers during the takeoff, then they really should not be on an airplane. If they use the Americans With Disabilities Act to force the airline’s hand, then they are, at best, taking unfair advantage of a law meant to prevent actual discrimination of the disabled. And if a child without any disabilities is behaving like this, I’d have to say that his or her parents probably should be arrested for something, if only being a useless excuse for parents…
In the case of the out-of-control smoker, we actually have another slippery slope to consider. On being interviewed in the Denver jail, the offender in this case claimed not to remember anything about the episode because of the three vodka drinks she had obtained during the flight, and promptly blamed the airline for not cutting her off. She later admitted to having a few beers (4 or 5) on the ground before the flight, as well. Depending on the exact size and content of the drinks, that would mean a BAC of between .15 and .30, which would qualify as public intoxication almost anywhere in the U.S. But the problem is, there’s no FEDERAL law against public intoxication, and airlines are not equipped to detect/prevent this behavior anyway. I don’t think requiring the flight attendants to give people a breath test before selling them a drink is a good idea, but neither do I think prohibition in the air is a good idea. So when should airline personnel cut someone off, and who gets to decide?
I could go on, but you get the idea. Clearly, when a passenger’s conduct endangers the health and/or safety of his/her fellow passengers, the airline needs to pitch that individual off of their aircraft as quickly as possible. As always, the problem is finding that line, and choosing the person to decide when a customer has crossed it…
Tuesday, July 8, 2008
Fly vs. Drive
Since we’re on the road today anyway, let’s take a moment to consider the ages-old question of should we fly or drive to our destination? Back in our salad days, when gasoline was under $1 a gallon and you could get on an airplane with as much bottled water as you wanted (without taking off your shoes, belt, or undergarments in the process), the trade-off was simple: flying was faster, driving was cheaper. Thus, if you needed to get where you were going quickly, or if your idea of a fun time does not include days of highway driving, you would fly to your destination; otherwise you might drive. But under the current conditions, this is no longer a given…
First, let’s consider the trip we’re currently on. It’s about 2200 miles from LA to Lansing, or about 34 hours of road time at 65 mph; this does not, of course, include time for food, refueling or rest stops, let alone sleeping. If you’re willing to drive for 17 hours a day you could do it in two days, but most of us would take four. If we assume $150 per night for hotels and 20 miles per gallon of gas (both optimistic under present conditions), we are talking about at least $950 for the trip, not counting food or other needs. We should probably allow another $300 or so for routine maintenance on the vehicle, since 2200 miles is most of a service cycle, and this will be hard use (2200 miles in four days). Allowing for food and other necessities, it’s going to be somewhere on the order of $1,400 to make the trip…
If I’m traveling alone, this does not compare well to the $309 I’ll pay for a ticket with 2 stops (Las Vegas and Chicago, for example) or even to the $825 I’ll pay for one stop in Chicago. It doesn’t even compare well with flying to Chicago and renting a car for the rest of the way. If I’m traveling with a companion, however, it would be at least $600 and more likely $900 to fly with 2 stops, and $1,700 to fly with 1 stop – no longer a clear advantage to the airlines. And if I’ve got three people with me, it’s going to be at least $1,400 to fly, and more likely $3,200 – advantage car. Although flying is still faster…
Now let’s take a shorter example. It’s about 680 miles from East Lansing to New York City; a drive that will take all day (about 10 hours+) and cost about $150 in gas, and let’s say $100 in repair costs. If we fly through Cincinnati (there are no direct flights to or from Lansing to either coast) the cost will be $242, and the trip will take a bit over 6 hours – if the planes are on time. But this time factor does not consider having to be at the airport 2 hours before your plane leaves, or the time it takes getting from East Lansing to the Capital City Airport (10 minutes) or the time it takes getting from JFK to Manhattan (90 minutes or more). If I’m by myself, the price difference is a wash; if I’m traveling with anyone the car trip is significantly cheaper, just as you would expect. What is bizarre is that with the common delays in air travel and the need to change planes, the car trip DOES NOT take any longer…
Even worse, from where I’m sitting (which today is the driver’s seat of a Pontiac Torrent), is the surcharge we would face getting all of this cargo onto an airplane. With most U.S. carriers now charging extra for each checked bag, we’d be looking at another $300 to $900 in fees, assuming they’d let us check this much baggage in the first place, which they probably wouldn’t. This might not apply on a weekend trip to see my folks in New York, but it would definitely apply to the voyage we are currently undertaking…
The bottom line is that even the current gas crisis has not changed the equation all that much. It’s still cheaper to drive, and in the post 9/11 landscape, it isn’t always faster to fly, either. Which would make me feel a lot better if the price of gasoline wasn’t still rocketing up…
First, let’s consider the trip we’re currently on. It’s about 2200 miles from LA to Lansing, or about 34 hours of road time at 65 mph; this does not, of course, include time for food, refueling or rest stops, let alone sleeping. If you’re willing to drive for 17 hours a day you could do it in two days, but most of us would take four. If we assume $150 per night for hotels and 20 miles per gallon of gas (both optimistic under present conditions), we are talking about at least $950 for the trip, not counting food or other needs. We should probably allow another $300 or so for routine maintenance on the vehicle, since 2200 miles is most of a service cycle, and this will be hard use (2200 miles in four days). Allowing for food and other necessities, it’s going to be somewhere on the order of $1,400 to make the trip…
If I’m traveling alone, this does not compare well to the $309 I’ll pay for a ticket with 2 stops (Las Vegas and Chicago, for example) or even to the $825 I’ll pay for one stop in Chicago. It doesn’t even compare well with flying to Chicago and renting a car for the rest of the way. If I’m traveling with a companion, however, it would be at least $600 and more likely $900 to fly with 2 stops, and $1,700 to fly with 1 stop – no longer a clear advantage to the airlines. And if I’ve got three people with me, it’s going to be at least $1,400 to fly, and more likely $3,200 – advantage car. Although flying is still faster…
Now let’s take a shorter example. It’s about 680 miles from East Lansing to New York City; a drive that will take all day (about 10 hours+) and cost about $150 in gas, and let’s say $100 in repair costs. If we fly through Cincinnati (there are no direct flights to or from Lansing to either coast) the cost will be $242, and the trip will take a bit over 6 hours – if the planes are on time. But this time factor does not consider having to be at the airport 2 hours before your plane leaves, or the time it takes getting from East Lansing to the Capital City Airport (10 minutes) or the time it takes getting from JFK to Manhattan (90 minutes or more). If I’m by myself, the price difference is a wash; if I’m traveling with anyone the car trip is significantly cheaper, just as you would expect. What is bizarre is that with the common delays in air travel and the need to change planes, the car trip DOES NOT take any longer…
Even worse, from where I’m sitting (which today is the driver’s seat of a Pontiac Torrent), is the surcharge we would face getting all of this cargo onto an airplane. With most U.S. carriers now charging extra for each checked bag, we’d be looking at another $300 to $900 in fees, assuming they’d let us check this much baggage in the first place, which they probably wouldn’t. This might not apply on a weekend trip to see my folks in New York, but it would definitely apply to the voyage we are currently undertaking…
The bottom line is that even the current gas crisis has not changed the equation all that much. It’s still cheaper to drive, and in the post 9/11 landscape, it isn’t always faster to fly, either. Which would make me feel a lot better if the price of gasoline wasn’t still rocketing up…
Monday, July 7, 2008
We Paid HOW Much For That?
As most of you know, I recently stopped working for UCLA Extension, a curious organization which is actually older than UCLA itself. It was 90 years ago when the first Extension classes were offered in Los Angeles, or 360 academic quarters ago, depanding on your point of view. And for most of them, Extension has published a large catalog that lists all of the classes, seminars, certificate programs, and (more recently) distance learning (online) classes offered for that quarter. If you've lived in L.A. for any length of time, you've probably seen one of their catalogs in your mailbox, with its distinctive cover art, which will usually reference the concept of "extension" and/or the quarter to which it belongs. For example, the cover for Spring Quarter a few years ago was a close-up photograph of a quarter (a U.S. quarter-dollar coin) under a spring approximately the size of the coin's diameter. "Spring" and "Quarter" -- Spring Quarter. Get it?
Last winter's catalog was heralded by the advertising people who came up with it as being one of the best covers ever -- the best concept, the best artwork, and so on. Even as a complete newbie to the organization, I could feel the excitement as we waited to see what it actually looked like. Imagine our collective surprise when the cover turned out to be a tiny (1" by 2") classified ad about Extension, "taped" to a blue field with two strips of yellow tape -- UCLA Bruin colors, blue and gold. Needless to say, everyone was speechless...
That is, until one member of our team who is studying design piped up with the plaintive question "We paid HOW much for this?"
We've all hearn the jokes about organizations that can not paint the latrine without running five focus groups and a double-blind comparison survey, but this was the sort of thing only an adman could love. Or perhaps a senior marketing executive of some kind. adding insult to injury, as far as we working stiffs were concerned, was the fact that the "artist" who came up with this cover was paid $5,000 for his work, which as far as we could tell, any ordinary six-year-old could have duplicated in five minues...
If there were taxpayers involved, there would probably have been outcry. Fortunately, Extension is entire self-supporting, and receives no taxpayer money whatsoever, which kept us from having to explain to an outraged public why we were spending their money on the dubious project. In fairness, the inside front cover had one of the best bits of advertising I've ever seen: A letter from the Governor of California, telling how when he first came to America he took classes at Extension while pursuing his career as a bodybuilder. It's hard to argue with a guy who arrived in this country barely able to speak the language and went on to superstardom in Hollywood, enormous commercial success in business, and was then elected Governor of the richest and most populous state in the Union, and his endorsement is a simple message that anyone who isn't actually brain-dead should be able to understand about just what a great opportunity classes at Extension can be.
Which is the point, of course: the ad on the cover is supposed to be the sort of thing an obscure Austrian body-builder recently arrived in this country might have seen in the back of a newspaper, and responded to. Clearly, the ad on the cover is intended to make us imagine Arnold looking at it in the gym between sets, and getting an idea, and the inside cover is supposed to represent how far he has come as the result of reading that humble ad. And, I suppose, under some circumstances, this might actually work. But I had to have someone who knows much more about design than I ever will explain it to me, and some quite good designers of my aquaintence (who have since seen the thing) have all had the same reaction to it: "You paid HOW much for that?"
Last winter's catalog was heralded by the advertising people who came up with it as being one of the best covers ever -- the best concept, the best artwork, and so on. Even as a complete newbie to the organization, I could feel the excitement as we waited to see what it actually looked like. Imagine our collective surprise when the cover turned out to be a tiny (1" by 2") classified ad about Extension, "taped" to a blue field with two strips of yellow tape -- UCLA Bruin colors, blue and gold. Needless to say, everyone was speechless...
That is, until one member of our team who is studying design piped up with the plaintive question "We paid HOW much for this?"
We've all hearn the jokes about organizations that can not paint the latrine without running five focus groups and a double-blind comparison survey, but this was the sort of thing only an adman could love. Or perhaps a senior marketing executive of some kind. adding insult to injury, as far as we working stiffs were concerned, was the fact that the "artist" who came up with this cover was paid $5,000 for his work, which as far as we could tell, any ordinary six-year-old could have duplicated in five minues...
If there were taxpayers involved, there would probably have been outcry. Fortunately, Extension is entire self-supporting, and receives no taxpayer money whatsoever, which kept us from having to explain to an outraged public why we were spending their money on the dubious project. In fairness, the inside front cover had one of the best bits of advertising I've ever seen: A letter from the Governor of California, telling how when he first came to America he took classes at Extension while pursuing his career as a bodybuilder. It's hard to argue with a guy who arrived in this country barely able to speak the language and went on to superstardom in Hollywood, enormous commercial success in business, and was then elected Governor of the richest and most populous state in the Union, and his endorsement is a simple message that anyone who isn't actually brain-dead should be able to understand about just what a great opportunity classes at Extension can be.
Which is the point, of course: the ad on the cover is supposed to be the sort of thing an obscure Austrian body-builder recently arrived in this country might have seen in the back of a newspaper, and responded to. Clearly, the ad on the cover is intended to make us imagine Arnold looking at it in the gym between sets, and getting an idea, and the inside cover is supposed to represent how far he has come as the result of reading that humble ad. And, I suppose, under some circumstances, this might actually work. But I had to have someone who knows much more about design than I ever will explain it to me, and some quite good designers of my aquaintence (who have since seen the thing) have all had the same reaction to it: "You paid HOW much for that?"
Sunday, July 6, 2008
Time Travel
I’m sending this one on ahead to myself (and any of you who are still reading this space), since I don’t think it would be either fair or safe to publish this post while still employed on this job. So for those of you reading along (including me), welcome back to the second week of June, 2008, and the truly bizarre place known as UCLA Extension, or UNEX…
Several weeks ago our Director scheduled a “retreat” for the Senior Staff members, to discuss ideas for a possible reorganization of the department. With our fiscal year ending, and funds being short, the Director decided to hold the retreat on Monday, June 9, 2008 at the Faculty Club facility on UCLA’s campus (that’s yesterday, from the point of view of when this post was being written). Given the number (and nature) of miss-steps that subsequently occurred, I thought this might be a good time to consider management retreats in general, and some of the things to avoid doing on one in particular…
To begin with, the whole project ran afoul of UNEX rules against spending money on food or entertainment for employees. Technically, even though Extension does not receive any taxpayer money, the funds we do get (from fees and tuitions) are still State money, and can’t be spent on these categories. Undaunted, the Senior Staff made plans to “retreat” to the conference room across the hall. The problem here is that getting off-site – or at least getting out of your regular working space – is critical for this sort of conceptual meeting to work in the first place. Otherwise, not only do you lose the sense of occasion (and importance) obtained by being Outside, but you’re much too likely to have people excuse themselves and go work on their usual assignments – which is in fact what happened…
Then there’s the lack of structure and the overabundance of agendas – which I regret to say are quite typical of this type of retreat. Every member of the management team is going to be threatened by different aspects of a reorganization, and each member of the team will have his or her own ideas about what changes should be made. In the case of our department, the Program Directors have been running their own areas of operation as little independent departments for years, and will resist any chance to centralize control or work more collaboratively, while the Program Managers have been used primarily as Administrative Analysts (not managers at all) during this period, and would like to actually have some hand in running things. If the Department’s Director doesn’t set the agenda and take a firm hand in running the discussion, the results will be anarchy – and the complete waste of a work day – before people decide the whole thing is rubbish, tune out, and the excuse themselves to return to work…
Which is, in fact, what appears to have happened…
Compounding matters, at least as far as I’m concerned, is the fact that I wasn’t invited to this “retreat” myself. Now I know some of you are thinking that since I’m leaving this job in three weeks, getting my opinion on the future direction of the department is not important. That’s almost certainly what my boss was thinking when he told me not to attend. But in this case, he was wrong (and so was anyone out there who agreed with him) for two reasons: First, because I am the only member of this department (however ephemeral) with a management degree, and the only one experience in leading this sort of reorganization event; and second, because with me absent and the third Program Manager position currently vacant, that left only one manager to represent the interests of a good 40% of the management team. The manager in question is a good man, and I’m sure he put on a really good show, but there’s no denying the fact that he was outnumbered five to one…
I could go on, but I think you get the point. The whole exercise was a huge waste of time and resources (although fortunately not taxpayer money), and will have to be repeated any number of times before any substantive change happens – if, in fact, any ever does. All things considered, I’d rather be in Winslow…
Several weeks ago our Director scheduled a “retreat” for the Senior Staff members, to discuss ideas for a possible reorganization of the department. With our fiscal year ending, and funds being short, the Director decided to hold the retreat on Monday, June 9, 2008 at the Faculty Club facility on UCLA’s campus (that’s yesterday, from the point of view of when this post was being written). Given the number (and nature) of miss-steps that subsequently occurred, I thought this might be a good time to consider management retreats in general, and some of the things to avoid doing on one in particular…
To begin with, the whole project ran afoul of UNEX rules against spending money on food or entertainment for employees. Technically, even though Extension does not receive any taxpayer money, the funds we do get (from fees and tuitions) are still State money, and can’t be spent on these categories. Undaunted, the Senior Staff made plans to “retreat” to the conference room across the hall. The problem here is that getting off-site – or at least getting out of your regular working space – is critical for this sort of conceptual meeting to work in the first place. Otherwise, not only do you lose the sense of occasion (and importance) obtained by being Outside, but you’re much too likely to have people excuse themselves and go work on their usual assignments – which is in fact what happened…
Then there’s the lack of structure and the overabundance of agendas – which I regret to say are quite typical of this type of retreat. Every member of the management team is going to be threatened by different aspects of a reorganization, and each member of the team will have his or her own ideas about what changes should be made. In the case of our department, the Program Directors have been running their own areas of operation as little independent departments for years, and will resist any chance to centralize control or work more collaboratively, while the Program Managers have been used primarily as Administrative Analysts (not managers at all) during this period, and would like to actually have some hand in running things. If the Department’s Director doesn’t set the agenda and take a firm hand in running the discussion, the results will be anarchy – and the complete waste of a work day – before people decide the whole thing is rubbish, tune out, and the excuse themselves to return to work…
Which is, in fact, what appears to have happened…
Compounding matters, at least as far as I’m concerned, is the fact that I wasn’t invited to this “retreat” myself. Now I know some of you are thinking that since I’m leaving this job in three weeks, getting my opinion on the future direction of the department is not important. That’s almost certainly what my boss was thinking when he told me not to attend. But in this case, he was wrong (and so was anyone out there who agreed with him) for two reasons: First, because I am the only member of this department (however ephemeral) with a management degree, and the only one experience in leading this sort of reorganization event; and second, because with me absent and the third Program Manager position currently vacant, that left only one manager to represent the interests of a good 40% of the management team. The manager in question is a good man, and I’m sure he put on a really good show, but there’s no denying the fact that he was outnumbered five to one…
I could go on, but I think you get the point. The whole exercise was a huge waste of time and resources (although fortunately not taxpayer money), and will have to be repeated any number of times before any substantive change happens – if, in fact, any ever does. All things considered, I’d rather be in Winslow…
Friday, July 4, 2008
Independence Day
I know it's geezer-talk to express a fondness for any time period other than the exact one you're in at the moment, but I'll admit I miss the time when being patriotic didn't necessarily mean that you were a member of any particular political party; when it was okay for moderates, liberals, free-thinkers and garden-variety troublemakers to just come out and say that they love their country; when no one would try to claim that you hate America if you just happen to be wearing the wrong lapel pin...
Actually, the fact that I persist in believing there was such a time probably makes me a geezer in and of itself. But I think the people who claim that if Richard Nixon was alive today and running for President he would be too liberal for either party to go near are probably right. And I remember a time when your lapel pin was your own business, no-bid contracts for companies that the Vice President used to run would have been an Impeachment offense, and you could still buy, transport, possess and use fireworks in my old neighborhood without being arrested for Weapons of Mass Destruction offenses...
For years now, fireworks have been illegal everywhere in the City of Los Angeles, and most (although not all) of the other places in the county as well. What is really odd about that is that here and there within the county (places like Lawndale and Inglewood, for example) individual cities have kept the sale of fireworks (at least, the so-called "safe and sane" ones) legal. In those cities, local civic groups run the fireworks stands every year to raise money, and almost everyone goes to buy some, the implication being that if you really cared about the Boy Scout troop, high school marching band, or little league team, you'd at least go and buy some fireworks. Whereas anywhere else in L.A., if you're caught with anything resembling fireworks today, you'll be on your way to jail...
From an economic standpoint, we can all understand where they are coming from: fireworks CAN be dangerous in the wrong hands (e.g. the very young, the careless, and the stupid), even the relatively low-powered variety being offered for sale elsewhere in the county. The cost in terms of fires that need to be put out, injuries that need to be treated, and people who need to be arrested (for arson, child endangerment, assault, or being a complete and total dumbass) is high, and the City of L.A. is already broke; accordingly, it's probably in the public interest to prevent these sales. And don't even get me started on the effects a few stray sparks (or garbage that's still heated to 1700 degrees F) will have on the dry brush on the hillsides...
From a practical standpoint, however, it doesn't make much sense to ban something in L.A. City if you can get it elsewhere in L.A. County (and many places in the neighboring counties as well). Nor does it make much sense to divert law enforcement resources from more serious matters to pursue those transporting or even using fireworks within the city limits. Especially when the fire department and much of the law enforcement apparatus being used for this purpose is County, rather than City, based...
I don't usually have an easy answer for these questions, and I certainly don't in this case. I only know that tonight I'm going to one of those places where fireworks are still legal, buy as many as I can afford, and spend a few pleasant hours lighting them off...
Happy Independence Day, Everyone!
Actually, the fact that I persist in believing there was such a time probably makes me a geezer in and of itself. But I think the people who claim that if Richard Nixon was alive today and running for President he would be too liberal for either party to go near are probably right. And I remember a time when your lapel pin was your own business, no-bid contracts for companies that the Vice President used to run would have been an Impeachment offense, and you could still buy, transport, possess and use fireworks in my old neighborhood without being arrested for Weapons of Mass Destruction offenses...
For years now, fireworks have been illegal everywhere in the City of Los Angeles, and most (although not all) of the other places in the county as well. What is really odd about that is that here and there within the county (places like Lawndale and Inglewood, for example) individual cities have kept the sale of fireworks (at least, the so-called "safe and sane" ones) legal. In those cities, local civic groups run the fireworks stands every year to raise money, and almost everyone goes to buy some, the implication being that if you really cared about the Boy Scout troop, high school marching band, or little league team, you'd at least go and buy some fireworks. Whereas anywhere else in L.A., if you're caught with anything resembling fireworks today, you'll be on your way to jail...
From an economic standpoint, we can all understand where they are coming from: fireworks CAN be dangerous in the wrong hands (e.g. the very young, the careless, and the stupid), even the relatively low-powered variety being offered for sale elsewhere in the county. The cost in terms of fires that need to be put out, injuries that need to be treated, and people who need to be arrested (for arson, child endangerment, assault, or being a complete and total dumbass) is high, and the City of L.A. is already broke; accordingly, it's probably in the public interest to prevent these sales. And don't even get me started on the effects a few stray sparks (or garbage that's still heated to 1700 degrees F) will have on the dry brush on the hillsides...
From a practical standpoint, however, it doesn't make much sense to ban something in L.A. City if you can get it elsewhere in L.A. County (and many places in the neighboring counties as well). Nor does it make much sense to divert law enforcement resources from more serious matters to pursue those transporting or even using fireworks within the city limits. Especially when the fire department and much of the law enforcement apparatus being used for this purpose is County, rather than City, based...
I don't usually have an easy answer for these questions, and I certainly don't in this case. I only know that tonight I'm going to one of those places where fireworks are still legal, buy as many as I can afford, and spend a few pleasant hours lighting them off...
Happy Independence Day, Everyone!
Thursday, July 3, 2008
Say Goodbye…
So, how did my exit interview at UCLA go, I hear some of you asking? Given my occasion critical comments about my recent employers, and my rather more common (and certainly more vicious) clashes with human resources personnel down through the years, I’m sure most of you were expecting me to take full advantage of this opportunity to “stick it to the Man.” If so, I’m probably about to disappoint you, and you may want to skip ahead to my rant scheduled for the 4th of July, which is a good bit and has fireworks in it. Because my final interview at Extension was an excellent example of how this exercise should be done, and what can come of it…
To begin with, I should note that most line managers have a traditional (and understandable) antipathy for all staff departments, especially human resources. There is an unfortunate tendency in all human activity to consider your own duties and tasks to be the most important of any, and line managers often fall into the (bad) habit of assuming that just because they need (or want) something to happen at once, that it CAN happen at once, and anyone who tells them it can’t is simply lazy, incompetent, or secretly plotting to destroy them. A line manager, upon being told that a critical position may take four to six weeks to fill (when the opening is costing their department money every day someone does not do that job) may well jump to all of these conclusions at once, thus making a difficult working relationship even harder…
Human resources people, in fairness, do often suffer from the same syndrome, believing that following their own written procedures and staying inside their usual routines are more important than actually running the company, or at least, any particular revenue-generating department, and refusing to expedite any request, no matter how much the customary 6-week delay will cost the company, how many jobs will be lost as a consequence, or what the long-term effects on the company’s survival might be. Thus, a lot of line managers come to loathe the Human Resources department, and the feelings are most assuredly mutual. But the fact is a GOOD human resources rep is worth his or her weight in any valuable substance you’d care to name – and some of the best in the business work for UCLA…
The HR rep assigned to my unit, for example, provided me with invaluable insights into some of the long-running management and leadership issues afflicting our department, helped me with a range of discipline, evaluation and benefit questions that came up, and advised me on how to deal with my one significant personality clash within the management team. When the time came for me to leave the organization, we arranged to meet for the last time and went over most of the issues I discussed in my last post. However, we also covered my observations of the department, my unit, the people in each, and my professional opinions on the unit’s organization and how functions and positions could be better arranged to complete our mission.
During the conversation the tradition conflict become clearer than ever; with the frustrations of the HR people trying to help the line unit (which I was leaving) to function better, with fewer internal conflicts and fewer potential legal issues conflicting with the line unit’s desire to accomplish everything faster, cheaper, and with fewer intermediate steps. I don’t know if our HR rep will be able to use my insights into the department’s ongoing problems to resolve these conflicts, or to assist our Director in making our department more functional, more productive, or more efficient, but I know that I was able to get the right information into the right hands where it might do some good. Which is the difference between doing your last, most important duty to your employer, and just wasting a final hour of staff department time and making your exit...
To begin with, I should note that most line managers have a traditional (and understandable) antipathy for all staff departments, especially human resources. There is an unfortunate tendency in all human activity to consider your own duties and tasks to be the most important of any, and line managers often fall into the (bad) habit of assuming that just because they need (or want) something to happen at once, that it CAN happen at once, and anyone who tells them it can’t is simply lazy, incompetent, or secretly plotting to destroy them. A line manager, upon being told that a critical position may take four to six weeks to fill (when the opening is costing their department money every day someone does not do that job) may well jump to all of these conclusions at once, thus making a difficult working relationship even harder…
Human resources people, in fairness, do often suffer from the same syndrome, believing that following their own written procedures and staying inside their usual routines are more important than actually running the company, or at least, any particular revenue-generating department, and refusing to expedite any request, no matter how much the customary 6-week delay will cost the company, how many jobs will be lost as a consequence, or what the long-term effects on the company’s survival might be. Thus, a lot of line managers come to loathe the Human Resources department, and the feelings are most assuredly mutual. But the fact is a GOOD human resources rep is worth his or her weight in any valuable substance you’d care to name – and some of the best in the business work for UCLA…
The HR rep assigned to my unit, for example, provided me with invaluable insights into some of the long-running management and leadership issues afflicting our department, helped me with a range of discipline, evaluation and benefit questions that came up, and advised me on how to deal with my one significant personality clash within the management team. When the time came for me to leave the organization, we arranged to meet for the last time and went over most of the issues I discussed in my last post. However, we also covered my observations of the department, my unit, the people in each, and my professional opinions on the unit’s organization and how functions and positions could be better arranged to complete our mission.
During the conversation the tradition conflict become clearer than ever; with the frustrations of the HR people trying to help the line unit (which I was leaving) to function better, with fewer internal conflicts and fewer potential legal issues conflicting with the line unit’s desire to accomplish everything faster, cheaper, and with fewer intermediate steps. I don’t know if our HR rep will be able to use my insights into the department’s ongoing problems to resolve these conflicts, or to assist our Director in making our department more functional, more productive, or more efficient, but I know that I was able to get the right information into the right hands where it might do some good. Which is the difference between doing your last, most important duty to your employer, and just wasting a final hour of staff department time and making your exit...
Wednesday, July 2, 2008
Before You Go…
How many of you out there have ever had an exit interview? To date, my working life has included about 22 years of full-time employment, and in the dozen or so jobs I’ve had so far (which I realize is too many for only 22 years – especially when you consider that one of those jobs lasted 5 years and two others were 3 years each) only two companies actually conducted an exit interview with me when I left. In one or two cases, where I had been laid off or asked to resign, I suppose my employers might have felt that I didn’t have much to tell them (they were wrong, in fact), but in the remaining eight cases, it was mostly a matter of the company not doing such interviews, my boss being too unprofessional to bother about one, or some other form of institutional failure…
When I left my job with Tosco in Phoenix I was so exasperated that no one was going to interview me (the company had turned down my request for an interview) that I wrote down all of my comments and sent it to our Director as a memo. But what I have since discovered is that almost no one seems to conduct these interviews; outside of very large and very regimented organizations (like my late employers) most people seem to feel that someone who has elected to leave the company is no longer relevant to the future of the organization, and if they’ve been laid off, asked to leave, or fired, there’s no point in even listening to them. Indeed, you’d better have them escorted off of the premises before they have a further bad influence on the rest of your people or, you know, steal something…
I’ll admit that if you’ve fired someone for gross incompetence, there may not be much point in trying to capture what they know about the organization. But even someone who does not do their job properly may still know things about the company that the management team doesn’t, and someone who has elected to leave voluntarily almost certainly does. The purpose of doing these interviews is not just to find out why someone has chosen to leave, but also what they know about the firm, what they think is positive, what they think needs work, where your organization is weak, and where it is strong, and so on. Because, let’s face it, it’s now or never…
From a management standpoint, the exit interview gives you a unique opportunity to look inside your own organization and find out what your employees really think about you and your policies. An employee who is leaving the company will tell you things they would never dare say when there was a chance that you would fire (or discipline) them; they’ll tell your human resources people things you would not believe. Conflicts between employees, abuses of power and privilege, unsuspected rivalries, and outright flaunting of company regulations (and sometimes the law) may come to light at this time. And then there’s the possibility that the departing employee hasn’t been doing the job you thought they were doing in the first place…
The bottom line is that like most feedback opportunities, the majority of all exit interviews will not produce anything spectacular, unexpected, or even interesting; but that one occasional example might contain a single nugget of information that could change your entire operation for the better – or save the company from destruction. It might seem tedious, expensive and time consuming to conduct those interviews (or just expensive, if you pay the human resource people to do them for you), but I have to ask if you can really afford to take the chance of missing that one special piece of information. Can you, in fact, afford to take the chance of ignoring your employees’ opinions in the hope that they don’t know anything you need to know? It’s possible, I suppose – but I for one would not want to bet the company on it…
When I left my job with Tosco in Phoenix I was so exasperated that no one was going to interview me (the company had turned down my request for an interview) that I wrote down all of my comments and sent it to our Director as a memo. But what I have since discovered is that almost no one seems to conduct these interviews; outside of very large and very regimented organizations (like my late employers) most people seem to feel that someone who has elected to leave the company is no longer relevant to the future of the organization, and if they’ve been laid off, asked to leave, or fired, there’s no point in even listening to them. Indeed, you’d better have them escorted off of the premises before they have a further bad influence on the rest of your people or, you know, steal something…
I’ll admit that if you’ve fired someone for gross incompetence, there may not be much point in trying to capture what they know about the organization. But even someone who does not do their job properly may still know things about the company that the management team doesn’t, and someone who has elected to leave voluntarily almost certainly does. The purpose of doing these interviews is not just to find out why someone has chosen to leave, but also what they know about the firm, what they think is positive, what they think needs work, where your organization is weak, and where it is strong, and so on. Because, let’s face it, it’s now or never…
From a management standpoint, the exit interview gives you a unique opportunity to look inside your own organization and find out what your employees really think about you and your policies. An employee who is leaving the company will tell you things they would never dare say when there was a chance that you would fire (or discipline) them; they’ll tell your human resources people things you would not believe. Conflicts between employees, abuses of power and privilege, unsuspected rivalries, and outright flaunting of company regulations (and sometimes the law) may come to light at this time. And then there’s the possibility that the departing employee hasn’t been doing the job you thought they were doing in the first place…
The bottom line is that like most feedback opportunities, the majority of all exit interviews will not produce anything spectacular, unexpected, or even interesting; but that one occasional example might contain a single nugget of information that could change your entire operation for the better – or save the company from destruction. It might seem tedious, expensive and time consuming to conduct those interviews (or just expensive, if you pay the human resource people to do them for you), but I have to ask if you can really afford to take the chance of missing that one special piece of information. Can you, in fact, afford to take the chance of ignoring your employees’ opinions in the hope that they don’t know anything you need to know? It’s possible, I suppose – but I for one would not want to bet the company on it…
Tuesday, July 1, 2008
They Diverted What?
Just two weeks ago my wife and I got our “Economic Stimulus Package” from the Federal government. It’s a whopping less than half a week’s total pay which will, in fact, not even cover the costs of our trip to Michigan later this week. I mean the gas, hotel bills, meals and car maintenance, here; the whole check does not represent even 5% of our total relocation costs. Still, having part of our travel expenses covered by a cheap political stunt is better than nothing, I suppose, and we will definitely be pumping back into the economy – paying for goods and services at gas stations, hotels, and roadside food stands. If there’s any left I plan to use the residue to purchase a snow blower once we arrive in East Lansing…
Have you gotten your “Economic Stimulus” check, otherwise known as a tax rebate, yet? Well, if not, you should probably check with any State, Federal or local agencies whom you owe money (at least if you haven’t been making your payments for a while). According to an article in USA Today about $2 billion of the rebates are being confiscated to pay child support, student loans, back taxes, and other things that the government thinks need the money more than you do. I’ll admit I have mixed feelings about this whole affair…
On the one hand, I don’t have much sympathy for deadbeat parents (we’ll be egalitarian here and include the tiny number of deadbeat mothers in with the vast majority of deadbeat dads) in the first place, and if you paid enough in taxes to qualify for one of these checks, you probably weren’t counting on it to survive anyway. I’m a bit more sympathetic to those who are defaulting on student loans and farm loans; the fact that some of these people have not been successful enough to repay the loans isn’t always their own fault, and in some cases I suspect that these folks need the money more than our government does. Especially since the whole $2 billion will only go to funding another two or three days in Iraq, anyway…
But there we come up against the big problem with this whole program. The country does, indeed, need some economic stimulus if we’re going to snap out of the current recession. It might seem as if one way to create more consumer spending is to just give money to people (and let them spend it), but somehow this never seems to work correctly; it didn’t earlier in the current administration, it didn’t during the Reagan years; in fact, it never has. This is because money pumped into the economy this way is only spent once, effectively: by the consumers who received it. If they spend it on the right products, it may have a small “ripple” effect, as retailers pay their distributors who pay manufacturers, but that’s as far as it is likely to go…
Suppose that instead, those same funds were spent on a Federal project to do any of the infrastructure development we desperately need in this country. For example, suppose we replace a few of those decaying highway bridges. The companies we hire to do the work have to pay their employees, their suppliers (people who make steel, concrete, paint and what not), and all of the fees, permits and insurance costs required. All of that spending results in additional spending, as suppliers pay their vendors, employees pay rent and buy consumer goods, and tax revenues are generated for cities and counties to support their own operations – not to mention what they might save on building new bridges…
This concept is called the “Multiplier Effect,” and is a common principle of macroeconomics. Depending on the conditions at the time, money injected into the economy in this fashion will generate between 2 and 5 times the impact of just giving money directly to the taxpayers (currently it’s about 4). It’s much more effective than a simple tax rebate in every sense except the political; politically the poor people see it as free money from the government and the wealthy see it as another opportunity to line their pockets at taxpayer expense. But at least this way our government is getting some of its overdue loan and tax payments back…
Have you gotten your “Economic Stimulus” check, otherwise known as a tax rebate, yet? Well, if not, you should probably check with any State, Federal or local agencies whom you owe money (at least if you haven’t been making your payments for a while). According to an article in USA Today about $2 billion of the rebates are being confiscated to pay child support, student loans, back taxes, and other things that the government thinks need the money more than you do. I’ll admit I have mixed feelings about this whole affair…
On the one hand, I don’t have much sympathy for deadbeat parents (we’ll be egalitarian here and include the tiny number of deadbeat mothers in with the vast majority of deadbeat dads) in the first place, and if you paid enough in taxes to qualify for one of these checks, you probably weren’t counting on it to survive anyway. I’m a bit more sympathetic to those who are defaulting on student loans and farm loans; the fact that some of these people have not been successful enough to repay the loans isn’t always their own fault, and in some cases I suspect that these folks need the money more than our government does. Especially since the whole $2 billion will only go to funding another two or three days in Iraq, anyway…
But there we come up against the big problem with this whole program. The country does, indeed, need some economic stimulus if we’re going to snap out of the current recession. It might seem as if one way to create more consumer spending is to just give money to people (and let them spend it), but somehow this never seems to work correctly; it didn’t earlier in the current administration, it didn’t during the Reagan years; in fact, it never has. This is because money pumped into the economy this way is only spent once, effectively: by the consumers who received it. If they spend it on the right products, it may have a small “ripple” effect, as retailers pay their distributors who pay manufacturers, but that’s as far as it is likely to go…
Suppose that instead, those same funds were spent on a Federal project to do any of the infrastructure development we desperately need in this country. For example, suppose we replace a few of those decaying highway bridges. The companies we hire to do the work have to pay their employees, their suppliers (people who make steel, concrete, paint and what not), and all of the fees, permits and insurance costs required. All of that spending results in additional spending, as suppliers pay their vendors, employees pay rent and buy consumer goods, and tax revenues are generated for cities and counties to support their own operations – not to mention what they might save on building new bridges…
This concept is called the “Multiplier Effect,” and is a common principle of macroeconomics. Depending on the conditions at the time, money injected into the economy in this fashion will generate between 2 and 5 times the impact of just giving money directly to the taxpayers (currently it’s about 4). It’s much more effective than a simple tax rebate in every sense except the political; politically the poor people see it as free money from the government and the wealthy see it as another opportunity to line their pockets at taxpayer expense. But at least this way our government is getting some of its overdue loan and tax payments back…
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