Here's a topic that will get me flamed (and possibly burned in effigy) no matter which side of it I decide to take: a story in the St. Petersburg Times indicates that more and more airlines are abandoning their ages-old tradition of letting families with small children board the plane first. If you're a parent with small children who travels by air, this is an outrage. If you're a single parent traveling with multiple small children, it's an abomination. If you're a business traveler (particularly single or childless) you will point to the study noted in the article that states that EACH family group with small children slows an already slow boarding process by 10 to 12 minutes. If you're an efficiency expert, you'll probably note that filling the plane back to front, and windows to aisles, speeds up the whole process and benefits everyone. If you're an experienced customer service agent (or an experienced traveler), you'll probably just shake your head...
Most passengers would agree that they want to get on the airplane as quickly as possible, get off as quickly as possible, and spend as little time in between as possible. Most of them would therefore also agree that speeding up the boarding process is a good thing. Where we get into the violent disagreements is when the issue of special needs comes into the equation. No one wants to tell a single parent trying to get a toddler belted in while holding an infant that they can’t have an extra few moments to get settled, but by the same token nobody wants to have to wait for an extra ten or fifteen minutes while this happens. And NOBODY wants to be the poor ramp agent who has to tell that overworked parent that they can’t have any extra time…
As an experienced traveler myself, I think a much bigger issue is those people who insist on sitting at the front of the airplane, and want everyone boarding behind them to wait while they try to wrestle a carry-on bag the size of a small car into the overhead bin. If people would just move to the back of the airplane before beginning this struggle it would definitely help – and if the airline has assigned seating they can expedite this by boarding from the back instead of the traditional First Class and Business Class and then the first 15 rows of Coach. The “families with children” scenario is a much bigger issue when the families are in row 6 and they’re taking 15 minutes to get the kids settled while everyone in rows 7 through 45 wait for them…
Of course, an airline with “Open Seating” like Southwest can’t do this – and in fact, one of the more annoying aspects of any Southwest flight is the tiny people with huge luggage mentioned above, who will invariably clog up the aisle. I’m not sure how Southwest would deal with this issue (if they ever do), but for carriers with assigned seating there’s an easy fix: give priority for the last few rows in any flight to families with small children. That way these folks can have the extra time they need to get settled, the rest of us don’t have to wait for them, and all of the crying, whining, squirming, seat-kicking, food-flinging and aisle-running behavior can be contained in the same part of the cabin…
I’d certainly be willing to board last, under those conditions. Heck, I’d be willing to pay extra to sit twenty or thirty rows forward of the kids’ section! Maybe there’s a new business model here after all…
Thursday, August 28, 2008
Wednesday, August 27, 2008
A Booming Business
It's been said that any new technology brings with it its own hazards, drawbacks and assorted downsides, and the same can usually be said for new business models. Overuse of computers has given us workplace problems like carpal tunnel syndrome and eyestrain, and we can all remember the joys of technological breakthroughs like asbestos, to take the obvious example. There's a case being reported this week in the Arizona Republic that brings up a similar point about the new business of biodiesel, and one of the side effects that we really should have seen coming before now...
With the price of gasoline hovering around $4 nationwide, the idea of getting used cooking oil from the local greasy spoon and filtering it down to motor fuel in your garage has a very strong appeal. Nevermind that most people will spend dozens of hours of work on every gallon of fuel they obtain through this process (effectively making much less than $1 per hour, or perhaps one twentieth of minimum wage for this work; it's still free fuel, it's still good for the environment, it's still a way to avoid foreign oil, and so on. Unfortunately, it's also still motor fuel, used to power an internal combustion engine, and therefore (under the wrong conditions) both flamable and explosive...
Imagine if people all over the country were to start filtering cooking oil in their garage. Explosions of the type described in the article would become commonplace, and you'd definately want to invest in those new fireproof ceramic shingles for your roof, just to keep your house from being set on fire everytime your neighbor's biodiesel operation blows up. Even worse, if the E85 ethanol (flex-fuel) vehicles start to catch on, you might have people all over the country operating distilleries in their basement -- in which case you'll want to purchase armor for the side of your house for those occasions when your neighbor blows himself up, house and all...
Now I suppose if could be argued that this is a good thing in the larger view; it would certainly increase demand for fire-proof ceramic roof tiles, armored siding, bullet-proof window glass, and fire extinguishers. It would also represent a huge growth opportunity for contractors who install these products, and might even result in a new building boom to replace all of the exploding houses and garages. With luck we could even see new products start up to handle these needs, like built-in fire fighting systems for ordinary single-family houses, or carpets and window treatments made out of the anti-spall linings used inside tanks (they keep bits of the inside of the tank from being knocked loose and flying around the interior like shrapnel when the vehicle it hit by a shell or missile, a process called "spalling")...
Preposterous, you say? Then tell me this: how do you propose to stop it? Used cooking oil can't very well be made a controlled substance, and neither can the (very simple) filters needed to convert it to fuel. You can make the whole process illegal, as with stills for making alcohol, but even BATF has never been completely successful in shutting those down, either; I'd hate to put local law enforcement in charge of sniffing out used cooking oil in someone's garage. And in any case, we can't afford the extra police needed to carry out such a search, or the additional errosion of our civil rights that searches of this kind would cause. Unless the price of motor fuel comes down, or some other method of transportation is introduced, and soon, this type of story is going to become more and more common...
Maybe I'll look into investing in the companies that make those ceramic roof tiles...
With the price of gasoline hovering around $4 nationwide, the idea of getting used cooking oil from the local greasy spoon and filtering it down to motor fuel in your garage has a very strong appeal. Nevermind that most people will spend dozens of hours of work on every gallon of fuel they obtain through this process (effectively making much less than $1 per hour, or perhaps one twentieth of minimum wage for this work; it's still free fuel, it's still good for the environment, it's still a way to avoid foreign oil, and so on. Unfortunately, it's also still motor fuel, used to power an internal combustion engine, and therefore (under the wrong conditions) both flamable and explosive...
Imagine if people all over the country were to start filtering cooking oil in their garage. Explosions of the type described in the article would become commonplace, and you'd definately want to invest in those new fireproof ceramic shingles for your roof, just to keep your house from being set on fire everytime your neighbor's biodiesel operation blows up. Even worse, if the E85 ethanol (flex-fuel) vehicles start to catch on, you might have people all over the country operating distilleries in their basement -- in which case you'll want to purchase armor for the side of your house for those occasions when your neighbor blows himself up, house and all...
Now I suppose if could be argued that this is a good thing in the larger view; it would certainly increase demand for fire-proof ceramic roof tiles, armored siding, bullet-proof window glass, and fire extinguishers. It would also represent a huge growth opportunity for contractors who install these products, and might even result in a new building boom to replace all of the exploding houses and garages. With luck we could even see new products start up to handle these needs, like built-in fire fighting systems for ordinary single-family houses, or carpets and window treatments made out of the anti-spall linings used inside tanks (they keep bits of the inside of the tank from being knocked loose and flying around the interior like shrapnel when the vehicle it hit by a shell or missile, a process called "spalling")...
Preposterous, you say? Then tell me this: how do you propose to stop it? Used cooking oil can't very well be made a controlled substance, and neither can the (very simple) filters needed to convert it to fuel. You can make the whole process illegal, as with stills for making alcohol, but even BATF has never been completely successful in shutting those down, either; I'd hate to put local law enforcement in charge of sniffing out used cooking oil in someone's garage. And in any case, we can't afford the extra police needed to carry out such a search, or the additional errosion of our civil rights that searches of this kind would cause. Unless the price of motor fuel comes down, or some other method of transportation is introduced, and soon, this type of story is going to become more and more common...
Maybe I'll look into investing in the companies that make those ceramic roof tiles...
Tuesday, August 26, 2008
Take Your Gun to Work Revisited
A while back I wrote a post in this space about a couple of employees of a supermarket who were able to defend their store and their personnel because they had taken advantage of a local ordinance and had, in fact, brought their guns to work that day. It's an incedent that drew attention because of its novelty more than anything else -- it's that rare case where the weapons-carry laws worked exactly as intended, and allowed law-abiding citizens to defend themselves with a level of force that was actually appropriate to the circumstances. All too often, the right to carry a weapon simply results in the sort of accidental shootings, property damage, or inapropriate uses of force so beloved of gun control advocates. And yet, the single most difficult part of this debate does not concern either of these issues...
In Florida, the issue of bringing your gun to work has raised an entirely new controversy, as some employees of companies that prohibit weapons on the job have begun to insist on bringing their guns to work and locking the weapons in the trunk of their cars during the work day. The gun owners involved claim that since they have carry permits, and can carry a gun all the way to and from work, they should be allowed to just leave these weapons in their cars during the day, so they can be armed for the trip to and from home. The company parking lot is still private property, and the company should still be able to ban guns there, but the employees are claiming that this would require them to leave their guns at home (since they'd have no way to secure them outside of the company's property) and therefore violates their Second Amendment right to carry a gun...
Even worse, in my opinion, is the implications for people who don't drive to work. Suppose they ride the bus, or walk to work. These people have no car to secure their guns in while on the job. Should they therefore have the right to bring their guns inside and carry them in the office? And if not, aren't they also being required to leave their guns at home? More to the point, perhaps, if we don't allow these people to bring their guns to work and secure them inside the building, aren't we discriminating against those who are too poor to operate a car and those who are ecologically minded enough not to want to?
What's really disturbing about this issue, at least from where I'm sitting, is the impact on private property rights. The Second Amendment to the Constitution does not address the rights of private property owners explicitly; it merely restricts the ability of the government to control gun ownership. But if the right to bear arms supercedes the rights of property owners to prohibit people from bringing guns onto their property, then by extension gun owners should be able to bring their guns anywhere they want to (e.g. schools, churches, hospitals, crowded shopping centers, airports...). It's clearly not what the Framers had in mind when they mentioned a "Well-regulated militia," but it's just as clearly what lies at the end of this particular slippery slope...
So my question is, if you were the company's owner, if it was your office or your factory, what would you do? Would you allow people to leave their guns in their cars? If so, how would you deal with someone who is being fired being escorted out of the building by Security and right up to where they've stashed their gun? On the other hand, if you prohibit people from bringing their guns to work, and one of them is killed on the way home in a situation he could have survived if he'd had his gun with him, can you be sued for wrongful death? What about a situation like the one in my earlier post? If your employees aren't able to shoot their way out of an armed confrontation and some of them die, what happens then? Especially if state or county law would have permitted them to carry a gun anywhere other than your property?
It's worth thinking about...
In Florida, the issue of bringing your gun to work has raised an entirely new controversy, as some employees of companies that prohibit weapons on the job have begun to insist on bringing their guns to work and locking the weapons in the trunk of their cars during the work day. The gun owners involved claim that since they have carry permits, and can carry a gun all the way to and from work, they should be allowed to just leave these weapons in their cars during the day, so they can be armed for the trip to and from home. The company parking lot is still private property, and the company should still be able to ban guns there, but the employees are claiming that this would require them to leave their guns at home (since they'd have no way to secure them outside of the company's property) and therefore violates their Second Amendment right to carry a gun...
Even worse, in my opinion, is the implications for people who don't drive to work. Suppose they ride the bus, or walk to work. These people have no car to secure their guns in while on the job. Should they therefore have the right to bring their guns inside and carry them in the office? And if not, aren't they also being required to leave their guns at home? More to the point, perhaps, if we don't allow these people to bring their guns to work and secure them inside the building, aren't we discriminating against those who are too poor to operate a car and those who are ecologically minded enough not to want to?
What's really disturbing about this issue, at least from where I'm sitting, is the impact on private property rights. The Second Amendment to the Constitution does not address the rights of private property owners explicitly; it merely restricts the ability of the government to control gun ownership. But if the right to bear arms supercedes the rights of property owners to prohibit people from bringing guns onto their property, then by extension gun owners should be able to bring their guns anywhere they want to (e.g. schools, churches, hospitals, crowded shopping centers, airports...). It's clearly not what the Framers had in mind when they mentioned a "Well-regulated militia," but it's just as clearly what lies at the end of this particular slippery slope...
So my question is, if you were the company's owner, if it was your office or your factory, what would you do? Would you allow people to leave their guns in their cars? If so, how would you deal with someone who is being fired being escorted out of the building by Security and right up to where they've stashed their gun? On the other hand, if you prohibit people from bringing their guns to work, and one of them is killed on the way home in a situation he could have survived if he'd had his gun with him, can you be sued for wrongful death? What about a situation like the one in my earlier post? If your employees aren't able to shoot their way out of an armed confrontation and some of them die, what happens then? Especially if state or county law would have permitted them to carry a gun anywhere other than your property?
It's worth thinking about...
Sunday, August 24, 2008
The Ethics of Sunday
Moving to a new city and a new state always insures that there will be new experiences and unfamiliar features to the landscape, a fact brought home to me today when several of the retail stores we wanted to visit were closed on Sundays. At least one of them actually had a sign on the door stating that they were closed every Sunday so that their employees could devote the time to family and/or worship. Now, in Southern California you may run across the occasional business that follows a practice like this, and of course there are national chains that maintain this policy operating in the Los Angeles area, but to see more than one of them in any given month would be unusual at best. It got me started on the ethics of declaring a specific day of the week off for religious observance, and I thought it deserves a closer look…
The obvious question is whether or not such a policy is fair to those employees whose religion does not have its Sabbath on Sunday. If they celebrate their holy day on Saturday, Friday, or Wednesday for that matter, is it fair that all of the Christians (at least all of the ones from Christian sects who go to church on Sunday) are getting their Sabbath off? A good manager can probably work around that, since there will still be five days available in which any given employee can work, but if the business has a weekly peak on a day that somebody wants to take off, this will be awkward. And no matter how hard they may try, at that point management is (by definition) treating some of its employees differently from the others…
Of course, in some industries it hardly matters; most professional offices (doctors, lawyers, accountants and so on) are closed on the weekends, and anybody who takes a weekday off for purposes of worship is already aware that most of the world will not be joining them. On the other hand, some industries require personnel fully 24/7 (such as cable television companies, telephone companies, health care and the like) and it can be extremely useful to a manager to have people on the payroll for whom Good Friday and Easter Sunday are just another day, or who (in extreme cases) might not even mind working Christmas Day. In both cases this issue will never come up…
Which brings us to the whole issue of religious holidays. If your company observes all Christian holidays, for example, but will not acknowledge those of any other faith, you are basically a discrimination lawsuit looking for a place to happen. To the people who claim that because they practice a specific faith they should only have to honor the religious holidays of that faith, I can only say that if you want that kind of protection for your observances, you’ve also got to grant it to everyone else. To this end, most employers offer their people a specific number of unspecified paid holidays each year (3 is common, although I have seen 2 and 5) which can be used for whatever observance you like, and is also fair to the poor atheists and agnostics in our society, who would otherwise only get our national holidays off…
So is closing the company down on Sundays fair to people who don’t worship on Sunday? I think the answer is that it can be, if the management team is willing to accommodate those people who need another day off. Just don’t ask me what we’re supposed to do when we’re trying to operate in a country that does have a state religion – and they’re taking a religious holiday on a day when we have a critical need to accomplish something…
It’s worth thinking about…
The obvious question is whether or not such a policy is fair to those employees whose religion does not have its Sabbath on Sunday. If they celebrate their holy day on Saturday, Friday, or Wednesday for that matter, is it fair that all of the Christians (at least all of the ones from Christian sects who go to church on Sunday) are getting their Sabbath off? A good manager can probably work around that, since there will still be five days available in which any given employee can work, but if the business has a weekly peak on a day that somebody wants to take off, this will be awkward. And no matter how hard they may try, at that point management is (by definition) treating some of its employees differently from the others…
Of course, in some industries it hardly matters; most professional offices (doctors, lawyers, accountants and so on) are closed on the weekends, and anybody who takes a weekday off for purposes of worship is already aware that most of the world will not be joining them. On the other hand, some industries require personnel fully 24/7 (such as cable television companies, telephone companies, health care and the like) and it can be extremely useful to a manager to have people on the payroll for whom Good Friday and Easter Sunday are just another day, or who (in extreme cases) might not even mind working Christmas Day. In both cases this issue will never come up…
Which brings us to the whole issue of religious holidays. If your company observes all Christian holidays, for example, but will not acknowledge those of any other faith, you are basically a discrimination lawsuit looking for a place to happen. To the people who claim that because they practice a specific faith they should only have to honor the religious holidays of that faith, I can only say that if you want that kind of protection for your observances, you’ve also got to grant it to everyone else. To this end, most employers offer their people a specific number of unspecified paid holidays each year (3 is common, although I have seen 2 and 5) which can be used for whatever observance you like, and is also fair to the poor atheists and agnostics in our society, who would otherwise only get our national holidays off…
So is closing the company down on Sundays fair to people who don’t worship on Sunday? I think the answer is that it can be, if the management team is willing to accommodate those people who need another day off. Just don’t ask me what we’re supposed to do when we’re trying to operate in a country that does have a state religion – and they’re taking a religious holiday on a day when we have a critical need to accomplish something…
It’s worth thinking about…
Friday, August 22, 2008
A Few Small Repairs
Regular readers of this space will recall that my wife and I have just completed a relocation from Los Angeles to East Lansing, Michigan, where I am joining the doctoral program in the Management Department of the Broad College of Business. As part of the process, we hired packers to come and pack up most of our belongings, loaders to load everything onto a moving van (and then into a warehouse and back into another moving van), and movers to move everything across the 2,300 or so miles between our previous city and our current city. I’m happy to report that the packers did an excellent job, wrapping several things much more securely than their contract really required. The moving crew that delivered our things were also quite good, carrying on despite summer heat, attacks by bald-faced hornets (whose nest they had accidentally driven the truck into) and the fact that the City had decided that last week was the ideal week to sink an 11-foot deep hole into the street in front of our house, after removing all of the concrete and leaving us on a dirt road…
Unfortunately, I can’t say the same for the crew that loaded everything onto the trucks and into the warehouse. In the course of doing so, the somehow managed to smash one of our television sets, damage the piano, and lose our vacuum cleaner altogether. There were a few other losses, such as one of our photo boxes (smashed, but the pictures are intact) and one of the two supports for a trestle desk (without which the other trestle and the desk top are both useless as well), but none that I felt reflected the total lack of competence suggested by a television set wrapped in a blanket or two and then crushed between other items packed into the truck…
If it sounds like I’m being unkind here, well, I’m really not. There is such a thing as a television packing box, used to protect a television set that is being transported by truck, and the company we hired to pack and move our stuff does in fact sell them. I’m fairly sure that they billed us for a couple of them in the packing supplies, but I can’t prove it. In any case, they didn’t bother to USE ONE when packing up our TV. Fortunately it was our second set; the main one is set up in our family room and working just fine, and our smaller emergency backup set (actually a flat panel that we acquired here at the Meijer) is also working perfectly. Which does not make this any less idiotic…
And don’t even get me started about the piano. My wife tells me that the damage is to one of the legs, and should be easy to repair; she insists that the sound quality of the instrument will not be affected. Which is all very well and good, but considering how much money we shelled out to have the piano moved in the first place, I don’t think it’s unreasonable to expect it to show up undamaged. Or at least, without one of the casters broken off and the foot cracked…
Which brings me to the point of this rant (yes, I do have one!). Our sales representative is going to get the sort of telephone call we all hope we never get sometime this week, and he will then have the choice of taking care of some very unhappy customers, or facing the consequences. It’s a situation so bad that it normally takes bad language to describe it, but this one man has the chance (and presumably the power) to make it all go away. Let’s all hope he chooses wisely…
I’ll keep you posted.
Unfortunately, I can’t say the same for the crew that loaded everything onto the trucks and into the warehouse. In the course of doing so, the somehow managed to smash one of our television sets, damage the piano, and lose our vacuum cleaner altogether. There were a few other losses, such as one of our photo boxes (smashed, but the pictures are intact) and one of the two supports for a trestle desk (without which the other trestle and the desk top are both useless as well), but none that I felt reflected the total lack of competence suggested by a television set wrapped in a blanket or two and then crushed between other items packed into the truck…
If it sounds like I’m being unkind here, well, I’m really not. There is such a thing as a television packing box, used to protect a television set that is being transported by truck, and the company we hired to pack and move our stuff does in fact sell them. I’m fairly sure that they billed us for a couple of them in the packing supplies, but I can’t prove it. In any case, they didn’t bother to USE ONE when packing up our TV. Fortunately it was our second set; the main one is set up in our family room and working just fine, and our smaller emergency backup set (actually a flat panel that we acquired here at the Meijer) is also working perfectly. Which does not make this any less idiotic…
And don’t even get me started about the piano. My wife tells me that the damage is to one of the legs, and should be easy to repair; she insists that the sound quality of the instrument will not be affected. Which is all very well and good, but considering how much money we shelled out to have the piano moved in the first place, I don’t think it’s unreasonable to expect it to show up undamaged. Or at least, without one of the casters broken off and the foot cracked…
Which brings me to the point of this rant (yes, I do have one!). Our sales representative is going to get the sort of telephone call we all hope we never get sometime this week, and he will then have the choice of taking care of some very unhappy customers, or facing the consequences. It’s a situation so bad that it normally takes bad language to describe it, but this one man has the chance (and presumably the power) to make it all go away. Let’s all hope he chooses wisely…
I’ll keep you posted.
Thursday, August 21, 2008
The Qdoba Difference
Some time ago I wrote in this space about a unique food service operation called Chipotle, and how they managed to parlay a handful of food items into over 2,000 different menu choices – resulting in extremely high speed in food production and relatively low costs while maintaining relatively high ingredient quality. Not surprisingly, about two years after the launch of the first Chipotle, a competitor using a similar formula launched in the same market in Denver, Colorado. The new organization was called Qdoba, and it utilized a number of the same production elements. But, as I discovered on visiting a Qdoba for the first time this past weekend, it’s not an exact copy or even the complete rip-off it initially appears to be. The truth is, the Qdoba people are using a similar business model to produce a different product and service…
The first difference in the business model is obvious the moment you walk into a Qdoba restaurant: there is no pounding Mexican/Industrial music, no corrugated iron siding on the walls, no stainless-steel seating areas or post-industrial décor. Instead, you’ve got acoustic ceiling tiles, carpet, and conventional seating areas combined with a much quieter background music, resulting in a dining environment in which it is actually possible to talk (dining at a Chipotle the conversation usually consists of yelling “What?” every minute or two). The restaurant we went to in East Lansing had a flat-panel TV on the wall with Olympic coverage going, as well. The whole message of the place is different; where a Chipotle is supposed to be “crazy fast” and edgy, this operation encourages the customer to actually sit and enjoy their meal, and take their time over it…
Then there’s the menu. Like its older competitor, Qdoba offers burritos, tacos, nachos, and other semi-traditional Mexican food (yes, I know that most real Mexicans do not eat these dishes; it’s traditional Mexican food as made in the US, all right?), but instead of the multiple permutations menu favored by Chipotle, the menu here has specific combinations of meats, cheeses, and condiments. You are encouraged to modify any or all of the combinations to suit your particular taste, but there is no requirement to make up your own combination unless you want to. This increases the time needed to construct your meal, and increases the complexity of both food fabrication and staff training, but it also gives the illusion of a more conventional restaurant meal…
And then there’s the food itself. The one constant in a Chipotle menu is the heat; unless you like your food relatively spicy you will find most of the menu items a bit on the hot side. By contrast, the Qdoba menu includes a number of much milder elements, which makes it possible for those with a wider range of tastes to enjoy their food – and permits those who do like spicy food to eat it more frequently with the attendant heartburn. Taken in combination with the slower pace, the more comfortable seating, and the less threatening menu, it’s a combination that should be able to compete with Chipotle anywhere, and which seems to work very well indeed in the upper Midwest…
They key point to consider here is that Qdoba isn’t just a copy of the Chipotle operation – though it easily could have been. Even granted that the founders of Chipotle were graduates of the Culinary Institute of America, and that their food is generally superior in flavor and design, there is no reason the Qdoba people could not have reverse-engineered the entire process, or else hired their own culinary experts to produce a close copy. Instead, they took many of the competition’s best design elements, and created a product/service that could complete directly with Chipotle, taking advantage of all of the weaknesses of their adversary’s model (e.g. loud, uncomfortable, a menu you have to figure out for yourself, a rushed experience, and spicy food). As a result, their business is much more successful than a knock-off version would have been. It’s something to consider the next time you are thinking about reverse-engineering a competitor…
The first difference in the business model is obvious the moment you walk into a Qdoba restaurant: there is no pounding Mexican/Industrial music, no corrugated iron siding on the walls, no stainless-steel seating areas or post-industrial décor. Instead, you’ve got acoustic ceiling tiles, carpet, and conventional seating areas combined with a much quieter background music, resulting in a dining environment in which it is actually possible to talk (dining at a Chipotle the conversation usually consists of yelling “What?” every minute or two). The restaurant we went to in East Lansing had a flat-panel TV on the wall with Olympic coverage going, as well. The whole message of the place is different; where a Chipotle is supposed to be “crazy fast” and edgy, this operation encourages the customer to actually sit and enjoy their meal, and take their time over it…
Then there’s the menu. Like its older competitor, Qdoba offers burritos, tacos, nachos, and other semi-traditional Mexican food (yes, I know that most real Mexicans do not eat these dishes; it’s traditional Mexican food as made in the US, all right?), but instead of the multiple permutations menu favored by Chipotle, the menu here has specific combinations of meats, cheeses, and condiments. You are encouraged to modify any or all of the combinations to suit your particular taste, but there is no requirement to make up your own combination unless you want to. This increases the time needed to construct your meal, and increases the complexity of both food fabrication and staff training, but it also gives the illusion of a more conventional restaurant meal…
And then there’s the food itself. The one constant in a Chipotle menu is the heat; unless you like your food relatively spicy you will find most of the menu items a bit on the hot side. By contrast, the Qdoba menu includes a number of much milder elements, which makes it possible for those with a wider range of tastes to enjoy their food – and permits those who do like spicy food to eat it more frequently with the attendant heartburn. Taken in combination with the slower pace, the more comfortable seating, and the less threatening menu, it’s a combination that should be able to compete with Chipotle anywhere, and which seems to work very well indeed in the upper Midwest…
They key point to consider here is that Qdoba isn’t just a copy of the Chipotle operation – though it easily could have been. Even granted that the founders of Chipotle were graduates of the Culinary Institute of America, and that their food is generally superior in flavor and design, there is no reason the Qdoba people could not have reverse-engineered the entire process, or else hired their own culinary experts to produce a close copy. Instead, they took many of the competition’s best design elements, and created a product/service that could complete directly with Chipotle, taking advantage of all of the weaknesses of their adversary’s model (e.g. loud, uncomfortable, a menu you have to figure out for yourself, a rushed experience, and spicy food). As a result, their business is much more successful than a knock-off version would have been. It’s something to consider the next time you are thinking about reverse-engineering a competitor…
Wednesday, August 20, 2008
The Business of Birdfeeders
In an earlier post, I wrote about my amazement with the array of colorful birds that live in our neighborhood and come to our bird feeder each day. I suppose I must sound quite bumptious to someone who grew up here, but you have to remember that in Los Angeles what you mostly see are pigeons, seagulls, and crows. Growing up in the Santa Monica Mountains we also had mockingbirds and scrub jays, and occasionally a Great Horned owl would perch in the tree outside my window and hoot for a few nights, and at our house in Redondo Beach we were frequently inundated with house sparrows (too many to count), but that’s basically it. And you might go weeks or months at a time without seeing any birds except for the ubiquitous crows and pigeons…
Meanwhile, in the month or so I’ve been watching, I’ve seen wild geese, mallard ducks, Great Blue herons, snowy egrets, American goldfinches, cardinals, robins, chickadees, more house sparrows than you can possibly count, red-tailed hawks, house finches, red-winged blackbirds, and blue jays. Not to mention crows, pigeons (and rock doves), and seagulls, for that matter. And that’s just wandering around Greater Lansing; I can’t even imagine how many more I’ll get to add to my list when we take a trip up to Northern Michigan and the Upper Peninsula. Or how many more birds will pass through our neighborhood during the Fall and Spring migrations…
So a few days ago we went out and bought a bird feeder to put on the feeder station attached to our deck (it came with the house). It seemed like a good idea, since I like watching the birds, and we already had a place to hang a feeder, and there was a store just up the street that sells birdfeeders and associated apparatus, called Wild Birds Unlimited. So we went, and discovered that there is a lot more to feeding birds than meets the eye. To begin with, there are over 300 of these Wild Birds Unlimited stores in North America, including one located less than five miles from our old place in Redondo. The things you find out when you relocate two-thirds of the way across a continent…
Then there’s the fact that these stores carry dozens of different types of feeders, including trough feeders, tube feeders, finch feeders, hummingbird and oriole feeders, hopper feeders, tray feeders, window feeders, suet feeders, specialty feeders, and feeders rather optimistically described as “squirrel-proof.” Then there are “instant” feeders – essentially balls of seeds or other popular bird feed held together with peanut butter or other edible binding agents, which you can hang in a tree or stick to a fencepost, and “bark butter” which is essentially the same product in tub form, which you can spread onto a tree branch or a fence post, presumably with a putty knife…
Equally bewildering is the array of bird feeds themselves, including dozens of different types. These are important, as the clerk at our local Wild Birds Unlimited explained, because different birds have different favorite foods and different dietary needs. We selected a bag of “Supreme Blend” bird food, which includes favorites for cardinals, finches, and chickadees, and also peanuts for the robins and seeds for the sparrows. The blue jays aren’t much of a bother; they will apparently eat anything that doesn’t eat them first, including the eggs and young of other birds. We also selected a classic balcony-style feeder with a gravity-feed system, because the cardinals prefer this type of feeder, and most of the smaller birds don’t really mind it (again, the jays don’t care)…
“Why does he tell me this?” I hear some of you asking. It’s simple, really: a month ago I had no idea there was such a thing as a national chain of retail stores dedicated to feeding birds; today I have a club card that will give me 15% off on all future bird food purchases. What new business models will I stumble upon tomorrow? More to the point, what new business models might there be waiting just outside your window?
Meanwhile, in the month or so I’ve been watching, I’ve seen wild geese, mallard ducks, Great Blue herons, snowy egrets, American goldfinches, cardinals, robins, chickadees, more house sparrows than you can possibly count, red-tailed hawks, house finches, red-winged blackbirds, and blue jays. Not to mention crows, pigeons (and rock doves), and seagulls, for that matter. And that’s just wandering around Greater Lansing; I can’t even imagine how many more I’ll get to add to my list when we take a trip up to Northern Michigan and the Upper Peninsula. Or how many more birds will pass through our neighborhood during the Fall and Spring migrations…
So a few days ago we went out and bought a bird feeder to put on the feeder station attached to our deck (it came with the house). It seemed like a good idea, since I like watching the birds, and we already had a place to hang a feeder, and there was a store just up the street that sells birdfeeders and associated apparatus, called Wild Birds Unlimited. So we went, and discovered that there is a lot more to feeding birds than meets the eye. To begin with, there are over 300 of these Wild Birds Unlimited stores in North America, including one located less than five miles from our old place in Redondo. The things you find out when you relocate two-thirds of the way across a continent…
Then there’s the fact that these stores carry dozens of different types of feeders, including trough feeders, tube feeders, finch feeders, hummingbird and oriole feeders, hopper feeders, tray feeders, window feeders, suet feeders, specialty feeders, and feeders rather optimistically described as “squirrel-proof.” Then there are “instant” feeders – essentially balls of seeds or other popular bird feed held together with peanut butter or other edible binding agents, which you can hang in a tree or stick to a fencepost, and “bark butter” which is essentially the same product in tub form, which you can spread onto a tree branch or a fence post, presumably with a putty knife…
Equally bewildering is the array of bird feeds themselves, including dozens of different types. These are important, as the clerk at our local Wild Birds Unlimited explained, because different birds have different favorite foods and different dietary needs. We selected a bag of “Supreme Blend” bird food, which includes favorites for cardinals, finches, and chickadees, and also peanuts for the robins and seeds for the sparrows. The blue jays aren’t much of a bother; they will apparently eat anything that doesn’t eat them first, including the eggs and young of other birds. We also selected a classic balcony-style feeder with a gravity-feed system, because the cardinals prefer this type of feeder, and most of the smaller birds don’t really mind it (again, the jays don’t care)…
“Why does he tell me this?” I hear some of you asking. It’s simple, really: a month ago I had no idea there was such a thing as a national chain of retail stores dedicated to feeding birds; today I have a club card that will give me 15% off on all future bird food purchases. What new business models will I stumble upon tomorrow? More to the point, what new business models might there be waiting just outside your window?
Tuesday, August 19, 2008
Offshore, Out of Mind?
As one of the only people I’ve ever met who has actually reported a “Do Not Call” List violation to the FCC, I noted a story in the Associated Press wire feed last week about a case in Pennsylvania involving half a million of them…
The AP is reporting that Pennsylvania’s Attorney General has filed a lawsuit against a company based in Baltimore that supposedly hired a telemarketing call center located in India to make calls to over 500,000 homes in Pennsylvania, regardless of whether those numbers were on the Do Not Call list or not. The calls were made by or on behalf of a company called Direct Leadsource, and were apparently part of an ongoing campaign to market mortgage loans. If you’re thinking that it would be unwise to try a stunt like these during a time when four states have started lawsuits to punish predatory lenders, you’re quite right. If you’re thinking that Pennsylvania has been hit hard by the current economic downturn and is unlikely to take kindly to this sort of scheme, you would be right again. It would not have taken more than a few people complaining to the FCC and local authorities to bring on this type of action…
Even worse, the company responsible for all of this is not registered as a telemarketer in the State of Pennsylvania, nor is it licensed to sell mortgage loans in that state. What on Earth made them think they could get away with this nonsense is still unknown, but there has been speculation that they might have thought that because the call center was overseas, the calls would not fall under the jurisdiction of any U.S. authorities. If so, this strategy does not seem to be working. Each violation of the Do Not Call list can carry a fine of up to $10,000, which means that the total bill for this escapade could be as much as $5,000,000,000. That’s $5 billion, folks; almost certainly enough to bankrupt the company…
Which is probably as far was this case will go, when all’s said and done. If Direct Leadsource is a corporation (and the people running it would have to be out of their tiny little minds to try this with any other corporate structure) then it probably doesn’t have any assets as such, and will simply be forced out of business. The idiots behind this outrage will just declare bankruptcy, fold their tent, and go try the same thing somewhere else. Unless, of course, they can come up with a better scam, and try that instead. In fact, I strongly suspect that was the idea all along; the people behind this enterprise probably figured to use the off-shore call center to do the telemarketing, scoop up all of the money they could from the unsophisticated, the naïve and the stupid, and then abandon the operation to bankruptcy when somebody called them on it…
It’s a pity there’s no corresponding criminal statute to prosecute them on, but if there was I imagine we would have heard about it by now. Maybe in the future we can pass laws that will keep miscreants from using the protection of the corporate veil to skate free of the consequences of their actions. Maybe we can include a provision in the upcoming laws about predatory lending that criminalizes this practice where mortgages are involved, and work our way out from there. Maybe we can allow the Attorney General in this case (and similar ones in the future) to sue the overseas call center for their part in the scam, and freeze their assets until they pay up – which should keep any other overseas companies from participating in this sort of scam in the future…
Or maybe we could just outlaw telemarketing calls and have done with it. After all, most of these sorts of scam are on email now anyway…
The AP is reporting that Pennsylvania’s Attorney General has filed a lawsuit against a company based in Baltimore that supposedly hired a telemarketing call center located in India to make calls to over 500,000 homes in Pennsylvania, regardless of whether those numbers were on the Do Not Call list or not. The calls were made by or on behalf of a company called Direct Leadsource, and were apparently part of an ongoing campaign to market mortgage loans. If you’re thinking that it would be unwise to try a stunt like these during a time when four states have started lawsuits to punish predatory lenders, you’re quite right. If you’re thinking that Pennsylvania has been hit hard by the current economic downturn and is unlikely to take kindly to this sort of scheme, you would be right again. It would not have taken more than a few people complaining to the FCC and local authorities to bring on this type of action…
Even worse, the company responsible for all of this is not registered as a telemarketer in the State of Pennsylvania, nor is it licensed to sell mortgage loans in that state. What on Earth made them think they could get away with this nonsense is still unknown, but there has been speculation that they might have thought that because the call center was overseas, the calls would not fall under the jurisdiction of any U.S. authorities. If so, this strategy does not seem to be working. Each violation of the Do Not Call list can carry a fine of up to $10,000, which means that the total bill for this escapade could be as much as $5,000,000,000. That’s $5 billion, folks; almost certainly enough to bankrupt the company…
Which is probably as far was this case will go, when all’s said and done. If Direct Leadsource is a corporation (and the people running it would have to be out of their tiny little minds to try this with any other corporate structure) then it probably doesn’t have any assets as such, and will simply be forced out of business. The idiots behind this outrage will just declare bankruptcy, fold their tent, and go try the same thing somewhere else. Unless, of course, they can come up with a better scam, and try that instead. In fact, I strongly suspect that was the idea all along; the people behind this enterprise probably figured to use the off-shore call center to do the telemarketing, scoop up all of the money they could from the unsophisticated, the naïve and the stupid, and then abandon the operation to bankruptcy when somebody called them on it…
It’s a pity there’s no corresponding criminal statute to prosecute them on, but if there was I imagine we would have heard about it by now. Maybe in the future we can pass laws that will keep miscreants from using the protection of the corporate veil to skate free of the consequences of their actions. Maybe we can include a provision in the upcoming laws about predatory lending that criminalizes this practice where mortgages are involved, and work our way out from there. Maybe we can allow the Attorney General in this case (and similar ones in the future) to sue the overseas call center for their part in the scam, and freeze their assets until they pay up – which should keep any other overseas companies from participating in this sort of scam in the future…
Or maybe we could just outlaw telemarketing calls and have done with it. After all, most of these sorts of scam are on email now anyway…
Monday, August 18, 2008
To SUV or Not To SUV
The local ABC affiliate station in Chicago is reporting that starting this fall, the Chicago Police Department will replace 150 to 160 of their existing Ford Crown Victoria police cruisers with new Chevrolet Tahoe SUVs. The Department cites such advantages as the SUVs handle better in bad weather and allow the officers to sit 13 inches higher, presumably to see over the rest of traffic better. On the one hand, speaking as someone who lives in the community where Chevy Tahoe units are built, this sounds like a good thing for Michigan. The problem is, when you consider issues like fuel and repair costs, I’m not so sure it’s a good thing for Chicago…
A quick check of the relative stats on “Fuel Economy.gov” shows that a Crown Victoria averages 18 miles per gallon (mpg), while a Tahoe manages just 16 mpg. It’s a difference of about 70 cents for each 25 miles driven, or about $410 per year at 15,000, although one suspects that police cars are driven harder than that. Still, that’s a difference of at least $60,000 per year extra to fuel the SUVs, which isn’t that bad, but those projections assume that gasoline stays under $4 a gallon, that the SUVs are kept in optimal driving condition, that they aren’t left idling, and so on. In theory, the differential could go much higher, and that doesn’t include the fact that SUV tires and parts are more expensive, or that the maintenance takes much longer…
Now, I’m sure you’re wondering what difference a small change like this is going to make on the budget of an agency the size of the Chicago Police Department, or on a city the size of Chicago, for that matter. Even allowing for the increase in carbon footprint or how much more room an SUV take up in traffic, why should anyone care if the city is buying new gas hogs? Well, I don’t suppose 150 SUVs are going to make much difference, but consider if the CPD were to purchase the Chevy Equinox instead. It’s a crossover, not a true SUV, but the police are not likely to use their SUVs for towing or construction duties, so that shouldn’t matter. More to the point, the Equinox has an average mpg of 21, 31% better than the Tahoe and almost 20% higher than the Crown Victoria…
Now the City of Chicago is saving $600 per vehicle per year over the Crown Victoria, and $1,000 per vehicle per year over the Tahoe, just in fuel costs. It’s a much more attractive idea, and one that won’t get you second-guessed on the evening news, mocked on the Internet or flamed on Fark.com. It also lowers the city’s carbon footprint and dependence on oil, which could only help. And the Equinox is also made in the Lansing area, so I’m still in favor of it from an economic standpoint. But what if the Chicago PD went with Ford Escape units instead? The Escape has an average mpg of 26, and the hybrid version manages 32, twice as high as the Tahoe and nearly twice as high as the Crown Victoria. That gives us a savings of nearly $3,000 per unit per year, $450,000 total, and a really great press release…
Why does he tell us this? I hear some of you asking. Unless you actually work for General Motors in the Lansing area, these choices are unlikely to have much effect on your life, and unless you spend a lot of time in Chicago it’s unlikely you’ll ever notice the difference. I call this to your attention because while the City of Chicago can afford to blow off a $450,000 per year savings if they really want to, your business probably can’t. A Chevy Tahoe is an extremely capable vehicle, and if you actually need any of the SUV’s functionality during the course of your business then by all means go and get one. Heck, get 160 of them if you like. But if not, you might consider something more efficient – or at least cheaper to operate…
A quick check of the relative stats on “Fuel Economy.gov” shows that a Crown Victoria averages 18 miles per gallon (mpg), while a Tahoe manages just 16 mpg. It’s a difference of about 70 cents for each 25 miles driven, or about $410 per year at 15,000, although one suspects that police cars are driven harder than that. Still, that’s a difference of at least $60,000 per year extra to fuel the SUVs, which isn’t that bad, but those projections assume that gasoline stays under $4 a gallon, that the SUVs are kept in optimal driving condition, that they aren’t left idling, and so on. In theory, the differential could go much higher, and that doesn’t include the fact that SUV tires and parts are more expensive, or that the maintenance takes much longer…
Now, I’m sure you’re wondering what difference a small change like this is going to make on the budget of an agency the size of the Chicago Police Department, or on a city the size of Chicago, for that matter. Even allowing for the increase in carbon footprint or how much more room an SUV take up in traffic, why should anyone care if the city is buying new gas hogs? Well, I don’t suppose 150 SUVs are going to make much difference, but consider if the CPD were to purchase the Chevy Equinox instead. It’s a crossover, not a true SUV, but the police are not likely to use their SUVs for towing or construction duties, so that shouldn’t matter. More to the point, the Equinox has an average mpg of 21, 31% better than the Tahoe and almost 20% higher than the Crown Victoria…
Now the City of Chicago is saving $600 per vehicle per year over the Crown Victoria, and $1,000 per vehicle per year over the Tahoe, just in fuel costs. It’s a much more attractive idea, and one that won’t get you second-guessed on the evening news, mocked on the Internet or flamed on Fark.com. It also lowers the city’s carbon footprint and dependence on oil, which could only help. And the Equinox is also made in the Lansing area, so I’m still in favor of it from an economic standpoint. But what if the Chicago PD went with Ford Escape units instead? The Escape has an average mpg of 26, and the hybrid version manages 32, twice as high as the Tahoe and nearly twice as high as the Crown Victoria. That gives us a savings of nearly $3,000 per unit per year, $450,000 total, and a really great press release…
Why does he tell us this? I hear some of you asking. Unless you actually work for General Motors in the Lansing area, these choices are unlikely to have much effect on your life, and unless you spend a lot of time in Chicago it’s unlikely you’ll ever notice the difference. I call this to your attention because while the City of Chicago can afford to blow off a $450,000 per year savings if they really want to, your business probably can’t. A Chevy Tahoe is an extremely capable vehicle, and if you actually need any of the SUV’s functionality during the course of your business then by all means go and get one. Heck, get 160 of them if you like. But if not, you might consider something more efficient – or at least cheaper to operate…
Sunday, August 17, 2008
The Ethics of Expenses
There was an interesting story on ABC News this past week about American Airlines charging their now infamous extra bag fee to soldiers on their way back to the war zones in Asia. Most of the other major carriers either have or will shortly be introducing such fees, and indications are that they will also charge soldiers for bringing an extra duffel bag with them. This is being portrayed as a huge corporation putting the screws to the brave troops, who are then facing a huge hardship in trying to pay the fees. But as usual, the truth is it’s not that simple. I thought it was worth a closer look…
In the first place, it’s important to understand that the troops aren’t actually paying these fees out of pocket; they submit expense vouchers to the Army, which pays them back for travel expenses, just like any other government employer – or most civilian ones, if it comes to that. There are official Army rules about that, of course, which determine how much baggage the Army is going to cover as part of your travel expenses, and the soldiers all know how much baggage allowance they have before they start to pack for the trip. But ranting about soldiers having the hardship of filling out expense reports doesn’t play as well as ranting about the airlines making them pony up for the extra bags, so that aspect of the story is generally being left out of the press accounts…
From the other side of the counter, the airlines are taking the position that they already offer service people the lowest possible fares and fees when the Army isn’t paying their way, and they try to make everything as simple as possible for soldiers flying on business, but they don’t see why they should be expected to subsidize the Department of Defense by waiving the fees altogether. It’s not a very effective emotional appeal, especially during a time when most consumers are already peeved at the airlines for raising fares and instituting all of these stupid new fees, but consider if the government employees who wanted to fly for a better fare than you can get were from the Department of Agriculture or Interstate Commerce – or if they were just rear-echelon types who will never get any closer to the war zones than Northern Virginia: would you still be worried about them getting their expenses reimbursed?
More to the point, perhaps, imagine if the government wanted your business to offer extra special deep discounts to their employees, in exchange for nothing but a fine patriotic flush. Not donate money, which would at least give you a tax break, but just not charge as much money, make less profit (or possibly none) and put your company and your family at risk, just so some of their employees could avoid the onerous task of filling out travel forms. How would you feel about this? I can’t speak for anyone else, but I can tell you that I’d never stand for it – this is America, folks; not only is our government not supposed to take things without paying for them, but you know that if you give them an inch they’ll take a cubic mile. Next they’ll be expecting the airlines to allow ANY government employee to fly for free under ANY conditions because anything else would be unpatriotic…
It sounds like a pile of nationalist, jingoist crap, doesn’t it? Except when you consider that a large part of why we are currently mired in two ruinous land wars in Asia is the 9/11 attacks, and a large part of why those happened is that for decades leading up to the attacks the airlines fought tooth and nail against security upgrades that would have prevented the whole disaster, on the grounds that armored cockpit doors or competent security screeners were too expensive. And then, after the attacks, when people were avoiding air travel, the airline industry went running to Congress to bail them out. One could quite reasonably claim that the whole international mess is their own fault, and that the industry is now whining about having to do its part to clean things up…
Should our troops be spared the cruelty of extra paperwork? Or should the airlines go on charging government employees on the same basis as everyone else, just as they’ve always done? It’s worth thinking about…
In the first place, it’s important to understand that the troops aren’t actually paying these fees out of pocket; they submit expense vouchers to the Army, which pays them back for travel expenses, just like any other government employer – or most civilian ones, if it comes to that. There are official Army rules about that, of course, which determine how much baggage the Army is going to cover as part of your travel expenses, and the soldiers all know how much baggage allowance they have before they start to pack for the trip. But ranting about soldiers having the hardship of filling out expense reports doesn’t play as well as ranting about the airlines making them pony up for the extra bags, so that aspect of the story is generally being left out of the press accounts…
From the other side of the counter, the airlines are taking the position that they already offer service people the lowest possible fares and fees when the Army isn’t paying their way, and they try to make everything as simple as possible for soldiers flying on business, but they don’t see why they should be expected to subsidize the Department of Defense by waiving the fees altogether. It’s not a very effective emotional appeal, especially during a time when most consumers are already peeved at the airlines for raising fares and instituting all of these stupid new fees, but consider if the government employees who wanted to fly for a better fare than you can get were from the Department of Agriculture or Interstate Commerce – or if they were just rear-echelon types who will never get any closer to the war zones than Northern Virginia: would you still be worried about them getting their expenses reimbursed?
More to the point, perhaps, imagine if the government wanted your business to offer extra special deep discounts to their employees, in exchange for nothing but a fine patriotic flush. Not donate money, which would at least give you a tax break, but just not charge as much money, make less profit (or possibly none) and put your company and your family at risk, just so some of their employees could avoid the onerous task of filling out travel forms. How would you feel about this? I can’t speak for anyone else, but I can tell you that I’d never stand for it – this is America, folks; not only is our government not supposed to take things without paying for them, but you know that if you give them an inch they’ll take a cubic mile. Next they’ll be expecting the airlines to allow ANY government employee to fly for free under ANY conditions because anything else would be unpatriotic…
It sounds like a pile of nationalist, jingoist crap, doesn’t it? Except when you consider that a large part of why we are currently mired in two ruinous land wars in Asia is the 9/11 attacks, and a large part of why those happened is that for decades leading up to the attacks the airlines fought tooth and nail against security upgrades that would have prevented the whole disaster, on the grounds that armored cockpit doors or competent security screeners were too expensive. And then, after the attacks, when people were avoiding air travel, the airline industry went running to Congress to bail them out. One could quite reasonably claim that the whole international mess is their own fault, and that the industry is now whining about having to do its part to clean things up…
Should our troops be spared the cruelty of extra paperwork? Or should the airlines go on charging government employees on the same basis as everyone else, just as they’ve always done? It’s worth thinking about…
Saturday, August 16, 2008
A Very Advanced Place
What do lottery games and cement mixers have in common? Well, usually nothing, but today I found myself being surprised, if not amazed, by both of them. We’re camped out in the family room of our house, waiting for our moving van to navigate its way here from Chicago, which will not be easy, since the road maintenance crew from the city has reduced all of the streets in our subdivision to dirt roads and dug a ten-foot-deep pit directly in front of our place. On the plus side, the odds of the van getting stuck in traffic on the way here are essentially non-existent, since in just over a month here we’ve yet to see anything that would be considered a traffic jam by Los Angeles Standards. Traffic in East Lansing means that you have to drop below 70 mph on the Interstate…
Most of Greater Lansing isn’t quite as extreme as our street is right now, but we’re living in a state with a smaller population than the city I grew up in, and a city smaller than Redondo Beach all by itself. Which makes technological advances like the ones I saw today all the more remarkable. Consider, for example, the “front discharge” concrete transport trucks (also known as cement mixer trucks) that we’ve seen all over the Lansing metro area. My wife and I had never seen such a device in California, or any of the other states we have journeyed through, for that matter, but it turns out that these vehicles are far more advanced than the “rear discharge” versions with which we had been familiar. It seems that the older style trucks require a crew of at least two (a driver and a “chute man” who controls the discharge of the cement) to operate, while the new “front discharge” models can be operated by a single crewman…
The newer trucks also have six axels, three of which can be can be hydraulically lifted when the mixer is empty, or engaged when its full, to lower the vehicle’s ground pressure. This increases the truck’s fuel efficiency and lowers the wear on half of the tires (when empty) and allows the vehicle to avoid getting stuck in the mud or damaging the roadway (when full). They may look a bit strange when you first see one, but these new trucks are much more advanced than anything you will see in California, a state noted for being obsessed with ground transportation. The lower road-wear alone would make these a godsend to the folks in Los Angeles…
As if that wasn’t enough, we then went into the Meijer to purchase a few bathroom items, and there, in the lottery ticket vending machine, were $20 scratch-off tickets. We’ve all seen the original $1 cards, and the California Lottery had gradually introduced $2, $3 and $5 games, but this is by far the most advanced means of separating people from their money by means of impulse buys I have ever seen, short of a Las Vegas casino. I should probably explain that a Meijer is a Midwest chain known as a “hypermarket,” sort of like the larger Wal-Mart locations, including a warehouse-style supermarket with a gigantic general merchandise store, including a pharmacy, a garden center, and in some cases, a gas station. In theory, you should be able to purchase almost any non-specialty merchandise you will ever need in a Meijer (it’s pronounced “Mayer” and is named after the guy who founded the company). It’s at least as amazing as the trucks or the scratchers…
I kid, of course, but in truth we have been impressed with our new home. East Lansing takes a bad rap from a lot of people, especially those in Ann Arbor and those in large cites out west, as being much like Detroit, only in miniature. My take on East Lansing after my first month, on the contrary, has been more of groves of lush green trees, flocks of wild geese and ducks flying (and waddling) free, colorful songbirds (cardinals, finches, robins, warblers, etc.) perching on our pine trees, and state-of-the-art television, DSL, Wi-Fi and telephone services. Not to mention cutting-edge concrete trucks and really amazing lottery games. It’s a beautiful place, and very advanced…
Most of Greater Lansing isn’t quite as extreme as our street is right now, but we’re living in a state with a smaller population than the city I grew up in, and a city smaller than Redondo Beach all by itself. Which makes technological advances like the ones I saw today all the more remarkable. Consider, for example, the “front discharge” concrete transport trucks (also known as cement mixer trucks) that we’ve seen all over the Lansing metro area. My wife and I had never seen such a device in California, or any of the other states we have journeyed through, for that matter, but it turns out that these vehicles are far more advanced than the “rear discharge” versions with which we had been familiar. It seems that the older style trucks require a crew of at least two (a driver and a “chute man” who controls the discharge of the cement) to operate, while the new “front discharge” models can be operated by a single crewman…
The newer trucks also have six axels, three of which can be can be hydraulically lifted when the mixer is empty, or engaged when its full, to lower the vehicle’s ground pressure. This increases the truck’s fuel efficiency and lowers the wear on half of the tires (when empty) and allows the vehicle to avoid getting stuck in the mud or damaging the roadway (when full). They may look a bit strange when you first see one, but these new trucks are much more advanced than anything you will see in California, a state noted for being obsessed with ground transportation. The lower road-wear alone would make these a godsend to the folks in Los Angeles…
As if that wasn’t enough, we then went into the Meijer to purchase a few bathroom items, and there, in the lottery ticket vending machine, were $20 scratch-off tickets. We’ve all seen the original $1 cards, and the California Lottery had gradually introduced $2, $3 and $5 games, but this is by far the most advanced means of separating people from their money by means of impulse buys I have ever seen, short of a Las Vegas casino. I should probably explain that a Meijer is a Midwest chain known as a “hypermarket,” sort of like the larger Wal-Mart locations, including a warehouse-style supermarket with a gigantic general merchandise store, including a pharmacy, a garden center, and in some cases, a gas station. In theory, you should be able to purchase almost any non-specialty merchandise you will ever need in a Meijer (it’s pronounced “Mayer” and is named after the guy who founded the company). It’s at least as amazing as the trucks or the scratchers…
I kid, of course, but in truth we have been impressed with our new home. East Lansing takes a bad rap from a lot of people, especially those in Ann Arbor and those in large cites out west, as being much like Detroit, only in miniature. My take on East Lansing after my first month, on the contrary, has been more of groves of lush green trees, flocks of wild geese and ducks flying (and waddling) free, colorful songbirds (cardinals, finches, robins, warblers, etc.) perching on our pine trees, and state-of-the-art television, DSL, Wi-Fi and telephone services. Not to mention cutting-edge concrete trucks and really amazing lottery games. It’s a beautiful place, and very advanced…
Friday, August 15, 2008
Just How Frequent, Again?
There was an interesting story on the news the other day about some disturbing new developments in the Airline industry – even more disturbing than charging money for checked bags and food, I mean. By this point there’s really no point in arguing that the industry as a whole (at least in the United States) is in dire trouble, and even future bailouts (your tax dollars at work again!) will not prevent many of the carriers from going under. But this most recent development is an indicator not only that the companies involved are feeling the ground getting shaky under their feet, but also that some of the disasters predicted years ago may finally be coming true, as poor management decisions come home to roost…
The story concerned moves by several major US airlines to curtail use of their Frequent Flyer rewards programs, by increasing the number of miles or “points” needed to obtain a free ticket, cutting in half the time customers have to redeem their miles (from 3 years to 18 months), and worst of all, by requiring fees to redeem those free tickets – anything from $25 on some short domestic flights to a whopping $350 on some overseas flights. The fees are being called “fuel surcharges” just like the fare hikes on tickets you pay for out of pocket, but with no real prospect of jet gas prices ever going down, those fares are probably permanent, and the amount you save on a supposedly free ticket has dropped anywhere from 5% to 65%. Or, to look at it another way, your “free” ticket is now being offered at a discount of 35% to 95% -- possibly a quite large discount, but no longer a free ticket by any means…
The airlines are claiming that these are still free tickets, and the fuel surcharges are only temporary. They’re defending the higher redemption rates and shorter life spans of the points by claiming that since they’ve added all manner of other things that you can buy with your rewards miles (e.g. rental cars, hotel rooms, merchandise, even magazine subscriptions) that the new programs actually offer better value than in years past. But customers seem unconvinced; one corporate executive was quoted as saying that it seemed inefficient to spend $500,000 and in return get a year of Reader’s Digest…
What makes all of these even more upsetting (and possibly hysterical – it depends on how you feel about airlines) is that this crisis was predicted over five years ago by Professors Bazerman and Watkins, in their book “Predictable Surprises.” The good doctors noted that the frequent flyer miles owed to passengers were, at least from an accounting standpoint, a huge debt that the airlines had incurred while trying to draw all of the frequent flyers to themselves. Since any such program would immediately be duplicated by all of the companies in the industry, all of the airlines were effectively mortgaging their future to gain an advantage in the present that could never be preserved. They predicted that the airlines must either begin defaulting on these promised flights (incurring huge lawsuits) or begin devaluing the reward miles themselves…
Of course, a lot of people have come to look at frequent flyer miles (and the attendant free tickets) as their right as passengers, not as a misguided (and possibly suicidal) marketing strategy that has now brought a troubled industry even closer to the brink. They will not react well to their miles dying off even faster than before, and as a result air travel in the US is going to decline even faster. In fact, it seems likely that the more fees, surcharges and rate hikes the airlines pile on to their remaining customers, the fewer customers are likely to remain in the air…
I’m not sure where all of this is going to end, but I know that if you were planning a career in the Airline industry, you might want to consider a change – and if you were saving your frequent flyer miles for a big trip in a few years, you might want to consider moving up your departure date. While you still can…
The story concerned moves by several major US airlines to curtail use of their Frequent Flyer rewards programs, by increasing the number of miles or “points” needed to obtain a free ticket, cutting in half the time customers have to redeem their miles (from 3 years to 18 months), and worst of all, by requiring fees to redeem those free tickets – anything from $25 on some short domestic flights to a whopping $350 on some overseas flights. The fees are being called “fuel surcharges” just like the fare hikes on tickets you pay for out of pocket, but with no real prospect of jet gas prices ever going down, those fares are probably permanent, and the amount you save on a supposedly free ticket has dropped anywhere from 5% to 65%. Or, to look at it another way, your “free” ticket is now being offered at a discount of 35% to 95% -- possibly a quite large discount, but no longer a free ticket by any means…
The airlines are claiming that these are still free tickets, and the fuel surcharges are only temporary. They’re defending the higher redemption rates and shorter life spans of the points by claiming that since they’ve added all manner of other things that you can buy with your rewards miles (e.g. rental cars, hotel rooms, merchandise, even magazine subscriptions) that the new programs actually offer better value than in years past. But customers seem unconvinced; one corporate executive was quoted as saying that it seemed inefficient to spend $500,000 and in return get a year of Reader’s Digest…
What makes all of these even more upsetting (and possibly hysterical – it depends on how you feel about airlines) is that this crisis was predicted over five years ago by Professors Bazerman and Watkins, in their book “Predictable Surprises.” The good doctors noted that the frequent flyer miles owed to passengers were, at least from an accounting standpoint, a huge debt that the airlines had incurred while trying to draw all of the frequent flyers to themselves. Since any such program would immediately be duplicated by all of the companies in the industry, all of the airlines were effectively mortgaging their future to gain an advantage in the present that could never be preserved. They predicted that the airlines must either begin defaulting on these promised flights (incurring huge lawsuits) or begin devaluing the reward miles themselves…
Of course, a lot of people have come to look at frequent flyer miles (and the attendant free tickets) as their right as passengers, not as a misguided (and possibly suicidal) marketing strategy that has now brought a troubled industry even closer to the brink. They will not react well to their miles dying off even faster than before, and as a result air travel in the US is going to decline even faster. In fact, it seems likely that the more fees, surcharges and rate hikes the airlines pile on to their remaining customers, the fewer customers are likely to remain in the air…
I’m not sure where all of this is going to end, but I know that if you were planning a career in the Airline industry, you might want to consider a change – and if you were saving your frequent flyer miles for a big trip in a few years, you might want to consider moving up your departure date. While you still can…
Thursday, August 14, 2008
Free Usually Isn’t
There’s an old American saying, sometimes abbreviated as an acronym: “There ain’t no such thing as a free lunch!” or TANSTAAFL, if you prefer. In a business context, you can generally assume that anything offered to you as a “free” or “give-away” offer is being paid for through some other aspect of the business model – the most familiar example being the “free” offers one sometimes sees advertised that charge “only” for shipping and handling. Even granted that the item being touted is free, you will generally find (if you check) that the cost of the item, the shipping and the advertising is all less than the “nominal shipping and handling charge” you are expected to pay for it. In the case of the free meals being offered by the Residence Inn we’re staying at, not only are they deductable as a business expense, but you can probably assume that they do not represent a significant percentage of the room rate…
What often gets on my nerves are people who decide to get something for free that isn’t supposed to be free in the first place – the best example being shoplifters. When I worked in retail I saw a lot of this, and a surprising amount of vandalism as well – people who destroyed our store’s products without even bothering to steal them. From time to time I’d even get to see one get caught, and most of them seemed quite pleased with themselves, for having put one over on “The Man” and gotten something they did not deserve. You see this same mentality sometimes here at the Inn, where people run wild, break things, deface things, make huge messes for the fun of it, take huge amounts of food or other items simply because they can, or permit their children to do these things…
Well, I hate to disappoint these people, if any of them actually have the brains to work a computer (which I actually rather doubt), but the fact is they aren’t putting anything over on the system. Every retail store in the world has a percentage they add to their markup to account for theft and vandalism, or “shrink,” as it is collectively know in the industry. When they steal from the stores in their neighborhood, the ones who pay for it aren’t some faceless corporate owners somewhere; it’s their neighbors, their friends, their own families, and even themselves – unless, of course, they steal everything they ever need, and never actually purchase anything honestly. And even then, their stolen funds do not go as far, since part of what they spend goes to pay for “shrink.” Meaning that even thieves get less for their money because of theft…
In the case of people at the Inn, I’m sure they all think that they’re putting something over on the hotel chain, whether it’s food to stock their own kitchen, toilet paper for their own bathrooms, soap and shower caps to give as Christmas presents, or just the fun of running up somebody else’s water, power and cleaning bills, and making someone else’s maid service work harder. What these idiots fail to understand is that the hotel chain is much bigger than they are, much more experience than they are, and perfectly willing to add all of those costs into the cost of the room – effectively billing them for their fun at a premium. So much for beating the system…
Now, I don’t mean to suggest that anyone reading this post would engage in any of these silly behaviors, let alone the actually criminal ones. I know that you’re all good, fair people who expect a reasonable product or service in return for a reasonable fee, and will have no problem with paying for value received. I call all of this to your attention as a reminder that things which are represented as being free generally aren’t – and that there are lots of people who ARE stupid, greedy or criminal enough (as the case might be) to actually believe in something for nothing....
And some of them may be staying in the same hotel you are…
What often gets on my nerves are people who decide to get something for free that isn’t supposed to be free in the first place – the best example being shoplifters. When I worked in retail I saw a lot of this, and a surprising amount of vandalism as well – people who destroyed our store’s products without even bothering to steal them. From time to time I’d even get to see one get caught, and most of them seemed quite pleased with themselves, for having put one over on “The Man” and gotten something they did not deserve. You see this same mentality sometimes here at the Inn, where people run wild, break things, deface things, make huge messes for the fun of it, take huge amounts of food or other items simply because they can, or permit their children to do these things…
Well, I hate to disappoint these people, if any of them actually have the brains to work a computer (which I actually rather doubt), but the fact is they aren’t putting anything over on the system. Every retail store in the world has a percentage they add to their markup to account for theft and vandalism, or “shrink,” as it is collectively know in the industry. When they steal from the stores in their neighborhood, the ones who pay for it aren’t some faceless corporate owners somewhere; it’s their neighbors, their friends, their own families, and even themselves – unless, of course, they steal everything they ever need, and never actually purchase anything honestly. And even then, their stolen funds do not go as far, since part of what they spend goes to pay for “shrink.” Meaning that even thieves get less for their money because of theft…
In the case of people at the Inn, I’m sure they all think that they’re putting something over on the hotel chain, whether it’s food to stock their own kitchen, toilet paper for their own bathrooms, soap and shower caps to give as Christmas presents, or just the fun of running up somebody else’s water, power and cleaning bills, and making someone else’s maid service work harder. What these idiots fail to understand is that the hotel chain is much bigger than they are, much more experience than they are, and perfectly willing to add all of those costs into the cost of the room – effectively billing them for their fun at a premium. So much for beating the system…
Now, I don’t mean to suggest that anyone reading this post would engage in any of these silly behaviors, let alone the actually criminal ones. I know that you’re all good, fair people who expect a reasonable product or service in return for a reasonable fee, and will have no problem with paying for value received. I call all of this to your attention as a reminder that things which are represented as being free generally aren’t – and that there are lots of people who ARE stupid, greedy or criminal enough (as the case might be) to actually believe in something for nothing....
And some of them may be staying in the same hotel you are…
Wednesday, August 13, 2008
Well… How Did We Get Here?
The question you keep hearing these days is “How did it come to this?” – no matter what problem is being discussed, in fact. People will ask how in the world the current gasoline crisis could have happened, or how the Enron Scandal could ever have happened, or how the mortgage/housing crisis could possibly have happened, as if there was never any indication that any of these things might happen. The sad part is that most of the time, disasters of this magnitude don’t just appear one day, fully-formed and ready to start wrecking lives and fortunes. In the case of any large and powerful (or at least lucrative) industry that comes to grief because of a lack of government oversight, in particular, it’s usually not that hard to figure out…
The Enron situation is a particularly pungent example of this principle. For years, the SEC and various Congressional factions had been trying to increase the regulations placed on corporate audits, and in particular, to pass requirements that the same accounting firm that certified a corporation’s books could not be providing any other services to the same corporation. Obviously, if one of these firms is receiving millions (or, in some cases, hundreds of millions) of dollars worth of consulting work from a company, they would be unlikely to report anything negative about that company for fear of losing all of those millions in other contracts. Unfortunately, all of the Big Five accounting firms (and many smaller companies) routinely had such contracts with the very firms they were supposedly auditing as “disinterested third parties” as required by Federal law – and they were determined to hang onto those contracts by any means necessary…
So for more than a decade prior to the collapse of Enron, all of these companies fought tooth and nail to prevent the SEC from imposing any regulations on them, to the extent of threatening at least one SEC chairman with personal and professional ruin, and contributing millions to members of Congress to ensure favorable votes. Nothing was ever done about these too-friendly relationships until the news came out that Enron’s senior management had intentionally defrauded both their stockholders and their own employees, and the Big Five accounting firm Arthur Anderson had helped them to do it…
You all know how that story came out, of course: Enron is gone, several of those senior managers have been charged (and in a few cases, convicted) of criminal offenses, and Arthur Anderson itself has been dismantled. What you may not realize is that none of it was really necessary; the SEC was never trying to prevent the auditing companies from having consulting contracts with publicly-held companies. The agency’s intent was to have the big accounting firms retain ALL of their consulting and support contracts, and simply rotate the auditing contracts (which represented a relatively small percentage of their total business anyway) instead. With plenty of audit business to go around, and the contracts rotating among the major companies every year or two anyway, no one would have wound up suffering. But the Big Five firms, in their greed and arrogance, were not about to let any such thing happen…
In the mortgage crisis, the breakdown was even simpler. As noted in my last post, there is no Federal statute regarding predatory lending practices, or even defining the term. So during the last housing boom, unscrupulous lenders took advantage of the greedy, the inexperienced and the stupid, encouraged people to take out mortgages and loans they could not possibly afford, so that the lenders could foreclose on their property, thus effectively seizing all of the payments made and equity acquired by the borrower, and then resell the foreclosed houses and recover all of the loan money as well. This time the results were even worse – and even more predictable. Lending institutions nationwide are stuck with properties that are unsellable, and therefore worth essentially nothing to them, banks are in danger of failing, and the overall effect on the economy has been devastating. And still, there is no prospect of any regulation that might change any of this…
The unfortunate fact is that we are to blame for all of this; every one of us. And unless we start demanding a government that is accountable to the people, or at least more so than it is to the special interests and lobbyist groups, we’re going to be responsible for the next foreseeable crisis, too…
The Enron situation is a particularly pungent example of this principle. For years, the SEC and various Congressional factions had been trying to increase the regulations placed on corporate audits, and in particular, to pass requirements that the same accounting firm that certified a corporation’s books could not be providing any other services to the same corporation. Obviously, if one of these firms is receiving millions (or, in some cases, hundreds of millions) of dollars worth of consulting work from a company, they would be unlikely to report anything negative about that company for fear of losing all of those millions in other contracts. Unfortunately, all of the Big Five accounting firms (and many smaller companies) routinely had such contracts with the very firms they were supposedly auditing as “disinterested third parties” as required by Federal law – and they were determined to hang onto those contracts by any means necessary…
So for more than a decade prior to the collapse of Enron, all of these companies fought tooth and nail to prevent the SEC from imposing any regulations on them, to the extent of threatening at least one SEC chairman with personal and professional ruin, and contributing millions to members of Congress to ensure favorable votes. Nothing was ever done about these too-friendly relationships until the news came out that Enron’s senior management had intentionally defrauded both their stockholders and their own employees, and the Big Five accounting firm Arthur Anderson had helped them to do it…
You all know how that story came out, of course: Enron is gone, several of those senior managers have been charged (and in a few cases, convicted) of criminal offenses, and Arthur Anderson itself has been dismantled. What you may not realize is that none of it was really necessary; the SEC was never trying to prevent the auditing companies from having consulting contracts with publicly-held companies. The agency’s intent was to have the big accounting firms retain ALL of their consulting and support contracts, and simply rotate the auditing contracts (which represented a relatively small percentage of their total business anyway) instead. With plenty of audit business to go around, and the contracts rotating among the major companies every year or two anyway, no one would have wound up suffering. But the Big Five firms, in their greed and arrogance, were not about to let any such thing happen…
In the mortgage crisis, the breakdown was even simpler. As noted in my last post, there is no Federal statute regarding predatory lending practices, or even defining the term. So during the last housing boom, unscrupulous lenders took advantage of the greedy, the inexperienced and the stupid, encouraged people to take out mortgages and loans they could not possibly afford, so that the lenders could foreclose on their property, thus effectively seizing all of the payments made and equity acquired by the borrower, and then resell the foreclosed houses and recover all of the loan money as well. This time the results were even worse – and even more predictable. Lending institutions nationwide are stuck with properties that are unsellable, and therefore worth essentially nothing to them, banks are in danger of failing, and the overall effect on the economy has been devastating. And still, there is no prospect of any regulation that might change any of this…
The unfortunate fact is that we are to blame for all of this; every one of us. And unless we start demanding a government that is accountable to the people, or at least more so than it is to the special interests and lobbyist groups, we’re going to be responsible for the next foreseeable crisis, too…
Tuesday, August 12, 2008
Follow-Up: Mortgages
I noted with great interest the other day that Connecticut had become the fourth state (following Illinois, Florida and California) to take Countrywide Financial to court over predatory lending practices. So far there's no standard definition of what "predatory lending" actually means, and the Federal courts are understandably reluctant to dive into that quagmire, but all of the states involved in these suits have been hit hard by the mortgage/housing crisis, and at least one of them has laws against misleading consumers into purchasing things they can't afford. Under the circumstances, it's somewhat like closing the barn door after the horse has already fled; the mortgage/housing crisis is already a national disaster and Countrywide is already facing bankruptcy (or more likely acquisition) because its part in the disaster has also decimated the company's finances. Still, I can't help feeling a vague glee at these events, and not just because Countrywide used to be my mortgage holder. I thought this might happen...
It's important to note that there can be no laws enacted against making money off of the stupid; if only because so many of our states need the income from lottery purchases. If someone wants to do something that runs contrary to their own interests, but which will generate earnings for you or your company, there are no laws to prevent you from assisting them in this enterprise, nor could there ever be. There are laws that require businesses to warn their customers away from hazardous or dangerous activities, and it's quite possible for someone to sue you if you fail to warn them that what they intend to do is dangerous or hazardous, but if someone decides to purchase a fireplace, fill it with lamp oil, and burn a pile of dollar bills in it, there are no laws preventing you from selling them the fireplace or the oil. And if Countrywide and the other lenders had warned people off of mortgages they could not afford, or even just asked the equivalent of "Are you sure you want to do that?" they would not be in this mess -- and neither would we...
What these suits allege is that the lender -- and many other companies in the same industry -- deliberately encouraged people to take out mortgages and loans they could not possibly afford, so that Countrywide could foreclose on their property, thus effectively seizing all of the payments made and equity acquired by the borrower, and then resell the foreclosed houses and recover all of the loan money as well. It's completely unethical business practice, but it remains to be seen if this is actually illegal in and of itself, if it can be shown to violate laws against fraud or deceptive business practices, or if the States or Federal governments need to pass specific laws forbidding this type of operation. Personally, I suspect that such laws are inevitable, unless the industry's lobbyists can block them from passing. Or just stall until the current crisis is over...
Because you can be sure this isn't the last time it will come up, unless Federal legislation is enacted to prevent future predatory lending. The ongoing slump in the housing industry had stuck dozens of lending institutions with foreclosed houses they can't sell; effectively worthless assets for which they paid cash. The industry is backing away from such loans now (actually, "fleeing pell-mell in any other direction" might be a better description), and a lot of the worst offenders may go under even if they aren't sued out of existence by aggravated states and cities, but unless the practice is actually outlawed, there is nothing to keep these companies from trying again during the next housing boom. In fact, if history teaches us anything, it is that people do not learn from past disasters, and this same cycle will almost certainly repeat...
Which leaves me with a difficult question: Should we hope that Countrywide loses these lawsuits and is punished for its role in creating the current housing crisis and economic slump? Or should we hope that it manages to skate free from any repercussions, and the resulting outrage triggers a groundswell of public opinion, forcing Congress to ignore "campaign contributions" and lobby efforts from the mortgage industry for long enough to pass laws forbidding predatory lending practices in the future? Especially when we consider that if these suits are successful we can almost guarantee that other States and cities will sue Countrywide and similar lenders in a multitude of additional actions, resulting in further lost jobs, bankrupted companies, and squandered or destroyed assets. All things considered, I think I'd rather just have the legislation, but experience tells me that's not the most likely outcome...
Stay tuned, folks. I've got a bad feeling about this one...
It's important to note that there can be no laws enacted against making money off of the stupid; if only because so many of our states need the income from lottery purchases. If someone wants to do something that runs contrary to their own interests, but which will generate earnings for you or your company, there are no laws to prevent you from assisting them in this enterprise, nor could there ever be. There are laws that require businesses to warn their customers away from hazardous or dangerous activities, and it's quite possible for someone to sue you if you fail to warn them that what they intend to do is dangerous or hazardous, but if someone decides to purchase a fireplace, fill it with lamp oil, and burn a pile of dollar bills in it, there are no laws preventing you from selling them the fireplace or the oil. And if Countrywide and the other lenders had warned people off of mortgages they could not afford, or even just asked the equivalent of "Are you sure you want to do that?" they would not be in this mess -- and neither would we...
What these suits allege is that the lender -- and many other companies in the same industry -- deliberately encouraged people to take out mortgages and loans they could not possibly afford, so that Countrywide could foreclose on their property, thus effectively seizing all of the payments made and equity acquired by the borrower, and then resell the foreclosed houses and recover all of the loan money as well. It's completely unethical business practice, but it remains to be seen if this is actually illegal in and of itself, if it can be shown to violate laws against fraud or deceptive business practices, or if the States or Federal governments need to pass specific laws forbidding this type of operation. Personally, I suspect that such laws are inevitable, unless the industry's lobbyists can block them from passing. Or just stall until the current crisis is over...
Because you can be sure this isn't the last time it will come up, unless Federal legislation is enacted to prevent future predatory lending. The ongoing slump in the housing industry had stuck dozens of lending institutions with foreclosed houses they can't sell; effectively worthless assets for which they paid cash. The industry is backing away from such loans now (actually, "fleeing pell-mell in any other direction" might be a better description), and a lot of the worst offenders may go under even if they aren't sued out of existence by aggravated states and cities, but unless the practice is actually outlawed, there is nothing to keep these companies from trying again during the next housing boom. In fact, if history teaches us anything, it is that people do not learn from past disasters, and this same cycle will almost certainly repeat...
Which leaves me with a difficult question: Should we hope that Countrywide loses these lawsuits and is punished for its role in creating the current housing crisis and economic slump? Or should we hope that it manages to skate free from any repercussions, and the resulting outrage triggers a groundswell of public opinion, forcing Congress to ignore "campaign contributions" and lobby efforts from the mortgage industry for long enough to pass laws forbidding predatory lending practices in the future? Especially when we consider that if these suits are successful we can almost guarantee that other States and cities will sue Countrywide and similar lenders in a multitude of additional actions, resulting in further lost jobs, bankrupted companies, and squandered or destroyed assets. All things considered, I think I'd rather just have the legislation, but experience tells me that's not the most likely outcome...
Stay tuned, folks. I've got a bad feeling about this one...
Monday, August 11, 2008
The Trouble with Dollars
It's a moment familiar to every good Trekist, and a surprising number of non-fans as well: they've just unlocked the overhead hatch leading to the grain storage compartment, and Captain Kirk has been buried to the waist with tribbles, when Dr. McCoy runs in and tells them he's figured out the solution to the trouble: don't feed the tribbles, and they'll stop reproducing. Kirk looks up from the huge mass of furry little creatures which have been gorging themselves for days, and mutters "Now he tells me." It's one of the best moments of one of the best episodes of one of the best television programs ever made, and like so many other parts of that production, it's surprising how often the same principle comes up in other contexts...
Take the headline in USA Today this week: "The Key to Saving Money: Just Don't Spend It!" Great; now they tell us. It's kind of like telling someone who has gone bankrupt that they need more money, or someone who's drowning that they need less water. It's not wrong, exactly, but it's no help, either. Most people have no idea how to stop spending money, or what they should do with it instead; just telling them to stop isn't going to do any good. The simple fact is that a stronger credit rating, a comfortable retirement or even a higher bank balance are all abstractions, whereas whatever it is you feel like buying at the moment is both concrete and immediate gratification into the bargain. You might as well tell people not to feed the tribbles...
Back when we were kids, my parents introduced me and my sister to the idea of saving money through one of the simplest methods possible: a matching program. Any money that we wanted to deposit in our savings accounts they'd match one-for-one. Of course, when you're 6 years old, that doesn't amount to much -- I think my allowance at the time was a quarter. But back in 1970, 25 cents would buy me two candy bars and five pieces of penny candy, or an ice cream cone at Baskin-Robbins, and the idea of not only earning interest on my money but also getting my parents to double it had a very strong appeal. They discontinued the program when I was a pre-teen and started earning money outside the home, but by then I had the kernel of the savings account I would eventually use to buy the house I'm sitting in...
Now, I'm not suggesting that this by itself would be enough to alleviate the savings crisis in this country; those habits are learned in childhood, and most of the people overspending, running up huge credit card bills, and never saving a dime are already adults. But the concept of matching accounts has been used with considerable success in adult populations; the donor- and grant-supported Individual Development Account (IDA) programs being a perfect example. In an IDA program members of an at-risk or in-need group (orphans aging out of the foster care system, for example) are given bank accounts that can only be accessed under agreed-upon conditions (for living expenses once they turn 18, in the above example). All deposits made to those accounts are matched by donors, businesses, government agencies, the bank holding the deposits, or whoever is backing the IDA program...
Massive social change -- like converting Americans from a nation of debtors into a nation of savers -- does not happen overnight. If we want to make that kind of change, then we need to start now, with small-scale savings programs for school children, IDA programs for people in need and at risk, and support for people trying to afford college tuition, retirement programs and house payments. As a wise man once said, we have to become the change we want to see in the world, or at least promote that change in our spending habits. Or else, we can probably count on seeing a lot more tribbles...
Take the headline in USA Today this week: "The Key to Saving Money: Just Don't Spend It!" Great; now they tell us. It's kind of like telling someone who has gone bankrupt that they need more money, or someone who's drowning that they need less water. It's not wrong, exactly, but it's no help, either. Most people have no idea how to stop spending money, or what they should do with it instead; just telling them to stop isn't going to do any good. The simple fact is that a stronger credit rating, a comfortable retirement or even a higher bank balance are all abstractions, whereas whatever it is you feel like buying at the moment is both concrete and immediate gratification into the bargain. You might as well tell people not to feed the tribbles...
Back when we were kids, my parents introduced me and my sister to the idea of saving money through one of the simplest methods possible: a matching program. Any money that we wanted to deposit in our savings accounts they'd match one-for-one. Of course, when you're 6 years old, that doesn't amount to much -- I think my allowance at the time was a quarter. But back in 1970, 25 cents would buy me two candy bars and five pieces of penny candy, or an ice cream cone at Baskin-Robbins, and the idea of not only earning interest on my money but also getting my parents to double it had a very strong appeal. They discontinued the program when I was a pre-teen and started earning money outside the home, but by then I had the kernel of the savings account I would eventually use to buy the house I'm sitting in...
Now, I'm not suggesting that this by itself would be enough to alleviate the savings crisis in this country; those habits are learned in childhood, and most of the people overspending, running up huge credit card bills, and never saving a dime are already adults. But the concept of matching accounts has been used with considerable success in adult populations; the donor- and grant-supported Individual Development Account (IDA) programs being a perfect example. In an IDA program members of an at-risk or in-need group (orphans aging out of the foster care system, for example) are given bank accounts that can only be accessed under agreed-upon conditions (for living expenses once they turn 18, in the above example). All deposits made to those accounts are matched by donors, businesses, government agencies, the bank holding the deposits, or whoever is backing the IDA program...
Massive social change -- like converting Americans from a nation of debtors into a nation of savers -- does not happen overnight. If we want to make that kind of change, then we need to start now, with small-scale savings programs for school children, IDA programs for people in need and at risk, and support for people trying to afford college tuition, retirement programs and house payments. As a wise man once said, we have to become the change we want to see in the world, or at least promote that change in our spending habits. Or else, we can probably count on seeing a lot more tribbles...
Sunday, August 10, 2008
Funeral for a Friend
I try to keep the posts in this space light, or at least not dark, partly because I think the world is depressing enough already, and partly because if I start taking this blog too seriously it's not going to be fun anymore, for you or me. That said, I'm still going to mark the passing, three weeks ago, of an old friend who could teach most of us a few lessons worth learning, not least of which would be the importance of lateral thinking. Heaven knows, he taught me a few...
Paul Robin was the only MSU graduate I knew well before coming to East Lansing, and in fact had been a graduate of the undergraduate business program here, in the historic (and still elite) hospitality management program, despite never having been admitted to the business school. Paul had simply decided that the classes in the business school interested him, and had "hacked" his way into the program, not in the usual sense of computer intrusion, but in the time-tested method of waiting until just before the deadline to add classes for each semester and then requesting that the instructor add him to the class list. He would then drop the classes he was actually supposed to be in...
When the Administration finally caught up with him they were not pleased to learn that Paul had outwitted the system without resort to any sort of computer chicanery, fraud or perjury -- without actually doing anything wrong, in fact. Paul was most of the way through the degree program by then, so they decided to let him stay, on the condition that he could find a division that would officially enroll him -- which is how he wound up with a degree in Advertising; it seems that the applicable Dean liked his style, or at least his gift for thinking outside the box...
When I think of all of the people I've met who manage to talk themselves out of what they really want to do; who come up with all sorts of rules and regulations, of expectations and propriety and even scruples that will keep them from seeking the path they really want to be on, I can't help thinking of what a shame it is that more people never got to meet my old friend and swap a few tall stories. And, of course, how fortunate I am to have had that chance...
People, listen to me: it's never the reasons why not that matter; it's always the reasons why that are important. As a management scientist and a strategy scholar, I can tell you for a certainty that there will always be reasons why you shouldn't do something, and there will always be ways to make it happen if you really want to -- and if you're willing to try. The most important challenge will always be "How badly do you want it?" and if the answer is "Not badly enough" then the failure is yours, not that of the system. They may just be words on a computer screen, but you'd do well to consider them the next time you have a strategic crisis to think your way out of -- or a life choice to make...
So I'll ask all of you to join me in taking a moment to remember Paul S. Robin, American Businessman, Musician, Inventor, Marksman, Hunter, Net Warrior, Scholar and Philosopher. Here's to you, Paul, wherever you are...
Paul Robin was the only MSU graduate I knew well before coming to East Lansing, and in fact had been a graduate of the undergraduate business program here, in the historic (and still elite) hospitality management program, despite never having been admitted to the business school. Paul had simply decided that the classes in the business school interested him, and had "hacked" his way into the program, not in the usual sense of computer intrusion, but in the time-tested method of waiting until just before the deadline to add classes for each semester and then requesting that the instructor add him to the class list. He would then drop the classes he was actually supposed to be in...
When the Administration finally caught up with him they were not pleased to learn that Paul had outwitted the system without resort to any sort of computer chicanery, fraud or perjury -- without actually doing anything wrong, in fact. Paul was most of the way through the degree program by then, so they decided to let him stay, on the condition that he could find a division that would officially enroll him -- which is how he wound up with a degree in Advertising; it seems that the applicable Dean liked his style, or at least his gift for thinking outside the box...
When I think of all of the people I've met who manage to talk themselves out of what they really want to do; who come up with all sorts of rules and regulations, of expectations and propriety and even scruples that will keep them from seeking the path they really want to be on, I can't help thinking of what a shame it is that more people never got to meet my old friend and swap a few tall stories. And, of course, how fortunate I am to have had that chance...
People, listen to me: it's never the reasons why not that matter; it's always the reasons why that are important. As a management scientist and a strategy scholar, I can tell you for a certainty that there will always be reasons why you shouldn't do something, and there will always be ways to make it happen if you really want to -- and if you're willing to try. The most important challenge will always be "How badly do you want it?" and if the answer is "Not badly enough" then the failure is yours, not that of the system. They may just be words on a computer screen, but you'd do well to consider them the next time you have a strategic crisis to think your way out of -- or a life choice to make...
So I'll ask all of you to join me in taking a moment to remember Paul S. Robin, American Businessman, Musician, Inventor, Marksman, Hunter, Net Warrior, Scholar and Philosopher. Here's to you, Paul, wherever you are...
Saturday, August 9, 2008
A Bad Example
A few days ago, Michigan had its second round of primary elections, this time for local and state offices only. Unlike the disputed Presidential primary held early this year, the current election dealt with issues like who would be the major party candidates for such offices as Township Supervisor, County Commissioner, and of course, County Drains Commissioner. The titles sound strange to someone from Los Angeles, which has fewer elected offices and fewer levels of government oversight -- and which is located in a County with more residents than the entire state of Michigan according to the 2007 census figures. But there was some commentary in one of the Drain Commissioner races that struck me as a particularly bad example of what can happen when business and politics intersect...
The office may sound quaint to someone from the big city (particularly a big city where 15 inches of rain represents a wet year), but in Michigan the County Drain Commissioner is no joke; it's a critical local office that controls not only what goes into the drain system but also what CAN go into the drains. The Drain Commissioner has at least some say in every new construction project that takes place in the county, even things like roads, parks and other public works. When you consider that the county we're living in averages double the precipitation of our last city in rainfall alone (the snow adds much more), and does not have a convenient ocean to dump the storm water runoff into, it makes sense that this is a political race to watch closely...
In the current contest, however, the campaign became polarized and the campaigning became rather dirty, according to our local paper. It seems that the incumbent is being criticized for being too anti-business, which does not sit well in an area as economically depressed as Central Michigan, while the challenger from within his own party is being painted as an entrepreneurial businessman with no experience in politics and no clear idea of how things get done in local government. The incumbent survived the primary, beating his own party's challenger by a 66.5% to 33.5% margin, but the big winner was the other party's candidate, who ran unopposed and now faces a much weaker incumbent in the General Election in November. Meanwhile, the actual purpose of the office is being generally ignored...
Now, for the most part I don't comment on political issues; my degrees are in business and literature, not political science, and I don't believe I'm qualified to discuss the issues in a state I've only lived in for a month or so anyway. In this case, however, I can't help thinking that the situation is dangerous -- and has implications on a much larger scale. The County Drain Commissioner should not be pro-business OR anti-business; his or her job is to look out for the good of the environment, the community, and the people who live here. It does us no good to have many new businesses move into or start up in our county if they are all subsequently destroyed by flood waters (as happened in several other states this summer). Nor does it do any good to have a pristine drains system if all of the local businesses fail, everyone moves away, and no one is here to use it -- or pay the property taxes for its upkeep...
As any long-time reader already knows, I'm generally a pragmatist, both politically and also in business. Any regulatory office is going to have to strike a balance between the needs of the various stakeholders affected by its rulings, and attacking any candidate on the basis of how friendly they are (or aren't) toward business is not going to end well. In the case of our County Drain Commissioner's office, I suspect that whoever wins the upcoming election is going to be strongly motivated to do anything possible to improve the business climate in Central Michigan. I just hope we don't all find ourselves paddling around in the consequences a few years from now...
The office may sound quaint to someone from the big city (particularly a big city where 15 inches of rain represents a wet year), but in Michigan the County Drain Commissioner is no joke; it's a critical local office that controls not only what goes into the drain system but also what CAN go into the drains. The Drain Commissioner has at least some say in every new construction project that takes place in the county, even things like roads, parks and other public works. When you consider that the county we're living in averages double the precipitation of our last city in rainfall alone (the snow adds much more), and does not have a convenient ocean to dump the storm water runoff into, it makes sense that this is a political race to watch closely...
In the current contest, however, the campaign became polarized and the campaigning became rather dirty, according to our local paper. It seems that the incumbent is being criticized for being too anti-business, which does not sit well in an area as economically depressed as Central Michigan, while the challenger from within his own party is being painted as an entrepreneurial businessman with no experience in politics and no clear idea of how things get done in local government. The incumbent survived the primary, beating his own party's challenger by a 66.5% to 33.5% margin, but the big winner was the other party's candidate, who ran unopposed and now faces a much weaker incumbent in the General Election in November. Meanwhile, the actual purpose of the office is being generally ignored...
Now, for the most part I don't comment on political issues; my degrees are in business and literature, not political science, and I don't believe I'm qualified to discuss the issues in a state I've only lived in for a month or so anyway. In this case, however, I can't help thinking that the situation is dangerous -- and has implications on a much larger scale. The County Drain Commissioner should not be pro-business OR anti-business; his or her job is to look out for the good of the environment, the community, and the people who live here. It does us no good to have many new businesses move into or start up in our county if they are all subsequently destroyed by flood waters (as happened in several other states this summer). Nor does it do any good to have a pristine drains system if all of the local businesses fail, everyone moves away, and no one is here to use it -- or pay the property taxes for its upkeep...
As any long-time reader already knows, I'm generally a pragmatist, both politically and also in business. Any regulatory office is going to have to strike a balance between the needs of the various stakeholders affected by its rulings, and attacking any candidate on the basis of how friendly they are (or aren't) toward business is not going to end well. In the case of our County Drain Commissioner's office, I suspect that whoever wins the upcoming election is going to be strongly motivated to do anything possible to improve the business climate in Central Michigan. I just hope we don't all find ourselves paddling around in the consequences a few years from now...
Friday, August 8, 2008
The Great Metamucil Fiasco
All right, so last spring I told all of you about the Great Prune Fiasco of 1994, and how I had a front-row seat for it. You can read all about it here , if you want to, but basically it was a loss-leader item that blew up in the face of the drug store company that ran it -- or at least in the faces of several of their stores, where prunes, far from being an unpopular item that could be offered at a dramatic discount, were actually one of the most popular food items available, and were suddenly being grabbed in vast quantities. In the end, I wound up selling the equivalent of about 14 cargo pallets worth of prunes in less than a week, and I honestly believe that I could have unloaded 40 or 50 if Corporate had sent them to me when I asked...
I called it a fiasco, and still do, because this is not how as loss-leader promotion is supposed to work -- in the same sense that the ocean is not supposed to be above the clouds. A loss-leader is an item which the seller (usually a retail store) offers at or below cost for the purpose of drawing customers to the store, in the hopes of then selling those customers some additional merchandise that has not been discounted. The loss-leader item can be almost anything, although if it is something highly desirable the store needs to place a hard limit on the number available, such as "limit 4 per customer" or even "limit 1 per household." The prune promotion became a fiasco when corporate forgot to put that limit on the ad circular that they ran in a neighborhood full of heavy prune-users...
All of that would have been bad enough, but a short time later an even worse advertising fiasco hit our store involving another loss-leader product. In an attempt to increase sales of its generic "Osco" brand items, the company decided to sell a bunch of them at laughably low prices, some of which amounted to loss-leaders in their own right. One of these was the Osco-brand bulk fiber drink mix, essentially the generic form of the popular Metamucil product -- an innocuous item in most places, but a perennial best-seller at our store with its heavy demographic of elderly folks from Eastern Europe. Corporate wanted us to sell the Osco Bulk Fiber at a deep discount, one penny over cost, which made it about half its normal price and about one-third of the normal price for Metamucil, and once again, they failed to put a limit on the advertising flyer...
You saw this coming, didn't you? Well, I sure did. Our elderly customers got the flyer, thought the product being advertised was their old favorite brand-name product, and descended on the store in ravening hordes -- albeit rather slow-moving ravening hordes, with an average age of 80-plus. Upon being told that the product on sale was not the one they wanted, about a third of these customers became loudly outraged and started demanding the "real thing" at the same sale price. Another third either could not understand that the sale was on the generic (not the name brand) product or refused to admit that they understood, in the hopes that we would just give up and let them have what they wanted. Both groups insisted that they should be allowed to purchase as much as they wanted of the real Metamucil product, at the sale price, since no limit had been included in the ad flyer...
I'm not sure how many of these people actually called the Corporate 800 number to complain; if even 10% actually did, it must have been a huge number. I know that some of them came back the next day, hoping to find that we'd given in and put the product they actually wanted on loss-leader sale. There were also some who came back later in the day hoping that someone easier to bluff, bluster or browbeat would be on duty -- not realizing that Floor Managers like me worked 12-hour shifts during that time of year. It wasn't until later in the week that some of our customers apparently gave up and decided to take a chance on the generic version, figuring that much of their prescription medications were generic (and worked just fine), so this stuff might work too. Of course, they immediately started asking how much of the Osco-brand product they could get at the sale price, and some of them wanted by the cart load...
I'm not condemning the loss-leader as a promotional technique, although between the original post and this one, I suppose it must sound as if I am. I've seen it used to amazing effect, and in fact most of the loss-leaders that the drug store company put on while I was with them turned out quite well. I am saying that like any other management or sales tool, a loss-leader has to be set up and run correctly to be any use at all. Otherwise, all you are likely to get is another Prune Fiasco...
I called it a fiasco, and still do, because this is not how as loss-leader promotion is supposed to work -- in the same sense that the ocean is not supposed to be above the clouds. A loss-leader is an item which the seller (usually a retail store) offers at or below cost for the purpose of drawing customers to the store, in the hopes of then selling those customers some additional merchandise that has not been discounted. The loss-leader item can be almost anything, although if it is something highly desirable the store needs to place a hard limit on the number available, such as "limit 4 per customer" or even "limit 1 per household." The prune promotion became a fiasco when corporate forgot to put that limit on the ad circular that they ran in a neighborhood full of heavy prune-users...
All of that would have been bad enough, but a short time later an even worse advertising fiasco hit our store involving another loss-leader product. In an attempt to increase sales of its generic "Osco" brand items, the company decided to sell a bunch of them at laughably low prices, some of which amounted to loss-leaders in their own right. One of these was the Osco-brand bulk fiber drink mix, essentially the generic form of the popular Metamucil product -- an innocuous item in most places, but a perennial best-seller at our store with its heavy demographic of elderly folks from Eastern Europe. Corporate wanted us to sell the Osco Bulk Fiber at a deep discount, one penny over cost, which made it about half its normal price and about one-third of the normal price for Metamucil, and once again, they failed to put a limit on the advertising flyer...
You saw this coming, didn't you? Well, I sure did. Our elderly customers got the flyer, thought the product being advertised was their old favorite brand-name product, and descended on the store in ravening hordes -- albeit rather slow-moving ravening hordes, with an average age of 80-plus. Upon being told that the product on sale was not the one they wanted, about a third of these customers became loudly outraged and started demanding the "real thing" at the same sale price. Another third either could not understand that the sale was on the generic (not the name brand) product or refused to admit that they understood, in the hopes that we would just give up and let them have what they wanted. Both groups insisted that they should be allowed to purchase as much as they wanted of the real Metamucil product, at the sale price, since no limit had been included in the ad flyer...
I'm not sure how many of these people actually called the Corporate 800 number to complain; if even 10% actually did, it must have been a huge number. I know that some of them came back the next day, hoping to find that we'd given in and put the product they actually wanted on loss-leader sale. There were also some who came back later in the day hoping that someone easier to bluff, bluster or browbeat would be on duty -- not realizing that Floor Managers like me worked 12-hour shifts during that time of year. It wasn't until later in the week that some of our customers apparently gave up and decided to take a chance on the generic version, figuring that much of their prescription medications were generic (and worked just fine), so this stuff might work too. Of course, they immediately started asking how much of the Osco-brand product they could get at the sale price, and some of them wanted by the cart load...
I'm not condemning the loss-leader as a promotional technique, although between the original post and this one, I suppose it must sound as if I am. I've seen it used to amazing effect, and in fact most of the loss-leaders that the drug store company put on while I was with them turned out quite well. I am saying that like any other management or sales tool, a loss-leader has to be set up and run correctly to be any use at all. Otherwise, all you are likely to get is another Prune Fiasco...
Thursday, August 7, 2008
Surprise!
I'd like to think that, in general, I'm a pretty good sport. I don't believe in the type of practical joke that destroys property or actually harms people, and if I'd been on the jury in the case where some idiot decided to give someone with a severe peanut allergy something containing peanut butter, I would have been voting for conviction for Murder in the Second Degree (under the Depraved Indifference statute) -- that's not funny. But in general I'll put up with most things, and I think I'm relatively good at laughing when the joke is on me. Or, at least, I did think so until we got our most recent cellular telephone bill...
Now, it's important to realize that my wife and I didn't set out to become AT&T customers in the first place; we had quit AT&T years ago because of their substandard service and baffling billing and gone with Cingular, only to end up back with AT&T when they bought Cingular out from under us. We were about to switch to another provider when AT&T bought them, too, and in an effort to keep anyone else from losing their jobs (or their companies) as a result of AT&T pursuing us, we just gave up. Fortunately, the influx of personnel from all of these other companies seems to have been a good influence on the AT&T core personnel, and their service and performance have been improving over the past few years. And the fact that they are nation-wide comes in handy when we travel, which is a good thing when you are relocating across the country...
So imagine our surprise when our first bill arrives in East Lansing for more than 3.5 times what we had been paying, more than half of it in "roaming charges." Fortunately for us, there's an AT&T Wireless store less than a mile from our new house, and we went down there the following day to ask just what in heaven's name was going on. This proved to be rather more involved than we had expected, because the people at the store didn't know either. In fact, when we showed them the bill they appeared to be as appalled as we had been ourselves; they agreed that they're a nationwide company and none of their current contracts include roaming charges. They had to get on the phone and call their own corporate customer service to try to find out what was going on. Which, of course, we could have done ourselves, but were hoping to avoid by just showing up in person and asking our question...
So we watched the AT&T guys sit on their own voicemail system and listen to their own recorded voice telling them how important their call was, a somewhat surreal experience that would have been a lot funnier under other circumstances, but wasn't bad even so. After a few whiles, they were able to determine that despite changing our coverage four times, our phones three times and our address twice, the computer still had us on our original Cingular calling plan, even though they'd been billing us under an AT&T plan (and rates) for at least 4 years at this point. Our original rate plan hadn't been with a nationwide network, as there were no such things in 2001, and had thus included roaming charges. No one present, including the person from Bangalore who was on the telephone with us, had ever seen such a thing before...
Our story may end well, however. The AT&T guys agreed to back all of the roaming charges off of our account and make sure that we don't have any more of them. They also transferred us to a cheaper calling plan that will bring our monthly bill back into a reasonable level, and explained how to go about exchanging our California telephone numbers for local ones (which we'll probably do next month after making sure that everyone had our new land-line number here in Michigan). I can't fault the AT&T guys at the AT&T store; they were handed a potato that was not merely hot but was in fact (metaphorically) radioactive, and they handled it with dignity and professionalism. Even the call center agent from Bangalore was very nice and helpful...
But I'd still urge any of you who are thinking about relocating or even extended travel to go check on your calling plan before setting out on your journey...
Now, it's important to realize that my wife and I didn't set out to become AT&T customers in the first place; we had quit AT&T years ago because of their substandard service and baffling billing and gone with Cingular, only to end up back with AT&T when they bought Cingular out from under us. We were about to switch to another provider when AT&T bought them, too, and in an effort to keep anyone else from losing their jobs (or their companies) as a result of AT&T pursuing us, we just gave up. Fortunately, the influx of personnel from all of these other companies seems to have been a good influence on the AT&T core personnel, and their service and performance have been improving over the past few years. And the fact that they are nation-wide comes in handy when we travel, which is a good thing when you are relocating across the country...
So imagine our surprise when our first bill arrives in East Lansing for more than 3.5 times what we had been paying, more than half of it in "roaming charges." Fortunately for us, there's an AT&T Wireless store less than a mile from our new house, and we went down there the following day to ask just what in heaven's name was going on. This proved to be rather more involved than we had expected, because the people at the store didn't know either. In fact, when we showed them the bill they appeared to be as appalled as we had been ourselves; they agreed that they're a nationwide company and none of their current contracts include roaming charges. They had to get on the phone and call their own corporate customer service to try to find out what was going on. Which, of course, we could have done ourselves, but were hoping to avoid by just showing up in person and asking our question...
So we watched the AT&T guys sit on their own voicemail system and listen to their own recorded voice telling them how important their call was, a somewhat surreal experience that would have been a lot funnier under other circumstances, but wasn't bad even so. After a few whiles, they were able to determine that despite changing our coverage four times, our phones three times and our address twice, the computer still had us on our original Cingular calling plan, even though they'd been billing us under an AT&T plan (and rates) for at least 4 years at this point. Our original rate plan hadn't been with a nationwide network, as there were no such things in 2001, and had thus included roaming charges. No one present, including the person from Bangalore who was on the telephone with us, had ever seen such a thing before...
Our story may end well, however. The AT&T guys agreed to back all of the roaming charges off of our account and make sure that we don't have any more of them. They also transferred us to a cheaper calling plan that will bring our monthly bill back into a reasonable level, and explained how to go about exchanging our California telephone numbers for local ones (which we'll probably do next month after making sure that everyone had our new land-line number here in Michigan). I can't fault the AT&T guys at the AT&T store; they were handed a potato that was not merely hot but was in fact (metaphorically) radioactive, and they handled it with dignity and professionalism. Even the call center agent from Bangalore was very nice and helpful...
But I'd still urge any of you who are thinking about relocating or even extended travel to go check on your calling plan before setting out on your journey...
Wednesday, August 6, 2008
People Different From Us
I try not to insult the advertising people in this space, although it's difficult sometimes, given how consistently (and constantly) they insult the rest of us. It's amazing, for example, that the women of this country have not risen up en mass and disemboweled all of the people who keep implying that they have no value of any kind if they appear to be over the age of, say, 20. You would also expect some reaction from all of the athletes (or even just larger than average people) who are consistently portrayed as being stupid, people who live in smaller communities who are consistently portrayed at being either stupid or ignorant or both, and intellectuals who are forever being portrayed at socially inept and personally unable to form (or maintain) a romantic relationship. But even allowing for how common these biases appear to be, I'm still at a loss to explain certain other types of advertising...
Take, for example, the new television spots for Edge shave gel. I used this product for years, before I grew a beard, and I still use it from time to time when I clean around the edges of my beard. It provides good lubrication for the razor (prevents skin irritation) and can be purchased in a variety of formulas (for different levels of skin dryness) and scents (so you can find one you can stand). It's also one of the products that have traditionally featured implied sex in its advertising, most often in the form of an attractive female indicating approval for the performance and/or scent of the product through a positive reaction to a male who has just finished shaving with Edge. The implication is clear: use this product and women like this one will want to touch your (cleanly-shaven) face, too. They might even turn up in your bathroom in revealing costume in order to do so...
Speaking as a male consumer whose experience does not correspond to anything you see in commercials, I must say that I've never purchased a product based on the belief that it might attract women of any sort, let alone highly attractive ones who will then, inexplicably, also want to sleep with me. Nor have I ever met a man who will admit to doing so, although it must be conceded that there may be some who have and simply will not admit doing so. We should also concede that, for the most part, men do select personal appearance choices (including beard and hair) for the purpose of attracting women, or at least pleasing the ones we already have. The number of us who would actually believe that a particular shaving cream would make us significantly more attractive to the opposite sex, let alone make random attractive women want to sleep with us, however, is not significant, although it's apparently higher than the number who would be offended by the suggestion...
The current ads go much farther than the typical television spots (such as the ones for cars, for example) that attempt to make the product a surrogate for a (female) partner. In one of these spots, a group of tiny (much smaller than a man's facial stubble) but highly attractive and scantily clad women spray foam all over the user's face (and each other) from backpack canisters which represent the deployment of the product, while in another spot even smaller (apparently microscopic) women in similarly revealing costume ride jet packs into a man's nose, representing the smell of the product. Why, precisely, this is supposed to be attractive to men is not explained. I can think of many things that I might have wanted random scantily-clad attractive women to do when I was single, but shrinking down to microscopic size and then flying into my nose to hold a party is not on my list, nor would such a thing have occurred to me...
All kidding aside, as an attempt to make the product appeal to its target demographic by associating attractive women with use of the product, it's hardly the worst attempt I've seen, and as a self-referential joke about commercials that use this tactic, it's actually not that bad. Certainly it's nowhere near as blatant as the classic Old Spice commercial in which the older sailor (who has a girl in every port, several of whom are featured in the ad) gives a bottle of the product to a young greenhorn, who is then immediately hit on by an attractive woman. But when I try to imagine the sort of mentality it would take to conceive of making this sort of appeal in the form of microscopic women with jet packs flying up the user's nose in order to hold a disco party, I am forced once again to conclude that the folks who make these ads are quite different from the rest of us...
Take, for example, the new television spots for Edge shave gel. I used this product for years, before I grew a beard, and I still use it from time to time when I clean around the edges of my beard. It provides good lubrication for the razor (prevents skin irritation) and can be purchased in a variety of formulas (for different levels of skin dryness) and scents (so you can find one you can stand). It's also one of the products that have traditionally featured implied sex in its advertising, most often in the form of an attractive female indicating approval for the performance and/or scent of the product through a positive reaction to a male who has just finished shaving with Edge. The implication is clear: use this product and women like this one will want to touch your (cleanly-shaven) face, too. They might even turn up in your bathroom in revealing costume in order to do so...
Speaking as a male consumer whose experience does not correspond to anything you see in commercials, I must say that I've never purchased a product based on the belief that it might attract women of any sort, let alone highly attractive ones who will then, inexplicably, also want to sleep with me. Nor have I ever met a man who will admit to doing so, although it must be conceded that there may be some who have and simply will not admit doing so. We should also concede that, for the most part, men do select personal appearance choices (including beard and hair) for the purpose of attracting women, or at least pleasing the ones we already have. The number of us who would actually believe that a particular shaving cream would make us significantly more attractive to the opposite sex, let alone make random attractive women want to sleep with us, however, is not significant, although it's apparently higher than the number who would be offended by the suggestion...
The current ads go much farther than the typical television spots (such as the ones for cars, for example) that attempt to make the product a surrogate for a (female) partner. In one of these spots, a group of tiny (much smaller than a man's facial stubble) but highly attractive and scantily clad women spray foam all over the user's face (and each other) from backpack canisters which represent the deployment of the product, while in another spot even smaller (apparently microscopic) women in similarly revealing costume ride jet packs into a man's nose, representing the smell of the product. Why, precisely, this is supposed to be attractive to men is not explained. I can think of many things that I might have wanted random scantily-clad attractive women to do when I was single, but shrinking down to microscopic size and then flying into my nose to hold a party is not on my list, nor would such a thing have occurred to me...
All kidding aside, as an attempt to make the product appeal to its target demographic by associating attractive women with use of the product, it's hardly the worst attempt I've seen, and as a self-referential joke about commercials that use this tactic, it's actually not that bad. Certainly it's nowhere near as blatant as the classic Old Spice commercial in which the older sailor (who has a girl in every port, several of whom are featured in the ad) gives a bottle of the product to a young greenhorn, who is then immediately hit on by an attractive woman. But when I try to imagine the sort of mentality it would take to conceive of making this sort of appeal in the form of microscopic women with jet packs flying up the user's nose in order to hold a disco party, I am forced once again to conclude that the folks who make these ads are quite different from the rest of us...
Tuesday, August 5, 2008
Renting a Behemoth?
There was an interesting article in USA Today this week about the downturn in car rentals of anything larger than a Chevrolet Cobalt, which isn't a very large car to begin with. Given the high price of gas recently, it's hardly surprising that some people would balk at renting a car that gets less than 20 miles per gallon, and refuse to consider something like a Hummer, which only manages 13 MPG on the highway. Nor should it surprise us that some companies are also taking exception to this expense, and requiring their people to rent smaller cars (and refuse upgrade offers to larger vehicles). No, what I find surprising (if not amazing) about this story is that the rental car industry as a whole appears to have been caught flat-footed on this whole issue...
Traditionally, of course, the compact and economy cars have formed the "base" level for rental car programs, with anything larger commanding a premium of 300% or more above the introductory level. Many consumers made a practice of renting a smaller car than they really wanted in order to get the lowest rate, hoping that the rental company would offer them a free upgrade to something larger and/or more prestigious. Meanwhile, many businesses would allow their employees to rent anything they wanted, figuring that the whole cost was a tax-deductible expense in the first place. But lately it seems that more and more people are refusing free upgrades, and more and more businesses are deciding that they need the cash value more than the tax credits. Obvious, one might think, but apparently the rental car industry did not find it so...
If this article is correct, the industry is still using much the same mix of assets it had when gasoline was $1.50 a gallon. Their traditional "fix" of just offering customers free upgrades when they run out of compact and economy cars is now problematic, and the companies involved have no other contingency plan in place for those occasions. And without additional assets (e.g. more small cars to rent) it's difficult to suggest anything that the rental car companies could do about the problem -- although clearly just saying "that's what we've got; take it or leave it" is not working. My question, as always, is how this came to happen in the first place...
The current gas crisis did not just spring into being overnight. Most of the rental car companies interviewed about this issue have pointed out -- correctly, I believe -- that fleet purchase decisions have to be made months or even years in advance, and orders placed for this year's assets are therefore made based on last year's conditions. But even granted that this is the case, the idea that gas prices were rising and would continue to do so is hardly something that you would need an entire Strategic Planning department to grasp. Even back when gas prices were still in the $3 range, there was a vast increase in the demand for small cars to rent. So what kept the rental companies from making this adjustment?
My theory is that since larger cars rent for more money than small ones, they represent an inherent increase in value to the consumer -- that is, no one minds being given a $70 car for a rental costing $20, but the reverse trade-off will not work. In fact, someone who actually wants a luxury car or giant SUV will not be pleased at being given a compact car even for no charge at all; the small car does not and can not fulfill the need (whatever it might be) that the larger car does. That being the case, it has always made more sense to have larger cars, and if necessary, let them go for small-car rates, than to just purchase more small cars. Until now...
Going forward, of course, the rental agencies will adapt to the new market demands. Enterprise is already acquiring large numbers of hybrid cars, while Hertz has been offering both hybrid cars and hybrid SUVs for some time, and is making plans to acquire the plug-in hybrid units as soon as they become available. It remains to be seen if the industry will be ready for the new fuel technologies, like fuel-cell, solar/electric, and Clean Coal vehicles, when those become available over the next few years. Or if this same asset utilization crisis will happen all over again...
Traditionally, of course, the compact and economy cars have formed the "base" level for rental car programs, with anything larger commanding a premium of 300% or more above the introductory level. Many consumers made a practice of renting a smaller car than they really wanted in order to get the lowest rate, hoping that the rental company would offer them a free upgrade to something larger and/or more prestigious. Meanwhile, many businesses would allow their employees to rent anything they wanted, figuring that the whole cost was a tax-deductible expense in the first place. But lately it seems that more and more people are refusing free upgrades, and more and more businesses are deciding that they need the cash value more than the tax credits. Obvious, one might think, but apparently the rental car industry did not find it so...
If this article is correct, the industry is still using much the same mix of assets it had when gasoline was $1.50 a gallon. Their traditional "fix" of just offering customers free upgrades when they run out of compact and economy cars is now problematic, and the companies involved have no other contingency plan in place for those occasions. And without additional assets (e.g. more small cars to rent) it's difficult to suggest anything that the rental car companies could do about the problem -- although clearly just saying "that's what we've got; take it or leave it" is not working. My question, as always, is how this came to happen in the first place...
The current gas crisis did not just spring into being overnight. Most of the rental car companies interviewed about this issue have pointed out -- correctly, I believe -- that fleet purchase decisions have to be made months or even years in advance, and orders placed for this year's assets are therefore made based on last year's conditions. But even granted that this is the case, the idea that gas prices were rising and would continue to do so is hardly something that you would need an entire Strategic Planning department to grasp. Even back when gas prices were still in the $3 range, there was a vast increase in the demand for small cars to rent. So what kept the rental companies from making this adjustment?
My theory is that since larger cars rent for more money than small ones, they represent an inherent increase in value to the consumer -- that is, no one minds being given a $70 car for a rental costing $20, but the reverse trade-off will not work. In fact, someone who actually wants a luxury car or giant SUV will not be pleased at being given a compact car even for no charge at all; the small car does not and can not fulfill the need (whatever it might be) that the larger car does. That being the case, it has always made more sense to have larger cars, and if necessary, let them go for small-car rates, than to just purchase more small cars. Until now...
Going forward, of course, the rental agencies will adapt to the new market demands. Enterprise is already acquiring large numbers of hybrid cars, while Hertz has been offering both hybrid cars and hybrid SUVs for some time, and is making plans to acquire the plug-in hybrid units as soon as they become available. It remains to be seen if the industry will be ready for the new fuel technologies, like fuel-cell, solar/electric, and Clean Coal vehicles, when those become available over the next few years. Or if this same asset utilization crisis will happen all over again...
Sunday, August 3, 2008
The Ethics of Inn Keeping
Last night I went down to the second floor of the Residence Inn to do some wash, only to find that this would not be possible. One of my fellow guests had apparently forgotten that he or she was doing the wash, and had left his/her clothing in one of the washers for several hours. Another guest was in the middle of doing her wash using the other washer, and had at least three more loads to go, and one of the dryers was also out of action, because another of our fellow guests had decided to wash (and dry) his clothing without bothering to take the chewing tobacco out of his pocket first. Said dryer (and probably the corresponding washer, as well) were not exactly non-functional, just too disgusting to use…
The previous night, someone had decided to spray shaving cream on the walls on the third-floor hallway (leaving a puddle at one end of the hall). There has also been a steady stream of people walking from the pool area down the main hallway of the Inn with nothing on their feet, leaving a layer of athlete’s foot fungus that is so thick you can just about see it with the naked eye. Then there’s the breakfast room, which has been overrun with people who apparently see nothing wrong with letting their kids scream, run around, and play catch with food items during meals…
Now, I understand that a Residence Inn isn’t exactly the Ritz; I also realize that anywhere you have families on vacation with small children and most of a high school baseball team staying, there’s going to be a fair amount of mess, noise, and youthful misbehavior. And I’m not suggesting that the hotel or its owners have any obligation to provide any service beyond a clean, comfortable room at a reasonable price (although two pairs of laundry machines aren’t likely to be enough for a community of 100 or more people; it’s just asking for trouble). What I am asking is, at what point is someone being so completely awful that the management of the hotel should have the right to ask them to leave and go make a mess somewhere else?
As I noted in my post about airlines and where to draw the line, places of public accommodation have a legal responsibility to accommodate people with disabilities, families with small children, and other folks who might otherwise cause disruption and annoyance to their fellow guests. And, as noted in that post, people who actually vandalize the property (like the shaving-cream bandits, for example) are already breaking the law, and can be arrested and removed without further adaptation, assuming you can find them in the first place. But what about people who render public areas uninhabitable, shared facilities unusable, or dining facilities unbearable? How much of a pain do they need to be before the management should have the right to kick them out?
Of course, I’m sure that the people I’m writing about in this post would all insist that they paid their money to be here, and the hotel staff are being paid to take care of their needs and clean up after them, no matter how outrageous their conduct becomes. And I know that if there were no laws governing public accommodations, some people would refuse service to potential guests on the basis of age, race, religion, or disability; in the years before such laws were enacted that’s exactly what happened. Still, does the need to make reasonable accommodation really mean that selfish, careless or unclean people should be able to make pigs of themselves wherever and whenever they choose, regardless of the cost to the rest of us?
It’s worth thinking about…
The previous night, someone had decided to spray shaving cream on the walls on the third-floor hallway (leaving a puddle at one end of the hall). There has also been a steady stream of people walking from the pool area down the main hallway of the Inn with nothing on their feet, leaving a layer of athlete’s foot fungus that is so thick you can just about see it with the naked eye. Then there’s the breakfast room, which has been overrun with people who apparently see nothing wrong with letting their kids scream, run around, and play catch with food items during meals…
Now, I understand that a Residence Inn isn’t exactly the Ritz; I also realize that anywhere you have families on vacation with small children and most of a high school baseball team staying, there’s going to be a fair amount of mess, noise, and youthful misbehavior. And I’m not suggesting that the hotel or its owners have any obligation to provide any service beyond a clean, comfortable room at a reasonable price (although two pairs of laundry machines aren’t likely to be enough for a community of 100 or more people; it’s just asking for trouble). What I am asking is, at what point is someone being so completely awful that the management of the hotel should have the right to ask them to leave and go make a mess somewhere else?
As I noted in my post about airlines and where to draw the line, places of public accommodation have a legal responsibility to accommodate people with disabilities, families with small children, and other folks who might otherwise cause disruption and annoyance to their fellow guests. And, as noted in that post, people who actually vandalize the property (like the shaving-cream bandits, for example) are already breaking the law, and can be arrested and removed without further adaptation, assuming you can find them in the first place. But what about people who render public areas uninhabitable, shared facilities unusable, or dining facilities unbearable? How much of a pain do they need to be before the management should have the right to kick them out?
Of course, I’m sure that the people I’m writing about in this post would all insist that they paid their money to be here, and the hotel staff are being paid to take care of their needs and clean up after them, no matter how outrageous their conduct becomes. And I know that if there were no laws governing public accommodations, some people would refuse service to potential guests on the basis of age, race, religion, or disability; in the years before such laws were enacted that’s exactly what happened. Still, does the need to make reasonable accommodation really mean that selfish, careless or unclean people should be able to make pigs of themselves wherever and whenever they choose, regardless of the cost to the rest of us?
It’s worth thinking about…
Saturday, August 2, 2008
Travel by Blue Screen
I was watching ESPN the other day, and I noticed what has to be the most efficient travel operations method I have ever seen. The network is featuring a series of commentary programs supposedly transmitted live from each of the various NFL training camps around the country as the teams begin gearing up for the 2008-2009 season. Basically, the program consists of two on-air personalities sitting in director’s chairs at the edge of the practice field while the team works out, and chatting about the personalities that make up the team and the prospects each team has for this season. The on-air people claim to be visiting one camp per day, as they move randomly about the country…
I became suspicious of the whole thing early on, when I realized that the program wasn’t moving from one camp to the next nearest one; instead, they appear to be lurching about the country at random, from New York one day to Los Angeles the next day to Indiana the next day to San Diego the next, and so on. There’s no question that ESPN has the resources to actually charter a private jet and send two of their on-air people (plus their entire support crew, camera crew, and entourage) on jaunts like these, but it seemed a highly inefficient use of both money and staff time. This opinion was reinforced when I realized that neither of the two talking heads on the show was interacting with any of the people at the training camps; all of the “local” team interviews had been taped earlier or were part of press conferences held at some other time…
It wasn’t until they had the continuity malfunction that I caught onto the scam, however. About a week into the program the two on-air guys were starting their conversation for the day, when a couple of people started walking across the field behind them. Despite being behind the commentators, the two people walking were clearly closer to the camera than the men in front of them (e.g. they were larger and in better focus). That’s when I looked closely and realized that the two commentators were actually sitting in front of a blue screen; they weren’t actually at the camp, but rather were being digitally superimposed over the live feed…
I suppose many other sports fans (and television viewers) would have been offended by this trick; at the very least, they might have resented the network assuming that they (the viewer/fans) would be taken in by this simple trick. My reaction was quite the opposite: I thought it was the most brilliant idea I had heard in years. Since ESPN already has a camera operator or two covering each team (or at least has one based near enough to go and get some footage when needed), all they had to do was have one of their people in the field set up a camera on a tripod somewhere near each practice field, and then have two of their people sit down in front of a blue screen on the set in their broadcast center. No travel expenses, per diem, or even extra salaries involved…
Now, I’m not saying that every company could get away with this sort of thing, or should even try. In each of the ESPN “Training Camp” broadcasts, the commentators spent most of their time reviewing tape, playing interviews and game footage, showing pictures and diagrams, and generally discussing media other than the footage being shot of them at that moment. In point of fact, it really would not have made any difference at all if they had gone around the country and set up their broadcast set at each training camp, or if they’d just gone to the Bahamas and done the whole broadcast as a voice-over using their satellite phones. Most business travelers who are spending the company’s money and their own time traveling around the country for business have some concrete reason for actually going where they say they are going in person, and a conference call or videoconference is not always going to cut it…
Still, if your company needs to cut down on its travel expenses, you could always look into having your people try traveling by blue screen…
I became suspicious of the whole thing early on, when I realized that the program wasn’t moving from one camp to the next nearest one; instead, they appear to be lurching about the country at random, from New York one day to Los Angeles the next day to Indiana the next day to San Diego the next, and so on. There’s no question that ESPN has the resources to actually charter a private jet and send two of their on-air people (plus their entire support crew, camera crew, and entourage) on jaunts like these, but it seemed a highly inefficient use of both money and staff time. This opinion was reinforced when I realized that neither of the two talking heads on the show was interacting with any of the people at the training camps; all of the “local” team interviews had been taped earlier or were part of press conferences held at some other time…
It wasn’t until they had the continuity malfunction that I caught onto the scam, however. About a week into the program the two on-air guys were starting their conversation for the day, when a couple of people started walking across the field behind them. Despite being behind the commentators, the two people walking were clearly closer to the camera than the men in front of them (e.g. they were larger and in better focus). That’s when I looked closely and realized that the two commentators were actually sitting in front of a blue screen; they weren’t actually at the camp, but rather were being digitally superimposed over the live feed…
I suppose many other sports fans (and television viewers) would have been offended by this trick; at the very least, they might have resented the network assuming that they (the viewer/fans) would be taken in by this simple trick. My reaction was quite the opposite: I thought it was the most brilliant idea I had heard in years. Since ESPN already has a camera operator or two covering each team (or at least has one based near enough to go and get some footage when needed), all they had to do was have one of their people in the field set up a camera on a tripod somewhere near each practice field, and then have two of their people sit down in front of a blue screen on the set in their broadcast center. No travel expenses, per diem, or even extra salaries involved…
Now, I’m not saying that every company could get away with this sort of thing, or should even try. In each of the ESPN “Training Camp” broadcasts, the commentators spent most of their time reviewing tape, playing interviews and game footage, showing pictures and diagrams, and generally discussing media other than the footage being shot of them at that moment. In point of fact, it really would not have made any difference at all if they had gone around the country and set up their broadcast set at each training camp, or if they’d just gone to the Bahamas and done the whole broadcast as a voice-over using their satellite phones. Most business travelers who are spending the company’s money and their own time traveling around the country for business have some concrete reason for actually going where they say they are going in person, and a conference call or videoconference is not always going to cut it…
Still, if your company needs to cut down on its travel expenses, you could always look into having your people try traveling by blue screen…
Friday, August 1, 2008
The Little Things
Sometimes it takes a massive effort to find a competitive advantage; huge amounts of money, years of hard work in developing customers and relationships, scientific innovation or creative thinking. And sometimes it's a simple as working out what will make things easier for your customer without significantly increasing the company's costs -- in other words, how to provide added value to the consumer without incurring additional expenses. Familiar examples would be things like the in-room coffee service you find in business hotels like this one -- the ready-to-use coffee package costs the hotel chain very little, but it's worth a lot to some travelers to be able to brew themselves a cup of coffee in their room late at night or early in the morning. It's also another perk to list on your facility description...
We encountered a new example of this today when we went to the FedEx/Kinko's near the hotel to make some copies of a receipt for a mail-in rebate. I'll spare you my rant about mail-in rebates and how any company that sets a time limit (it's usually 30 days) in which you have to mail in the receipts should be boycotted. My actual point here is that if you are using the self-serve copiers at a FedEx/Kinko's, you're probably not going to have any of the standard office supplies or equipment with you either. Thus, if you need to remove a staple from the documents you're trying to copy, draw a straight line, write something down, paperclip something, or staple your documents back together, you're probably going to be out of luck. Which means you will either go and ask one of the FedEx/Kinko's employees if you can borrow a staple remover, stapler, ruler, pen, glue stick, or whatever else you need but don't have with you, or else just avoid going out to make a copy in the first place. It's going to make life difficult for the employees in the copy center and/or discourage customers, both of which would cost the company money...
To defeat this problem, the FedEx/Kinko's people set up a small plastic caddy near each of the self-service copiers, containing all of these office equipment mentioned above. If you need to unstaple a document, make a note on it, copy it, and then staple it back together, you just use the stuff provided for that purpose. In fact, if any of you have ever done business in a FedEx/Kinko's, you've probably done just that, possibly without ever noticing that the items you needed were provided for you. Of course, the company does have to deal with the possibility of people breaking, walking off with, or intentionally stealing their office equipment and supplies. They appear to have dealt with this by purchasing the cheapest possible models of each item that still work (the cheapest stapler, the cheapest pen, and so on) in quantities so large that the unit price must be laughably small. Having trained on the supply system at UCLA, I can tell you from personal experience that you would not believe how cheap some of this stuff is if you buy it in sufficiently huge quantities...
Now, I realize that this isn't exactly rocket science; the basic idea seems almost too obvious to comment on in the first place. Except for the fact that I've been in a number of competing copy centers over the years, and none of them seem to have figured out this concept. What makes the FedEx/Kinko's strategy so exceptional is that between the value added they are providing their customers and the staff time they are saving, it hardly matters how much of this equipment gets broken or stolen; a complete set (including the caddy) for a copier station would cost less to replace than half an hour of an associate's time -- and it's unlikely a whole set would go missing at once...
When we consider the things our own companies could do to become more profitable, most people will focus on ways to add value at little additional cost, and completely neglect the concept of lowering costs, especially in terms of saving staff time spent on non-essential tasks. Most people tend to develop a set of costs (material, labor, operations, etc.) and then just adhere to those numbers without further thought. Even when they do consider cost-cutting measures, most people will focus on lower material costs, lower utility costs, lower salaries, and other direct benefits to the company. Measures that make life (and their jobs) easier for the employees, which inherently improves their work environment and improves productivity, are generally ignored. In fact, in many companies, management seems to have an adversarial or even resentful attitude toward their workers. But when you take a closer look at the leading companies in almost any industry, you will find that they make every effort to improve working conditions, increase morale, and give the work force every possible advantage...
I don't think this is a coincidence...
It has often be remarked that you can't get the big things right if you don't get the little things right first. I would suggest that sometimes the big things are, in fact, the little things...
We encountered a new example of this today when we went to the FedEx/Kinko's near the hotel to make some copies of a receipt for a mail-in rebate. I'll spare you my rant about mail-in rebates and how any company that sets a time limit (it's usually 30 days) in which you have to mail in the receipts should be boycotted. My actual point here is that if you are using the self-serve copiers at a FedEx/Kinko's, you're probably not going to have any of the standard office supplies or equipment with you either. Thus, if you need to remove a staple from the documents you're trying to copy, draw a straight line, write something down, paperclip something, or staple your documents back together, you're probably going to be out of luck. Which means you will either go and ask one of the FedEx/Kinko's employees if you can borrow a staple remover, stapler, ruler, pen, glue stick, or whatever else you need but don't have with you, or else just avoid going out to make a copy in the first place. It's going to make life difficult for the employees in the copy center and/or discourage customers, both of which would cost the company money...
To defeat this problem, the FedEx/Kinko's people set up a small plastic caddy near each of the self-service copiers, containing all of these office equipment mentioned above. If you need to unstaple a document, make a note on it, copy it, and then staple it back together, you just use the stuff provided for that purpose. In fact, if any of you have ever done business in a FedEx/Kinko's, you've probably done just that, possibly without ever noticing that the items you needed were provided for you. Of course, the company does have to deal with the possibility of people breaking, walking off with, or intentionally stealing their office equipment and supplies. They appear to have dealt with this by purchasing the cheapest possible models of each item that still work (the cheapest stapler, the cheapest pen, and so on) in quantities so large that the unit price must be laughably small. Having trained on the supply system at UCLA, I can tell you from personal experience that you would not believe how cheap some of this stuff is if you buy it in sufficiently huge quantities...
Now, I realize that this isn't exactly rocket science; the basic idea seems almost too obvious to comment on in the first place. Except for the fact that I've been in a number of competing copy centers over the years, and none of them seem to have figured out this concept. What makes the FedEx/Kinko's strategy so exceptional is that between the value added they are providing their customers and the staff time they are saving, it hardly matters how much of this equipment gets broken or stolen; a complete set (including the caddy) for a copier station would cost less to replace than half an hour of an associate's time -- and it's unlikely a whole set would go missing at once...
When we consider the things our own companies could do to become more profitable, most people will focus on ways to add value at little additional cost, and completely neglect the concept of lowering costs, especially in terms of saving staff time spent on non-essential tasks. Most people tend to develop a set of costs (material, labor, operations, etc.) and then just adhere to those numbers without further thought. Even when they do consider cost-cutting measures, most people will focus on lower material costs, lower utility costs, lower salaries, and other direct benefits to the company. Measures that make life (and their jobs) easier for the employees, which inherently improves their work environment and improves productivity, are generally ignored. In fact, in many companies, management seems to have an adversarial or even resentful attitude toward their workers. But when you take a closer look at the leading companies in almost any industry, you will find that they make every effort to improve working conditions, increase morale, and give the work force every possible advantage...
I don't think this is a coincidence...
It has often be remarked that you can't get the big things right if you don't get the little things right first. I would suggest that sometimes the big things are, in fact, the little things...
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