The Numbers Are In...

Three weeks ago I activated the "Stats" function on this blog, which includes the counter you can find at the bottom of the page, to see if my picture of who comes to this site - and how often - was correct. As I noted at the time, the stats system had only been available for a few months, and was indicating that I get between 500 and 600 visitors a month - which seemed a bit high. Well, actually, it seemed like somewhere between 490 and 590 more than I would have expected, and I decided to keep an eye on the hits and see what happened. It's been an interesting few weeks, to say the least...

As you can see from the counter, we've had over 630 hits in the 21 days since I turned on the counter; we seem to average about 20 visits a day, although I can't tell you for sure if that's 20 visitors or just 2 people who come by a whole lot. By contrast, my rather snaky opinion blog, called "Racing to the Bottom" is only drawing a few hits each month, and in fact weeks go by without a single visitor. I don't update it as often, and perhaps the topics aren't as accessible, since they're mostly be railing about something or other that has gotten under my skin that week, but I'll keep an eye on that one, too...

So, as we go into 2011, what will happen to my little business blog? Will it retain its modest core of readers, or will it drop off into one of those dark corners of the Internet people never visit? Will people start reading the opinion columns on "Racing to the Bottom" because I've linked to it here, or will that dry up too? If I go through with that whim to start a third blog featuring light-hearted fiction and comedy, will anyone come to that party? Is anyone even reading this one? I still don't have any answers, but I can tell you this much: One of the reasons I gave for starting this blog was "It might be fun" - and it has been. I think I'll stick with it for another year...

Happy New Year, everyone!

Airline Follies Part 67

Earlier this year I wrote about the curious case of a Delta passenger who was trying to bring a dog home from Mexico until the airline lost it. After giving the customer the runaround for two days, during which they initially claimed to have no record of any dog, and then claimed the dog was being cared for at the Mexico City airport, the airline changed their story (again!) and claimed that the dog had gotten out of its carrier and run away. At the time I just assumed that it was some sort of clumsy effort to cover up the fact that someone had stolen the dog and its carrier – especially since the airline never produced the carrier from which the dog supposedly escaped. And I might have gone on thinking this was the case, except there has been another case this week – and this time the disappearance took place on American soil…

You can read the story here if you want to, but the basic facts are that an Army officer was relocating from San Diego to a base in Germany, and paid Delta to ship her two dogs (a beagle and a German shepherd), but only the beagle arrived. When the customer asked what had happened, the airline told her that the dog had escaped from its carrier and run away, and offered to refund the shipping fee. In other words, the exact same story they gave when a customer’s dog disappeared in Mexico City. It was a dubious story the first time, but Mexico does not have the sort of compulsive airport security we’re becoming accustomed to seeing in the US, and it’s just vaguely possible that someone left a door open just at the time the dog managed to work its way clear of a carrier guaranteed by the FAA to be impossible for a dog to escape. At a US airport, however, we also have to believe that the cargo area was unattended and unmonitored, that no video cameras anywhere caught anything, and that someone left an access gate to the airport open and unmonitored…

All right, it’s still barely credible, given some of the laughable excuses for “security” we’ve been seeing out of TSA lately, although given that this was the third such incident in the past year (there was a second case about a month after the one I noted) I would really have expected Delta to handle it better. It doesn’t take too many episodes like this one before your reputation for being a safe way to transport your pets (formerly quite good) goes completely in the crapper. Unfortunately, there really isn’t much the customer (or any customer) can do about a case like this; pets are considered property, and unless a specific dog is a pedigreed show animal or the equivalent, it doesn’t really have a value in the legal sense. The customer can sue the airline for intentional infliction of emotional distress, but such cases are hard to prosecute, and you’re still not likely to gain any satisfaction by doing so. Of course, you could also tell everyone you can about the airline losing your dog…

From a business standpoint, I have to point out that if your security is bad enough that someone can steal a dog out of your baggage operations, it’s also bad enough that someone could steal things for which you could be sued for significant amounts, and it’s probably also bad enough for someone to sneak IN (say, with a bomb) which could result in enough liability to bankrupt your entire corporation, not to mention getting the responsible parties charged with several hundred counts of criminal negligence, negligent homicide, or even treason. The fact is, letting people make off with your customers’ belongings is not the same thing as allowing your employees to steal the office supplies. Whether the dog was taken by an employee, by someone who was able to sneak into the baggage area, or lost because your security was preposterously bad, it’s no way to run a railroad – or, in this case, an airline…

Belled Cats & Paper Tigers

I was reading the latest variation of the article about how grade inflation is a travesty that will eventually destroy our educational system (courtesy of the New York Times online this time around) and reflecting that efforts to regulate the behavior of people in jobs from which they can never be fired is even sillier than the belief that media outrage (or even public outrage) can influence the actions of the CEOs of privately-owned companies, when I ran across a link to one of those “rate my instructor” sites we keep hearing about. At this point in history I’ve had somewhere between 100 and 200 students at MSU, and some of them have apparently had quite strong feelings about me (good and bad, thank you), if my teacher evaluations are anything to go by, so I decided to look myself up on the rankings. Imagine my surprise when I discovered that I wasn’t listed. Neither were any of our full, associate or assistant professors, or any of our professors of the practice. In fact, there were only two listings for the entire Management Department: a graduate student who dropped out of the program nearly a decade ago, and a member of my own cohort – who did not have a single rating…

Puzzled by this, I did a quick Internet search and looked myself up on a few of the competing sites. Still no listing for me – or for any of our faculty, in fact. There were a few listings for other departments in the business school, but none of them were names I knew – and I should tell you that there are a number of quite prominent people working in this institution. That none of them should be ranked anywhere online seemed extremely odd to me, until I realized that I for the most part these are not free services – you have to pay to get to any of the really good parts of any of them, and no college student is going to do any such thing. Even if they were willing to spend the money – and most people in that age group are much more interested in buying beer and/or pizza – the rating system would have no real legitimacy with the audience. Which is to say, there would be nothing to keep a low-ranking instructor (or a graduate student) from logging in and reading what his or her students had to say about him or her – or worse yet, making several bogus rankings to make him or herself look better…

There’s also no reason to believe that the people who own the site would have any interest in maintaining the confidentiality of the people posting, especially if they were members who have already entered their personal contact information (and credit card numbers) into the system. I doubt any graduate student would really care, and it’s a certainty no tenured professor ever would, but junior faculty who are trying to qualify for tenure in schools where your teacher evaluations are weighted in that decision might – and there’d be no way to be sure that some psychotic bastard wouldn’t try to take revenge for a bad rating or two that cost him or her a job. Even without a fish-eyed admiral from the “Star Wars” movies yelling “It’s a Trap!” to warn them there’s no way any undergraduate with the sense God gave a gerbil would ever risk being ratted out by such a concern…

I can’t say for certain, of course, but I imagine that there are sources on campus – or somewhere very nearby – where a wide variety of intelligence regarding courses to avoid and instructors to stay away from is available to all of our students; certainly there was in my day, and with social networking available it’s probably too easy these days. I’m not saying there’s a Facebook group called “Max P. Belin DIE DIE DIE!!!” out there, but I must admit that I’d be completely unsurprised if there was – and rather astonished if at least some of our more hard-assed instructors HADN’T been so honored…

And I’d be completely floored if anyone in this institution believed for even one moment that there was anything they could do about it…

A New Sport - Part II

If you missed yesterday's post about scambaiting, and the rules of the game, you may want to go and read it - and take a quick spin by the linked site advocating this game - before continuing. Because while the New York Times article played up the light-hearted aspect of this passtime, and my post did too, some of the posts on the "419 Eater" forum are deadly serious - and it occurs to me that I don't want to give you the impression that I'm taking this pursuit lightly...

As noted on their FAQ, most of the hard-core scambaiters aren't doing this for fun. Some of the worst of the Internet scams have had terrible consequences for the people who fall for them, including people who have bankrupted themselves, gone into crushing debt, or even become homeless because they believed what some random yutz on the Internet was telling them. The worst cases are the ones that pop up right after any major natural disaster, claiming to be relief organizations that will use your donations to help people who've just been left homeless (or worse) by hurricanes, tsunamis, floods, earthquakes and the like. Others will come up with the most pathetic tear-jerking sob stories and send them to literally millions of people, hoping to nail that one-in-a-million person who will fall for their sad (fabricated) story. And no, most scammers are neither poor people who need the (stolen) funds in order to eat nor crusaders attempting to right past (or historical) wrongs; the majority are simply criminals, and many appear to have links to organized crime...

What struck me about the scambaiter forum wasn't the glee that some of the participants were taking about making scammers try to bite their own backs - although there were many such posts - but rather the comments about how every time one of these "lads" gets played by a "baiter" (as they call themselves) he will be that much more cautious before sending out his next reply, and how every hour that a scammer spends responding to "bait" messages is one hour he can't spend preying on actual victims. It has become clear over the last decade that no amount of government action or law enforcement efforts can ever eradicate Internet scams, but as I read through the baiter literature, it seemed clearer and clearer that if you had enough scambaiters, they might be able to stem the tide - and if somebody could find a way to make scambaiting as profitable as the scams are in the first place, that might actually bring enough people into the fray to change the whole picture...

Now, I don't mean to suggest that scambaiters are cyberspace superheroes, bravely fighting back evil criminals who would wreck pain and suffering on innocent (if occasionally gullible) people for their own selfish ends; I'm sure a lot of the baiters are just doing this for fun, for personal satisfaction, or for the enjoyment they get upon seeing a picture of a cybercriminal with a large fish over his head in the mistaken belief that this will get a scam to work. But on the other hand, if you've ever wondered if the popular image of hackers as electronic vigilantes - Robin Hood with a laptop - is ever actually true, I think we can now say with some confidence that sometimes it is. Out there in the deep blue reaches of cyberspace there really are a dedicated corps of men and women who are donating their time towards making our world just a little bit better than it was when they woke up this morning - defending the defenseless and destroying (or at least seriously inconveniencing) the forces of evil...

They may not wear tights, leap tall buildings at a single bound, or strike terror into the hearts of evildoers, but I'd be pressed to call them anything other than heroes just the same. Maybe there's hope for this Internet culture of ours after all...

A New Sport

Almost from the very beginning of email we’ve all been dealing with the mass mail messages commonly known as “spam” in reference to an otherwise innocent potted meat product. We’ve talked about the ethics of using such techniques in this space before, and the debate continues as to whether there is (or even should be) any distinction between commercial email messages used as a legitimate marketing technique and fraudulent messages that exist only to scam people out of money and/or personal information. But regardless of your feelings about spam, the big question remains what to do about it. An entire sub-industry of software systems intended to detect and screen out spam messages has sprung up in recent years, and modern email systems are devoting more and more effort to diverting such messages to specialized “spam filters” – or rejecting the messages altogether. I’ve always wondered if there was some way to harness these missives for good purpose, either for commercial gain or personal satisfaction – and a story I ran across today suggests that there might be…

A recent technology column in the New York Times online told the mildly amusing story of a common email scam – a message from a friend or acquaintance claiming that the sender is stuck in London and needs your help to get home after having their wallet stolen – and an exchange the author had in which he tried to provoke various responses from the sender. It’s a variation on the old game of trying to get a telemarketer to react in various ways while tying up their time on the phone (trying to convert them to your religion, telling them the sad story about having your heart broken, threatening suicide if they don’t keep talking to you, or asking lots of questions about their pitch and then hanging up), with the added bonus being that email scammers will say or do almost anything if they think there’s the slightest chance of you sending them money. It seemed like a novel way of harmlessly wasting time until I read the comments at the bottom of the page…

It turns out there is an entire online community of people who participate in this kind of sport, informally known as “Scambaiting,” with their own forums and discussion boards (such as 419 Eater, a reference to the section of the Nigerian Penal Code that deals with email scams) offering detailed ways to make online scammers do interesting things for your own amusement. In particular, there’s an entire section of scambaiting which deals with trying to get scammers to send you a picture of themselves naked (or at least of someone very attractive in a state of undress) in return for the money which you will not, of course, ever have any intention of sending. While most people in the community acknowledge that the odds of ever gaining anything of value through these games is really no higher than your chances of actually making money by going along with an online bank scam, there is still a certain amount of personal satisfaction to be had from making these Internet criminal do silly things for your amusement. In addition, I think it supports an argument I’ve been advancing for some time now about the way in which our world is changing…

I’m not sure there ever was a time when the average person would have wired an extravagant sum of money to a bare acquaintance on the basis of a voice they might or might not recognize on the telephone, or the postal, telegraph or email equivalent; but if there ever was such a time, it appears to be ending now. Gradually, as time goes on, even the completely credulous, the utterly stupid and those suffering from dementia will fail to fall for this type of Internet scam, and both the criminals and those who take amusement from baiting them will move on to other pursuits. And while I am generally in favor of the world wising up, being more responsible and paying closer attention, it’s hard to deny that we’re also losing our innocence and becoming a colder, harder, and much more hostile world…

The Ethics of Xmas

For the last few years we’ve been hearing a lot about the so-called “War on Christmas” and how some Christian conservatives (not to be confused with conservative Christians, who are often quite liberal on social justice issues) claim to be fed up with what they refer to as “excessive political correctness.” The holiday they celebrate on December 25th is called Christmas, and they insist that there’s nothing wrong with a Christian wishing people a Merry Christmas, anymore than there would be something wrong with members of the appropriate faith wishing someone a joyous Chanukah, Kwanzaa, Yule, Solstice, Ramadan, or whatever. I’m going to leave the political and legal aspects of this debate to those more qualified, and simply focus on the business aspect of the question, which is how are we, as managers, supposed to reconcile the demands of Christians (to recognize Christmas, specifically) with the demands of everybody else (to not be subjected to Christian holidays or customs) in the workplace?

While there are some factions that would have you believe that recognition of the Christian holidays in the workplace (and in business activities like advertising) is a cherished tradition going back for thousands of years, the truth is that most of the “traditional” elements they’re describing did not appear until the later half of the 20th Century. The idea of using a religious holiday to make money is a relatively modern innovation, and would likely have been considered blasphemous in any era before this one. In recent years the demand for tolerance and inclusion has resulted in the appearance of generic iconography and text celebrating all of the possible holidays rather than simply those of a single faith, with “holiday cards” and “holiday parties,” and so on. But with the re-appearance of Christian fundamentalism in the United States (and the alignment of various Christian fundamentalist groups with conservative political groups) we’re now starting to see a push-back effect against these all-inclusive holiday celebrations…

As a manager, there’s an understandable reluctance to become involved in any religious issues while on company time, as any decision you make is likely to offend someone. There’s even a well-known bit of Internet humor about a human resources director trying to accommodate every conceivable special interest group at the proposed company event (and slowly going insane in the process) that points up just how easily this sort of thing can backfire on the company. But, by the same token, telling people that all displays in celebration of any holiday are forbidden would clearly be hostile to your employees’ collective right to free expression, and make you the flinty-hearted villain who banished their cherished (if occasionally bigoted) holiday traditions from the workplace. Now the outcry over the “War on Christmas” and the demands by Christian groups to return to a non-existent time when everyone in the workplace thought, acted and worshipped in exactly the same way as they do are stirring the pot – and making things that much more difficult for the management team…

If generic holiday recognition is no longer sufficient for Christians in your organization, do you have an ethical duty to allow them to have their own separate Christmas traditions? If so, does that mean you have to accommodate every other religion and life-philosophy (including atheists and agnostics), and allow them their own traditions? Failing that, can you ethically require everyone in your organization to leave their holiday traditions, religious observances, cultural demands and philosophical imperatives at home and just spend their time at work actually working? And if you do, doesn’t that institutionalize the very banishment of all religious influence on the workplace and dedication to logic, reason, and capitalism that the religious fundamentalists are claiming is going on already? How are you, as a management professional concerned only with the efficient and profitable operation of the company, supposed to deal with all of these conflicting – and generally absolute, if not intolerant – demands?

It’s worth thinking about…

They Don’t Get It

I suppose a blog post that is due to hit on Christmas Day should have some kind of uplifting message about peace, love and universal brotherhood, and this story might have a bit of that in it somewhere, but I’d forgive you if you don’t see it at first. Because today’s story comes to us from the AP by way of NJ.com, and it’s about how the town of Bridgewater, New Jersey spent $17,000 defending a legal case over a $4.04 refund to one of its citizens – and ultimately lost…

The whole thing began simply enough, as these stories always seem to; a resident of Bridgewater objected to the town charging him $5 for a CD copy of the recording of a town council meeting. Since these meetings are a matter of public record – and since a recording had already been made and was available to anyone who wanted it – the resident thought the service charge was unreasonable. Given the amount of effort it takes to burn a CD copy of a sound file, it’s hard not to agree with him, especially since there is a city agency in Bridgewater that already employs someone to make those copies for anyone who asks. When the town blew off his request, the resident filed a complaint with the New Jersey Government Record Council, and two years later the state council agreed with him and ordered to town to refund the $4.04 for the CD and the $3,500 in legal fees the resident had incurred while pursuing this action…

Now, one could reasonably ask why this guy was being such a tool about this issue in the first place. After all, it’s just a $5 service charge; hardly something worth taking two years and spending $3,500 over, let alone forcing your community to spend another $14,000 of their own legal fees to defend. But when you consider the facts of the case, it rapidly becomes clear that this was exactly the point in the first place – the town had no legal, fiscal or statutory right to just randomly slap service fees on things whenever they wanted to, and when called on it they should just have given the resident his CD and lived with the consequences until they could pass a municipal code mandating the fee. To my mind, however, the most stunning part of this dubious piece of public administration comes at the end of the story, when the Town Attorney claims that the legal fees would have been much lower if the resident had just settled his case…

If that wasn’t snarky enough for you the first time, I’ll do it again: the relevant public official denied responsibility for the outcome of his municipality being called on a blatantly illegal attempt to grab money from its citizens by blaming the resident in our story for not settling on a case which HE WON. It’s a bit like a coach saying “We could have won the game if the other team hadn’t insisted on scoring so many points.” It indicates that the public officials involved had somehow become so certain of their own righteousness that even after losing the case, they STILL don’t realize that the problem is entirely of their own making. Not unlike people who make judgments about people they’ve never met, books they have never read, or religious beliefs they’ve never actually studied…

I don’t know if we can be better than that; I don’t know if humanity can rise above its baser instincts and become all of the things we aspire to be. I just know that if we’re actually going to get there, we’re going to need less of this kind of knee-jerk reaction and more actual thought, self-awareness and reason. This seems like a good day to start working on all of that…

Merry Christmas, everyone!

Customer Appreciation: How Far Would You Go?

Most consumers have run across customer appreciation stunts at least a few times over the years; those rather odd promotional activities that fall somewhere between advertising and value-added, in a (usually vain) attempt to create customer loyalty in people who would otherwise have no particular attachment to the business. Some of these are little more than expensive fiascos, while others can work surprisingly well; the question is how many resources are you willing to devote to an activity which, even if successful, will mainly generate intangibles (e.g. goodwill and customer loyalty)? Can your business afford to take all of your clients to Las Vegas for the weekend, or would a weenie roast in your parking lot make more sense? Should you offer your customers an item that cost you 25 cents to make and 30 cents to mail for “free” if they just pay you $4.95 shipping and handling (as credit card companies are wont to do), or play it straight and send out free calendars and fridge magnets with your contact information on them?

Before you answer that question, you might want to consider the customer appreciation stunt that the owner of a small greeting-card shop in New York is putting on this Holiday season. According to a news story in the New York Daily News if you spend $50 or more on cards (or any other purchase) the owner, a former exotic dancer, will perform the pole dance of your choice. The performances are described as “R-rated” and will probably draw some fire from some blue-nosed public crusader eventually, but for the moment the stunt seems to be working: the store is bringing in unusual amounts of both foot traffic and purchases, and the owner intends to go on performing for anyone who wants her to…

Now, if we consider this promotion from a strictly business standpoint, it would appear to be very clever. Since the owner has to be present in the shop during the hours of operation anyway, and since the dance performances do not prevent her from conducting any other aspect of her business, they value she is adding to the purchase of greeting cards (and stripper paraphernalia, if desired) effectively costs the business nothing. If she had to employ a dancer to conduct this promotion we would have to subtract the cost of employing such an individual from whatever incremental increase in business the dances bring in, but since the owner is doing these performances herself during regular working hours, any increase should drop straight to the bottom line…

Of course, no business can exist in a vacuum. Some people will question the morality (or propriety) of combining stationery and exotic dancing into one business, or at least question whether the point of this business is actually greeting cards or pole-dancing. However, if the owner obeys all local ordinances and does not in any way harm anyone it’s hard to imagine how this supplementary service would be any different from a coffee house offering open-mike poetry night or a bar offering live music in order to draw more customers, add value to their business transactions, and improve the bottom line. The real question would be, how far would you be willing to go to promote your own business by creating new and unprecedented value for your customers? I’m not saying your competition is about to introduce pole-dancing or any other non-traditional customer appreciation program to their repertoire, but apparently you never know…

Forrest Fires and Gasoline

Over the past few years I’ve been trying to come up with some alternative for just saying “words fail me” or the ever popular “WFT?” to describe my reaction to the various acts of net lunacy I encounter. Yesterday’s example of someone treating Facebook and the World Wide Web like a slumber party for their three best friends isn’t really what I’m talking about here; that’s just a matter of people who didn’t grow up with the Internet trying to get their minds around the fact that the world we knew has changed beyond recognition. Sometimes I run across business concepts so flawed than any average six-year-old could point out the howling idiocy involved, but which seems to have slipped right past entrepreneurial businesspeople, investment bankers, and the New York Times reporter covering the start-up company. Times like today, and stories like this one…

According to the actual account as published on the New York Times website , there are a number of new companies launching that will do a quick background check on someone you met on an Internet dating site – frequently for as little as $9.99! – to make sure that your new friend isn’t a predator of some kind. It sounds okay on the face of it – all of the annoying television ads about 20% of all relationships now starting on line are essentially correct, and there’s certainly a level of anxiety inherent to agreeing to meet anyone you met online in the real world. But as James Brady Ryan’s column on Nerve.com points out, there is a hole in the logic behind this service that a small child could point out at once: all you know about someone you met online is what THEY told you – including their identity…

Unless your new virtual beau is unbelievably stupid – I mean cartoon character stupid; makes-Homer-Simpson-look-like-a-rocket-scientist-stupid – there’s no real chance that he is going to give you his real name in prelude to committing a major felony. By the same token, the hot chick you think you just met might just as easily be a gang of muggers, burglars, or identity thieves. Until such time as there is some air-tight way to identify someone you are communicating with online (don’t hold your breath) there is no way for such a service to verify anything beyond the criminal record attached to the name your correspondent chose to give you, which would appear to make this whole concept useless. Unfortunately, it’s actually much worse than that…

Suppose for a moment that you were going to attempt some nefarious act with a person you will pick up on line, and that you also knew about the existence of such “background check” web sites. The obvious dodge in this case is to find an identity that could believably be your own (correct age, race, description, etc.), which you can easily obtain by using such a service until you fine someone with a sufficiently clean background. Maybe you’ll select someone with a few unpaid parking tickets, or an old pot bust in college, just so as not to attract attention. Then, when you go online to look for your victim, you’d just use the fake (clean) identity you’ve just scammed up – making your victim even less likely to catch on to whatever crime you intend to commit until much too late…

It’s hard to imagine any such service lasting longer than the first wrongful death lawsuit when their first customer gets murdered by someone who used exactly the methods described here – and I doubt any disclaimer on the website is going to help with the defense, either. Everybody out there can do what you want, of course, but if it were mine, I’d just fold down these sites and fade quietly into the ether before anybody finds out that this particular howler was my idea…

Everyone is Watching…

Some time ago I wrote in this space about a young Facebook user who got into trouble by posting pictures of himself at a costume party wearing a “convict” costume and drinking beer while awaiting sentencing on a DUI charge. It really didn’t help matters that his attorney had described the fellow’s drunken driving as an isolated incident, or that the offender himself had claimed to be very sorry for his actions and promised not to act that way again. It probably didn’t help that the defendant was below the legal drinking age, either. Instead of the wrist-slap he’d been hoping for, this jovial fellow wound up with serious jail time and other sanctions – all because he couldn’t be bothered to keep clean, stay out of trouble, and (most importantly) NOT have pictures of himself repeating his previous offenses splattered all over the Internet…

As bad as that was, there’s a story from New Zealand this week that tops it easily. It seems that an employee of their Social Development Ministry was fired, and has subsequently lost a wrongful termination action, as the result of posting descriptions of herself as “a very expensive paperweight” and similar comments on her Facebook page. You can find the original story from the Dominion Post by way of the Stuff.co.nz website linked here, but the upshot of the story is that after fraying her employer’s trust rather severely being charged and convicted of arson, the employee in question was then terminated for describing herself as the stereotype of a useless government drone. Under the circumstances, I suppose, we have to question if this self- report wasn’t, in fact, correct…

A much more immediate question would appear to be why otherwise sane people – some of them apparently partially educated! – go around believing that their Internet exploits will never be seen by anyone except their friends. This kind of behavior would be sufficiently asinine if they’d had their accounts set for full privacy (and the incriminating posts were leaked by gabby friends or careless acquaintances, but in both of these cases (and dozens of others that have popped up on the news in the last few years) the Facebook users in question hadn’t even bothered with the privacy settings, and just left everything on the defaults…

Now, no one is saying that Facebook users (or anyone else) shouldn’t have the right to freedom of individual expression, or that you shouldn’t be able to post any content you like (provided that neither the content nor whatever you had to do in order to get it violate any existing laws) to the Internet. What continues to bewilder me is why anyone thinks that anything you post online has any expectation of privacy. Even if Facebook had a perfect track record with privacy and data security (and they don’t; confusing and constantly changing privacy settings have been among the most frequent complaints about the company in recent years) there’s still no way they could possibly guarantee that you account couldn’t be hacked, cracked, or stolen – and your incriminating comments and/or pictures revealed to people who mean you no good…

It’s possible that as technology continues to evolve there may someday be privacy on the Internet, but I rather doubt it. I suspect that in much the same way that people have grown wary of leaving their doors unlocked or giving out their telephone numbers, people will just grow accustomed to the idea that anytime you’re online you are, in effect, standing on a lighted stage with everybody in the world who wants to bother tuning in watching you from out in the darkness. If that idea bothers you, there’s a simple solution: don’t post things online that you wouldn’t be comfortable accepting responsibility for in open court…

And whatever you do, never start a blog…

Don’t Buy That!

I noted with great interest a slide show on Kiplinger.com this week talking about things you should avoid buying as Christmas presents (or the equivalent). I’ve published a gift guide in this space every year I’ve been writing this blog, but that’s been about the Rules of what is or is not a good idea from a social awkwardness/relationship standard; this Lifestyles and Consumer Interest slideshow is about pricing and opportunities, and one in particular caught my eye: Snow throwers…

Astute readers may recall some of the posts from our first winter in Michigan, when all of the local retailers ran out of snow throwers at the end of January, and the local news anchors began making fun of anyone who had put off purchasing their snow machine until later in the season. Not surprisingly, Kiplinger’s says the best time to buy these is at the end of the season (March or April, depending on where you live), when retailers will be trying to clear out their stock to make room for the spring and summer merchandise that will be in the pipeline by then. Skis, snow boards and other winter sports equipment work the same way, and for the same reason, as do winter clothing and outerwear. Some of the other categories were a bit more eccentric, however…

Consider, for example, digital cameras. Obviously, these make for a nice present, especially if the person you’re shopping for has ever expressed any interest in photography, but given that the main electronics trade shows take place in January and February, and that new models are introduced (and old ones are discontinued) at that time, you might be better off getting something in March. Personal computers (and accessories for them) are also affected by the electronics show season, but apparently the best deals come in late summer, when college students are getting ready to go back to school, and retailers need to clear out their stock to make way for the Christmas specials merchandise that will arrive in September. The one that really surprised me was power tools; apparently these are marked up to capitalize on the Christmas rush, but will be marked down for Father’s Day in June…

Now, no one is saying that you shouldn’t give any of these items as gifts, or even that price (or level of discount) should be the deciding factor in what you give people for any occasion. The point of this article, and the reason I’m calling it to your attention here, is that if YOU need any of these items, you may wish to purchase them during more favorable conditions (e.g. sometime next year). By the same token, if your household needs a new car, or any other really big-ticket item, you may want to wait until the week between Christmas and New Year’s and see if you can find a dealer who needs to clear inventory off the books before the end of the tax year. This last bit is important for businesses that need equipment and want to avoid paying income taxes for the current year, too, so I’d definitely check with your accountant as soon as possible…

The Kiplinger’s people didn’t specifically mention them, but there are two items that have been popping up all over the Internet on this subject that deserve mention here: anything with the legend “anti-aging” printed on it, and anything that is advertised as enabling the user to meet his or her fitness goals in just a few minutes each day without actually doing anything. Even if these products do work as advertised (and I wouldn’t bet money on that) there’s still an excellent chance that any potential recipient will interpret the message you are trying to send as “You look older than crap” and “You need to get into better shape” respectively; sentiments which will rapidly become problematic if they aren’t already – especially if they are true…

The Ethics of Walking

Here’s another hypothetical for you: Suppose that you own a business, and six months ago you took a pre-order from a customer, to be delivered now. Just before you’re ready to deliver the product, a huge order comes in from a government client agency which will require all of the product you have available, including the pre-orders. If you make good on the special order you can make a huge bonus/mark-up on what your product would normally go for; more than the pre-order customer will ever spend with you; probably more than they will ever have to spend on anything. You can provide your pre-order customer with an equivalent product, and even offer them a deep discount on it; you can apologize for the inconvenience; you can even point out the “substitution” clause in the purchase agreement, which says you can substitute an equivalent product if you have to. But whatever you do, it won’t be the product you originally sold; nor will it be the product your customer actually wanted. What are you going to do?

Well, before you answer that question, you might want to consider the case of the Waldorf-Astoria Hotel in New York, and the situation they ran into last month when King Abdullah of Saudi Arabia came for a visit. You can read the New York Times article about it if you want to, but the basic story is that seven Saudi princes came with the King, and all of them brought their various entourages and security details, which wound up taking up more rooms than the Waldorf had available that week. So, as is commonly done in the hospitality industry, the hotel found rooms at a nearby property of equivalent price and quality for all of the guests displaced by this sudden demand, starting with people who had booked their rooms in advance using discount programs – the guests paying the least for their rooms to begin with. This practice is called “walking” within the industry, and most hotels do have substitution language in their contract with you that prevents you from suing them over such a substitution. Thus, the practice is legal enough; my question is, is this ethical?

In the story linked above, the Waldorf stood to make an extra $100,000 or more per night the Saudi contingent was with them; more than the discount customers they displaced were likely to spend in the next hundred years in total. They also provided the displaced customers with very nice rooms at the Hilton property around the corner, and provided one night free, which at New York prices is not a trivial gesture. It would be difficult to say that the displaced guests were actually damaged in any way; certainly no lawyer would touch the case even if the hotel didn’t have substitution language on their side. But the Hilton isn’t the historic Waldorf; the hotel the customers in the story had specifically wanted to stay in as the highlight of their trip, and the one they’d stayed in on the same dates for many years. Did the hotel have an obligation to give its customers what they wanted, or only the equivalent value?

In a world filled with Internet bargains and third-party travel cites (like Expedia, Hotels.com, and so on) the practice of “walking” discount-level guests in favor of higher-paying customers is becoming more and more common, and even confirmed reservations are no longer certain unless you’ve reached that stratospheric status where even a Saudi prince would think twice about messing with you. We’re going to end up seeing more and more stories like this one from the Consumerist website , and it’s going to get harder and harder to be sure of anything when you travel. Eventually the industry and its customers will both evolve new procedures to deal with all of this, but until then we’re left with the question of whether “walking” is ethically acceptable, or if hotels (and their management) have a responsibility to their customers (to provide the service as promised) that supersedes their responsibility to their stockholders (to maximize profits without breaking the law or materially damaging anyone)?

It’s worth thinking about…

Drive Thru for Rent?

The other day I was out driving around, when I passed a small commercial building by the side of the road with a large “For Rent” sign nailed to it. This isn’t unusual in Central Michigan, where the slow economy has driven a number of businesses under and made it difficult to start new ones (or rent out the space they used to occupy). The sign was unusual because it didn’t start with the usual text of “Commercial Property For Lease” or “Will subdivide/modify to suit” or even with the square footage of the building, but rather with the phrase “Drive-Thru for Rent!” and underneath it continued “BBQ? Tacos? Coffee?” before giving the real estate agent’s contact information. This wouldn’t be that unusual either; as I like to point out, food service is one of the hardest industries in which to turn a profit, and the current economic crisis hasn’t done drive-thru places in Central Michigan any favors, either. It’s just that this particular structure used to be a bank…

I should interject here that drive-thru business locations are much more popular in Michigan than in most of the other states I’ve visited in my travels. Given the long, cold winters and generally crappy weather, people prefer to get in and out of their cars as infrequently as possible; thus you see more drive-thru banking locations, restaurants, coffee houses, pharmacies and other businesses than in more temperate climates. In this particular case, the former bank building was only big enough to have held two or three desks and a small teller area (maybe four or five employees at most), but it included three separate drive-thru lanes. The line closest to the building was the typical bullet-proof window and access drawer arrangement, but the two outer lanes both made use of speakers and pneumatic tube systems…

Now, I can see driving up to a window, placing an order, putting your money in the drawer, and then receiving your food the same way; it’s not all that different from any other fast-food operation. But the thought of tacos or barbequed meat – or worse yet, cups of coffee – being sent through a pneumatic tube system gave me a long moment of incredulous laughter. Okay; so unlike in the movies, real pneumatic tubes send their cargo in a capsule, which would tend to contain the barbeque sauce, hot sauce, or coffee. In real life, the capsules also don’t fly through the tubing at the rate you see on the big screen, which means that they wouldn’t end up spraying everything you’ve purchased all over the neighborhood in the first place. It’s still an amusingly silly image…

Of course, all that will probably happen is that somebody will rent the building and just use the window and drawer to serve customers, leaving the outer two lanes unused. Or, perhaps, some enterprising businessperson will figure out that you could have people place their orders through the outboard lane’s intercom and then loop around to pick up their food through the window and drawer. Or, more likely yet, either the tenant or the landlord will modify the property, including the drive-thru lanes, to suit the new occupant’s business model, whatever that turns out to be. But there’s still a small part of me (left over from a miss-spent childhood, no doubt) that wishes the new tenants really would try using the pneumatic tubes to deliver food to their customers. I’m not sure if they’d be able to make money on the food, but they could probably charge admission to watch people receive their orders via air pressure…

It’s a Gas

There’s been a lot of chatter on the Internet – and over the airwaves – for the past few days, as various pundits have be chiming in on the new version of the “Pickens Plan” in which T. Boone Pickens appears to be backing off of his previous stand on wind power (he spent $80 million of his own money pushing it in television ads and online) and is now concentrating on natural gas to decrease America’s dependence on imported oil. Environmentalists appear to be gnashing about how disappointing it is that Mr. Pickens is backing another fossil fuel over clean, renewable wind power, while anti-business types and anyone else who hates billionaires who like to throw their weight around is howling about how Mr. Pickens owns several of the companies that would build the infrastructure for a natural-gas-based transportation system, and how all of this is just another attempt to line his pockets. As a life-long environmentalist and business pragmatist, I have to ask, why does anyone care?

You can check out the story on MSNBC.com here if you want to, but I think we should note two facts about the situation before reaching any conclusions. One is that Mr. Pickens isn’t abandoning wind power; he’s relocating the wind farm he was going to build in the Texas Panhandle to Canada, where local utilities have a mandate from the national government to purchase electricity from renewable sources (like wind farms). It’s hard luck on the small town in Texas where the wind farm was going to be, but the local infrastructure couldn’t have handled (or transmitted) the output from the wind farm even if it did get built, and it’s really hard to blame anyone for taking their product to a market that will pay more for it. The second is that Mr. Pickens isn’t trying to conceal his interest in natural gas or his financial stake in getting the infrastructure in place; he’s just touting it as an alternative to imported oil – which, in fairness, it is…

In addition, it’s probably worth noting that the wind turbine industry seems to be doing just fine, and that if giant wind farms are built in Canada using American-made equipment, there should still be a major lift to our economy. But the real point here is that a businessman with an interest in natural gas infrastructure campaigning in favor of natural gas is in no way different from the petroleum industry commercials I called to your attention earlier this year, which claimed that this country could fulfill all of its own energy needs with the resources found within our boarders. If we agree that an improved foreign trade ratio and a decreased dependence on several countries that actively hate us for oil is a good thing then these new natural gas-powered vehicle programs are probably worth the effort, and if these initiatives turn out to be cheaper or more practical than wind power (at least in the short run), then we all stand to benefit. The real question is what are we going to do when the world starts running out of natural gas?

It’s possible that the new energy policy that will come out of Washington in the next two (or four) years will include increased support for alternative sources of energy. And if we can buy enough time to develop those new sources, build the infrastructure to sustain them, and educate our people on how to use them by using the respite that the Pickens plan could quite possibly gain for us, then I don’t see why anybody should complain if the guy who had enough foresight to figure out which way the bandwagon was rolling and get in front of it makes another fortune or two in the process…

Cheating at Solitaire

There was an interesting court ruling in the news this week: a federal appeals panel upheld a lower court ban on software that automatically plays World of Warcraft, enabling players to grind through the lower levers of character development while showering, working, sleeping, or doing their homework. On the face of it, of course, both halves of this case are absurd; the people who make software that enables customers to exchange hours of their actual life for a virtual existence are suing over software that makes it easier and more convenient for their customers to succeed in the game, and people who are spending their spare time pursuing virtual rewards are complaining because software that allows them to cheat has been outlawed by the court. But when you actually get into the facts of the case, everything rapidly becomes a lot murkier…

Consider, for example, that the software company makes money on time-based subscriptions to their online activities, which means that any software that decreases the amount of time their customers have to spend online cuts directly into their bottom line. Since an automated program can “play” the game 24 hours a day, each day of the subscription will be that much more productive, and the player will be able to spend less money while reaping the same benefits. By the same token, this type of software allows people who are willing (and able) to use it an unfair advantage over players who actually take the time to develop and grow their own characters. In many ways, it’s like the cases we’ve seen where online games allow the user to purchase success elements using real-world money rather than earning them through game play as intended. The difference in this case is, the terms and conditions of the game expressly forbid the use of software (or “bots” as they are called) that can play for you automatically…

What a lot of people fail to grasp is that the terms of service provided in an End User License are actually the terms of the contract under which you are purchasing or leasing the product, and failing to conform to those rules is a material breach of your contract. I’m not aware of Blizzard Software suing anyone over the use of bots in World of Warcraft, but from a legal standpoint this shouldn’t be any different from the civil cases regarding unlawful copies or piracy issues or any of the other software-oriented lawsuits of recent years. Or, to put it another way, these bots aren’t legally any different from a software program that would allow five hundred office workers to use one copy of MS Office (and only pay for it once), but no one would even try to argue that such a program wasn’t both breach of contract and piracy. It’s just because the application they are designed to fool is a game program – and the image of a technology geek furtively cheating on a game which is a surrogate for actual human interaction and achievement, like a man cheating at solitaire – that this case ever made it to court in the first place…

You can pick up the rest of the details off David Kravets’ “Threat Level” blog at Wired.com if you want to. I can’t really comment on the quality of the legal actions involved, or even on the DMCA, because as previously noted I don’t have a law degree or a license to give you advice on legal matters. Ultimately, the issue of what constitutes violation or misuse of a copyright will have to be decided by more qualified people than me, and I wouldn’t be at all surprised to see additional legislation as well as additional case law come into effect before all of this gets settled. For the moment, let me just suggest that if you’re going to develop World of Warcraft characters you do it the old-fashioned way, at least until a more favorable legal climate emerges. Of course, if that bothers you, there are always activities in real life you could amuse yourself with in the meanwhile…

More Complicated Than it Looks

I noted another story on the Detroit Free Press website wailing and gnashing about the CEO of General Motors asking for permission to offer larger compensation packages – mainly bonus and raise increases – to the management personnel at GM at the same time that he announced that hourly personnel will not be getting raises this year. Granted that this is the Free Press, and they’ve been running a bit left of center for as long as I’ve been paying attention to them; also granted that there’s a huge backlash against over-paid executives on any company that has ever received bailout money going on right now, and this is an easy way to gain readership and sell newspapers (both real and electronic). My first thought upon actually reading the story was that it’s really too bad that people will only look at the headline and not read this story – because the issue they’re describing isn’t nearly as simple as it looks…

First of all, it’s important to realize that until GM pays back its bailout money the CEO can’t increase the bonuses or raises being paid to anybody; the executives or the managers or the janitorial staff. Whether the executives at GM are really worth hanging onto, given that they managed to run what used to be the largest industrial firm in the world into bankruptcy, is debatable; however, the CEO believes that they’re actually better than anybody he could get to replace them, and it’s possible that he’s right. But right or wrong, without the approval of acting special master for executive compensation Pat Geoghegan, GM can’t act on the CEO’s wishes. The public statement that he would like to increase those incentive programs just gives the CEO an alibi for whatever happens as a result; if his executives do flee the company for higher wages elsewhere and this does turn out to have a negative effect on performance, he can point to this statement as proof that the resulting fiasco isn’t his fault…

In fact, if you bother to actually read the article, you’ll find a statement from a Treasury department spokesman to the effect that such requests are routine under the bailout program, and this one is not considered to be anything special. As for the hourly employees not getting an increase in base salary, this sounds very disturbing until you realize that all of the workers in question are unionized under the UAW, and their base salaries, raises and bonuses are collectively bargained for and established years in advance. If the UAW doesn’t feel its people are receiving appropriate salaries it can demand higher ones when its contract with GM expires next summer, or go out on strike to demand more, but there was never any realistic chance of any CEO randomly offering (or even requesting permission to offer) higher hourly wages just on a whim. The fact that the hourly personnel will not receive pay raises unless the union successfully negotiates one is a total non-story, and its inclusion here is entirely inflammatory…

So while this story sounds like a case of a greedy CEO planning to offer huge amounts of money to wealthy senior executives at the expense of hard-working blue-collar folks (whose labor actually makes the company possible), the truth is that this is just a case of one well-heeled hired gun covering his backside in the event of trouble, and none of it really means anything. It’s actually much more significant that the same article claims GM is well positioned relative to the global competition and may be able to become profitable again in a relatively short time. This would enable the company to pay back its Federal bail-out money, negotiate a mutually advantageous contract with the union, attract new stockholders, improve its credit rating, and go back to offering its executives the obscenely large bonuses they’ve come to expect…

It’s an outcome that would be good for the economy, the employees, the stockholders, and ultimately everyone who makes money by making, selling or financing cars. But I have to admit, it won’t do a thing for the Free Press or anybody else who makes a living selling newspapers…

Paying for the Non-Privilege

Some years ago I recall being very surprised to discover that Sears had cancelled my charge card just as I was about to use it. At the time I was underemployed and living in a small apartment, and thus could not afford to purchase much of anything, let alone indulge in regular shopping sprees, but I went to Sears once or twice a year to purchase basics like cheap clothing, cheap towels, and occasionally cheap gifts. I’d acquired one of their in-house charge cards because it had a lower interest rate than any of my credit cards, and because I’ve always believed that having a little extra credit available is a good thing, but I didn’t really need to float any of my Sears purchases, and generally paid off the card as soon as I got the bill. The combination of infrequent use and timely pay-off meant that the company wasn’t making any lucrative interest fees off of me, and since my account cost the same as any other to administrate, they cancelled me. I was mildly annoyed, but not enough to stop shopping there – when it was convenient for me, of course…

Over the years since, Sears and a number of other companies have spun off their credit divisions, or sold them outright to raise money – since these are frequently the most profitable division of any retail outfit, and occasionally the only division that nets any money, there’s always someone who wants to buy them. I’ve never bothered to acquire a Sears MasterCard or Visa, because these accounts don’t offer any advantage over the cards I’ve already got – as previously noted, I don’t shop at Sears enough for the supposed special advantages of their own Card to matter to me – and because they cost too much to be worth having for their own sake. I don’t have any other store credit cards, either, and if the new wrinkle that is being introduced in the UK becomes common in this country, you may not want to keep yours, either…

A story off the Daily Mail (London) website indicates that the bank which provides the in-store credit cards for a number of British retailers has started charging a ten-pound fee (about $15.75 USD at the moment) to any customer who fails to make a purchase using his or her card for six months. This is, of course, entirely separate from the annual fees, finance charges, late fees or interest that you will accrue if you actually use the thing, and rather defeats the purpose of saving money on in-store purchases (you’d have to receive a 1% discount on $3,150 in purchases, or a 5% discount on over $600 in purchases to make up for 12 months of non-usage fees), even assuming that you get in-store purchase savings in the first place. But a much more disturbing possibility, at least to me, is that other types of business might attempt a similar business model…

Consider, for example, airlines that sell food for purchase during the flights. This model won’t work well if no one buys the food, so these carriers might start adding a “spoilage fee” to your ticket, which can be refunded if you actually purchase enough to eat, or a “corkage” fee (such as restaurants charge for bringing in your own wine) for eating your own food while on board. You could also imagine them charging people who pay for their baggage and then don’t bring any, or asking a premium for very large people, very heavy people, or anyone travelling with a child small enough to annoy other passengers. And if those fees catch on, it could only be a matter of time before businesses of all sorts start charging “convenience” fees or “annoyance” fees or “we don’t feel that our bottom line is quite attractive enough, so we’re going to charge you more” fees…

I kid, of course; all of these non-usage fees (and related charges) are clearly stated in the fine print of the card agreements, and if you can’t be bothered to read contracts before you sign them it’s only a matter of time before you accidentally sign away your vital organs (or something equally silly) anyway. I’m just saying that this trend of making all of the additional money you can off of the careless, the credulous and the stupid is disturbing, and I really hope it doesn’t get carried to its logical conclusion. I am not hopeful of this, however…

The Ethics of Gift Cards

In several earlier posts in this space I have written against the use of gift cards for both high-priority occasions and high-priority people, both because of the inherent business issues with such purchases (such as the company you bought the card from going out of business before the gift can be redeemed), and because of the high level of convenience involved. I’m not saying there’s anything wrong with sending your third cousin’s son (whom you haven’t seen in three years) a gift card for his birthday, or with getting your friend the knitter a gift card for a large supply of yarn (since you don’t know what colors she needs or anticipates needing for her next project); I’m just saying that getting your wife a gift card from the supermarket around the corner for your Anniversary is unwise unless you like sleeping on the couch. If it’s really the thought that counts, a gift that says “I spent less than fifteen seconds picking out your gift!” is going to be inherently problematic. Unless it’s a gift card for a very large amount of junk food, in which case we’ve got a whole other level of grey area on our hands…

A story that turned up in the Sunday Mail of Queensland documents several strenuous objections to the KFC $500 gift card available in Australia and various other parts of the world as being health hazards. The argument is that since $500 is enough for 14 buckets of chicken or at least 50 to 70 individual meals at current prices, such a gift card would enable the recipient to enjoy KFC meals once a week for a year, or possibly even more often, instead of the once per month or once per calendar quarter that nutritionists would prefer. While there’s no explanation given as to why this would be worse than gifts of bio-toxins (alcohols) or refined sugars (any form of candy), you could actually argue that giving someone a present that is actively bad for their health – or at least enables them to do things that are actively bad for their health – is not a good choice. The question that struck me is, does this actually involve an ethical dilemma, either for the consumer or for the company?

Fast-food companies have for years pointed out that no one is forcing their customers to purchase or consume the company’s wares, and that if you don’t limit yourself exclusively to foods with high fat, carbohydrate or cholesterol contents, their meals are not going to do you any real harm. In the case of high-dollar gift cards, companies like KFC will generally point out that such a gift would enable a large family to eat out once each month, or permit a single individual to enjoy a hot meal once each week, and that if all of your other meals are relatively healthful, this will not harm anyone. KFC in particular will point out that they do offer food that, if not exactly healthy, is certainly no worse for you than any other dining-out experience would be, so blaming them for your poor eating habits (or those of your recipient) is hardly just. But the real question is, if these gift cards have the potential for actual harmful misuse, should they be offered or advertised as gifts?

A similar point could be raised with the consumer. If you are giving a KFC gift card to someone who can not afford to eat out very often, and who will only order the relatively healthy items off the menu (and enjoy them in moderation) are you really doing any harm? More to the point, perhaps, if you give such a gift card to someone who you know will use it just to purchase deep-fried items in bulk, are you responsible for their poor eating habits and/or lack of self-control? Or, to put it another way, do companies have any ethical responsibility to only market gift items that are part of a healthy lifestyle? Do private citizens have any ethical responsibility to only give gifts that are actively good for the person getting them? Or should companies market what people want to buy, and let people make their own decisions about what to consume, even if those decisions will ultimately kill them?

It’s worth thinking about…

Why Management is Important

There's a common belief in popular culture these days that management in general - and managers in particular - are obsolete, or even redundant. There's actually a theory of "non-management" that suggests that if you hire, train and empower the right people, you don't even need anyone to supervise them; just tell them what you want done, and get out of their way. It's a comforting idea, really; it suggests that all of us who have spent years learning about management science and practicing the profession of management don't actually know more than random armchair pundits can just make up on the fly. You don't even need to hang onto people who have managed not to get fired for two years and call them supervisors, just drop all of those high management salaries down to the bottom line and declare a higher dividend. And there's even some evidence to suggest that it might really work that way. But on the other hand, stories keep popping up that suggest that having someone who knows what he or she is doing running things might just be worth the money...

Consider the case of Capital One and a former customer named Perry. When Capital One sent the customer to their collections department she had the temerity to hire a lawyer and direct all future communications from the company to her attorney. Capital One took offense at this, and refused to go through the customer's legal counsel, persisting in calling the customer and members of her family at home, at work, and at all hours of the night.They also began ratcheting up the amount the customer supposedly owed them, ultimately demanding payment in excess of $286 million. Now, a competent manager, or at least one who had a passing understanding of strategy, public relations, or law, could probably have figured out why escalating from a $4,000 debt to something over $286 million was a bad idea. Somebody who had actually spent a few minutes in a business law class might have been able to explain why failing to appear in court is a bad idea, too. But apparently, nobody at Capital One had figured out why doing both of these things in the same case is a bad idea...

In the case linked above, the former customer is counter-suing for the same amount Capital One sued her for, claiming that the $286 million can't simply be a computer error, but must in fact be the product of a deliberate attempt to harass and intimidate her. The company could probably have raised some other argument, except they failed to show up for the court hearing and are now in very real danger of being found liable for the full amount. It doesn't help their case any that under the laws of the state where this action is happening, the company was legally required to communicate through the attorney, not start arbitrarily raising the amount of the case, and other minor civilities that were completely ignored in this case. In fact, even if they can get off the hook for the $286 million, Capitol One may still be hit with civil sanctions and even criminal charges because of their misconduct in this case...

Now, I'm not saying that there isn't a management team currently running Capital One, or that the management personnel running the collections department at Capital One are incompetents who have gotten so arrogant at being about to flout Federal law and sneer in the faces of consumers that they've made a mistake that could end up costing the company nine figures worth of money; I'm not even saying that if the case ultimately goes south on them that they won't just scam up money from a Federal bail-out program to make good their loss. I'm just saying that a real management professional would have understood the potential for ridicule, legal exposure, and (worst of all) lost profits that could result from allowing this sort of fiasco to continue, and thought of a better way to recover debts and intimidate uppity customers...

But if you still think there's no purpose in having somebody running the company who actually knows what he or she is doing, please feel free to eliminate the management positions in your company. I'm going to see if I've got any money invested in Capital One - and if I do, I'm going to transfer it into some company that still has managers working for them...

Counting the Hits

Some of you may have noticed the counter that popped up at the bottom of the page today; it's a relatively new feature of Blogspot, along with a user statistics function available from the dashboard. The upshot of all of this new software is that, for the first time in nearly four years, I have an idea of how many people are reading this blog, and where they are coming from. It's been a rather strange, if eye-opening experience...

To begin with, the stats function (and the counters) only go back to last summer, or less than six months total, and probably the least productive six months in the entire history of this blog as well. Despite this low spot in my productivity, I still seem to be getting somewhere around 500 to 600 discrete visits each month, or somewhere around 20 per day. Unsurprisingly, most of the individual page views seem to cluster around things that would be common search terms in their own right - almost 10% of the views were the result of my post about the ethics of Amazon, which probably means people were searching for web sites that mention "Amazon" and "ethics" and found my post about them. Still, it's a lot of interest for a little business blog written by a guy nobody ever heard of...

Even more peculiar, at least from my point of view, is the huge range of countries our readers seem to come from. Only a little over half of the hits are from the U.S.; almost one-sixth of them are from the Netherlands, and nearly 10% are from Germany, neither of which makes much sense. I also seem to have a number of readers in Brazil, or at least one who comes here often. The rest seem to be scattered across Asia, including Russia and the Far East. Some of my students have been from those parts of the world, but if any of them found the blog by searching under my name those hits would be coming from here, not from overseas...

Oddest of all, I think, is that a significant number of those hits came from people searching for my name on various search engines. Why people from other countries would be searching for me by name passes understanding; perhaps some of my students have told other members of their families about me, and people are combing the Web looking for leverage. In any case, it does give you an idea about the economics of blogging - and why so few of us can make a living this way...

If I average 500 visitors a month (which is at least 490 more than I thought we were getting), and 2% of them were to click through on an ad to a sponsoring website (which is more than most blogs-based ads get) and if I got a penny for each one (which is higher than usual) that would still only be 10 cents a month; not even enough to make a phone call. I'd need 500 times as many visitors just to cover my DSL bill; 50,000 times this number to generate a good living. And frankly, there aren't too many blogs that get 2.5 million visits a month...

I'm not sure how much different my blog is going to be now that I know how many people are reading it, but I don't suppose it will change much. I'm still reaching a tiny, and mostly random audience, and still writing mostly because I want to, and still declining to monetize, commercialize or civilize this space.

But I'll keep you posted...

Go Smurf Yourself

A long time ago, a major concern that parents had to worry about was having children who were too young to know any better calling those “976” pay-per-minute telephone services and running up huge telephone bills. Some of it was that these services had “adult” material, but mostly it was just that a three-year-old could call the recorded “Message from Santa” number six hundred times in a day (kids that age do not get bored as easily as you might think), and a few weeks later the parents might be faced with a thousand dollars in phone charges. Even otherwise intelligent people who were old enough to know better would occasionally make this mistake; using a phone service to get updates about their soap operas every weekday for a month until their parents started yelling at them about a $700 phone charge (at $4.95 per minute, it adds up quickly). Of course, that all seems so quaint now…

The phone-service menace had faded, if not quite vanished, when websites that charge for content became the new electronic threat. Most of these required a credit card in order to use, but those aren’t that hard for an enterprising young tyke to get hold of, especially when their parents use the same credit card number on the same computer to buy their own online content; in some cases the computer’s own auto-complete software will fill in those fields for them. For at least ten years now, we’ve been bombarded with stories of children as young as 2 years old placing orders for everything from pornographic movies to large construction equipment using their parents’ computers, and this along with the threat of online predators has convinced most reasonably sane people that you’d have to be an idiot to let small children surf the ‘Net unsupervised…

Now it would appear that Apple has pushed back this frontier, as they have so many others, with iPhone and iPad technology. A story from the Associated Press by way of the Yahoo News tech page presents the curious case of the “Smurf’s Village” video game, which is available for Apple gadgets as part of the run-up marketing for the upcoming Smurfs movie. Like a lot of the current generation of online games, the Smurf’s Village gives the user the option of simply buying resources (using real money) instead of working for them through game play. What’s special about this case is that the game is intended primarily for small children – and the usual failsafe of requiring the user’s iTunes password in order to purchase things within the application apparently doesn’t always work…

Now, the Apple leadership and the game publishers have correctly pointed out that parents can restrict all in-application purchases with a simple settings adjustment; it also seems reasonable to ask about kids and unsupervised online gaming in the first place. Any child who is too young to understand about money (and credit cards) is probably too young to be using web-enabled electronic devices without supervision, and letting your child do so isn’t functionally any different from letting them have access to X-rated cable channels, adult websites, or chat services, all of which are already on the list of socially unacceptable parent behaviors (and will probably end up in the legal definition of child endangerment soon if they aren’t already). A much more troubling point is how easy these applications are to abuse – and how blatantly the programmers are trying to get the user to do so…

Consider the case of the Smurf’s Village game, for example. Like most such applications, it has a wealth of challenges that can take days or weeks of constant play to overcome – or you can complete them instantly with the application of a few real-world dollars. Even adults who should know better can fall prey to this type of programming; expecting small children not to is unrealistic. And while children might consider the idea that purchasing a sword or a biological-warfare grenade launcher in order to slaughter other players might be bad, it’s hard to picture them applying the same logic to purchasing “Smurfberries” in order to build their village faster…

Even worse, in my opinion, is the attitude that some of the parents quoted in this article seem to be taking; that none of this is their fault and everything should go back to the way it was when they were children. Like it or not, in-app purchases are here to stay, just the way online communities and cyber-stalkers are. Letting your children play with a web-enabled computer/communications device that is connected to your credit cards is every bit as stupid as letting them play in traffic would be – and these electronic hazards are no more likely to go away than automobile traffic is…

On the Slope Again

Here’s a question I saw posed about an online news story this week: Suppose a businessman buys the contents of a storage locker that are being sold at auction, which happens every month in America when people stop paying their locker rental fees and ignore notices to do so or to clean out their belongings. In this case, let’s suppose that the seizure and auction were legally conducted; no one was swindled into giving up their possessions, the storage company gave the owners all of the time required by contract and law to pay up, and even notified the owners of the auction so they could attend and buy everything back. Does the man who acquired the items at auction have any responsibility to return them to the original owners, or does he have the right to sell his legally-obtained property as he sees fit?

Before you answer that question you might want to consider this case from the Chicago Sun-Times website. According to this report, a man who routinely buys abandoned storage locker contents was doing just that in 2006 when he came upon a lot that included the funeral flag, dog tags, medals, gold star banner, photographs and other memorabilia of the first U.S. servicewoman killed in Afghanistan. At this point the story gets a little murky; the purchaser says he attempted to make contact with the family about returning the items and they never replied; the family does not dispute this, but a non-profit group established in the late Marine’s name says they want the memorabilia and the purchaser has declined their offers for it. Meanwhile, the purchaser (who has violated no laws whatsoever) is being excoriated in the media and flamed everywhere online that this story appears…

Now, granted that the articles obtained in this particular auction have a high emotional meaning to the family, facts of the case do appear to be that these items were left in a storage locker for several years (from 2002 to 2006) and then abandoned after several billing notices, a seizure notice, an auction notice an so on; it’s also clear that the purchaser isn’t refusing to return them to the family, just to do as a third-party group is asking him to do. What makes this case interesting (at least to me) is the issue of where do we draw the line? A lot of what ends up being auctioned off from storage lockers probably has sentimental value to someone, but self-storage companies aren’t charities, and expecting them to continue providing a service you’re not paying for is ridiculous. For that matter, so is asking someone who purchased goods through such an auction to simply give you items they bought and paid for. At the same time, it’s hard to imagine anyone who wouldn’t want to return a dead servicewoman’s burial flag and decorations to her family…

So where do we draw that line? At what point is something so important, holy or sacred that possession of it should supersede the laws of property ownership and liability, and who gets to make that decision? It’s another one of those questions I’m really grateful I don’t have to answer personally; I’m just going to be a weasel here and suggest that anything that is of huge sentimental value to you and can be stored in a single file box is probably something you should not put in self-storage in the first place…

And if you do, make sure you pay the rent on time!

Range Anxiety

I haven’t really be following the growing competition in hybrid and plug-in hybrid car systems, since at the moment I don’t need a new car, and even if I did I’m a graduate student, which means no one is going to give me a car loan anyway. I believe that there is a great deal of potential in this product category, especially if some of the new technologies to provide electricity generation at home pan out. Imagine having a bank of solar cells on the roof of your garage to charge up your car, which you then use to commute. Once you’ve paid for the basic systems (possibly including a battery in the garage to store energy gathered when you’re not home), your fuel costs would be effectively zero for however long the car lasted, and your carbon footprint would be effectively zero also. But for the moment, hybrids are expensive, and the plug-in hybrids are even more so, while the pure electric vehicles have issues of their own…

Consider the case of the new Nissan Leaf, as profiled by The New York Times website. The Leaf is a pure electric vehicle, which means it does not have a gasoline motor and has no emissions whatsoever. There’s some debate as to how much it would actually cost to operate, but the EPA lists the Leaf’s annual energy costs as being about $561, which is less than the Toyota Prius and less than one-third what it would cost to buy gas for a conventional mid-sized car. Unfortunately, the EPA also lists the Leaf’s range as being just 73 miles – much less than the 100 claimed by Nissan, and significantly worse than the Prius (which can, theoretically, reach 600 miles on a full tank under optimal conditions). Even more to the point, recharging stations can be hard to come by on the open road, which means that you probably shouldn’t ever go more than 35 miles from home unless you know ahead of time where you can plug in the car…

This particular worry is known as “range anxiety” to the industry writers, and it has always been a major drawback to electric cars. If you use them exclusively for short trips – such as a short-range commute like mine, or running errands around a small town – they’re reasonably effective, but once you consider a road trip to anywhere you start having problems. In my case, even the run to Detroit to see a baseball game is out of range, and going to Ann Arbor would be impossible unless there was a public charging station I could use there – assuming I’d be there long enough for the Leaf’s battery to charge back up. This limits the utility, and therefore the desirability, of the product, and removes a significant number of customers from the potential market for this vehicle, and who’s even mentioned long-term issues like figuring out how to dispose of the car’s battery yet?

Of course, similar objections apply to bio-fuels, ethanol, hydrogen fuel cells and even “clean” diesel engines (you can’t get low-sulfur diesel fuel in many larger cities), while hybrid vehicles (including the so-called “plug-in hybrids”) have the drawback of still using gasoline for fuel, albeit in smaller quantities. It’s possible that one of the various technological fixes, such as a network of public charging stations, recharging facilities at existing gas stations, larger storage cells for electric car batteries, or portable solar power panels will solve the problem, and in a few years you’ll see pure electric cars on the road the way we’re starting to see hybrids. On the other hand, it’s possible that some other new development is coming, and all of these alternative power sources will someday seem as quaint as the steam-powered cars of the late 19th Century…

I’m just grateful that for the moment, at least, my commute is only eight minutes each way…

Deficit Thinking or Thinking Deficit

Ever since the midterm elections the debate about the national debt has been heating up again, to degrees not seen since the mid-1980’s arguments about the same topic. This blog isn’t supposed to be political, but taxes, and especially business-related taxes, do relate to our primary topic, and there was an article this week in the Wall Street Journal that points out one of those traditional blind spots in which neither side of the political spectrum appears to have much of a grasp on reality: deficit spending and increased taxation…

The linked article follows up on a classic study in economics from the 1980s, which showed considerable support for the contention that every dollar of new taxes leads to more than one dollar of spending by Congress. In fact, the Vedder and Gallaway article found that for each new tax dollar, our Federal government generated $1.17 of new spending (17% more than the tax increase). The updated study is considerably more sophisticated, taking into account a much longer time period, and controlling for a range of different variables, but the alternative models suggest a tax-to-spend relationship of between $1.05 and $1.81, depending on where, when, and how the data is arranged. Nor does this pattern appear to be changing – in the years from 2008 to 2010 the present Congress has approved over $ 1 trillion, which violates all of the existing budget rules…

Now, as a political moderate, I’m not going to claim that the bailout wasn’t needed, or that we can just start slashing social programming without horrible long-term repercussions, or that our military spending is out of line with post-Cold War conditions, or any of the other standard formulae that people like to spout instead of actually wading through millions of pages of dust-dry government documents; I’m just pointing out that regardless of what you think of deficit spending (whether you’re for it or against it), our government has NEVER been able to reduce the deficit by raising taxes. It’s always possible that conditions will be different somehow this time around, but after 65 years and 13 Presidential administrations, no one has ever succeeded in doing so. Which makes the present call for things like a 6.5% national sales tax nothing more than political grandstanding…

From a business standpoint, there’s no reason to expect any member of Congress to show any fiscal responsibility, simply because there is no benefit for any of them to do so. On the contrary, the way most of our representatives continue to get elected is to bring economic advantages (e.g., jobs, entitlements, benefits and pork) to their home districts and/or states. Any member of Congress who could somehow manage to bring funds to their constituents while making somebody else pay for all of them would be elected for life, and in fact many of our longer-serving politicians have spend decades in office doing just that, or at least creating the illusion of doing so. By all indications, the problem with the current system isn’t that we aren’t being taxed enough, or even that we’re being taxed too much, but rather that our taxes are being spent on the wrong things…

Several authors have noted that deficit spending by our national government is, in effect, taking the benefits and making someone else pay for them – in this case, someone else being whoever the tax-paying public is twenty to fifty years from now. Personally, I believe that our government can dig itself out of the hole it’s currently in, by investment in industries and enterprises that will raise our tax base under existing tax law (and coincidentally create jobs, raise our standard of living, improve our trade balance, and fix our broken economy), and that might even be true. The two things that history teaches us about this issue are that whatever else tax-and-spend policies might be able to do, they won’t be able to reduce the Federal deficit – and that people never listen to history, of course…

Missing the Point – Yet Again

Two stories hit one of the news aggregation cites I frequent today in the “nutty lawsuits” category, which I think demonstrate why you should not take legal advice from people without law degrees – including bloggers without law degrees. I’m not going to comment on the validity of these cases (that would be the practicing law without a license I keep warning you about), but I think there are business lessons to be had in both of these instances, even if they’re not exactly the ones the authors or the people who tagged these stories as “humor” intended you to have…

First, we have the case from Alberta, Canada by way of the National Post website, about a woman who recently won a worker’s compensation case because her job caused a flare-up of an old repetitive motion injury. The job duty in question was scooping ice cream, which is an unfortunately thing to have problems with when you are employed by an ice cream shop to scoop ice cream for a living. Certainly, the people who aggregated this story thought it was an amusing case of someone trying to scam a living off of her employer without actually having to do any work. But anyone who has actually tried doing this for a living could have told them otherwise – and so could a lawyer…

Scooping a few helpings of ice cream for the family may be trivial, but having to scoop several hundred servings a day isn’t, especially when we’re talking commercial-grade ice cream, which is stored at a very low temperature to prevent spoilage. If you’ve every had to put a package of ice cream into a pot of hot water in order to get the scoop into the rock-hard surface you already know what I’m talking about; now imagine having to do this several hundred times in an 8-hour shift. Even a healthy person could easily injure herself that way, and keep in mind that she didn’t have a pot of hot water or any other way to soften the product before trying to scoop it. More to the point, perhaps, making someone who already has an old rotator cuff injury work such a shift is asinine. I’m not sure what somebody who can’t scoop would do for an ice cream shop, but there has to be some other duty you could assign such a worker, whether it’s running the register, heating up the fudge topping, or just sweeping up…

The other case comes to us from San Rafael, California, where two men are suing a restaurant because they claim they were injured and their clothing was damaged when two escargot they were eating “exploded” on them, spewing melted butter on their polo shirts and faces. The restaurant’s insurance company is refusing to pay them anything, on the grounds that having butter spill onto isn’t particularly harmful and the two diners have not produced any evidence of actually being injured or damaged in any way. Undeterred, the two butter-splashed customers are brining a case in small-claims court, where they are making a big show of representing themselves (attorneys are not allowed in small claims court in California even if they wanted one) and boasting about how they are going to “put the restaurant owner on the stand” (they can’t, and no small claims judge is going to listen to their explanations of why they should be allowed to in this case anyway). The owner is treating the whole thing as a frivolous lawsuit, and everyone in the community seems to feel that he’s right, but there’s no guarantee the court will see it that way – and even if it does, this will still be an annoying drain on his time…

You and I weren’t there when the snails exploded, so we don’t really know how the restaurant handled the incident. But if they can prove that they attempted to make things right at the time (paying for the dry-cleaning bill, offering a replacement dish) they probably can have the court case thrown out. My point here is that even if the case is ruled to be frivolous, it’s still a potentially costly waste of time and resources for the business owner, and has the potential to make the plaintiffs a laughing stock of the local community, particularly if their actions cost them their neighbors’ good opinions. It could also backfire on them, if (for example) they have businesses of their own which are suddenly struck by waves of frivolous lawsuits…

My point here being that these stories may sound humorous when you read about them in the news, but from a business standpoint, they’re not really very funny…

Gaming the System

The other day I stumbled across a rant on the Consumerist website where someone was complaining that the new Burger King sweepstakes (they’re giving away the new “Kinect” controller for the Xbox) was recycling the same codes over and over again. For those not familiar with these games, the large drink cups you purchase as part of this promotion each have a supposedly unique code that you type into the game website to see if you’ve won anything. While you’re on the site the company running the game gets the chance to bombard you with ad copy, propaganda (in favor of their food), other offers and anything else they think might induce you to give them more money – which is the point of this exercise, of course, along with getting the customer to buy more $1.79 soft drinks that cost about three cents each. The real issue is why you would need dummy codes…

In the Burger King promotion being discussed the “prize code” is a six-digit alphanumeric, which means that six of them in sequence should yield 36 to the sixth power unique combinations, or 2,176,782,336 unique codes. It is possible that Burger King did, in fact, print that many special promotional drink cups, I suppose, although assuming that you will serve over two billion customers during the short span of the promotional period seems a bit overconfident to me. Even if they did, however, there’s no way two customers should have received the same number – unless they printed up two sets of each code, or somewhere in excess of 4.3 individual “prize code” cups. Even then, the odds of consecutive customers getting the same number should have been 2,176,782,336 to one. What seems more probable is that Burger King printed up however many winning codes actually correspond to all of the prizes they are giving away, and then filled in all of the other “prize code” cups with a few (or even just one) inert codes…

Now, one could legitimately ask what difference this makes to anybody. After all, in any corporate sweepstakes/contest of this type, 11 out of every 12 or 599 out of every 600 or 999,999 out of every million “game pieces” is going to be a dud; what difference does it make if every one of the duds has a unique code or not? That would be true if all you wanted the customers to do was collect codes or tokens or whatever (in addition to buying your product); the difficulty here is that Burger King also wants customers to go to their website and be exposed to advertising material – and nobody is going to go look up the same code they got the last three times, or which their buddy got in the previous order. Even worse, in this case, is that you can also text your code numbers to see if you’ve won anything (incurring text charges a fees, of course) – which means that Burger King is effectively telling their customers that it believes they are stupid enough to spend money verifying “prize” codes they already know are duds…

I’m not picking on Burger King here, even though the workers at my local store are so inept that they occasionally leave the top half of the bun off certain products; McDonald’s pulled a similar stunt with the “Free Entry” code for their last Monopoly™ game (it was the same code every time), and they also had to end their last iteration of the game three weeks early because they had already run out of prizes. My point here is that any sweepstakes or game is really just another advertizing gimmick, and like any other gimmick, it won’t work if it ends up costing you more in prizes, lawsuits or offended customers than you make on increased traffic, advertising sales or kickbacks from wireless service providers…