In a very real sense, the phases of my life have been marked by the ignition of fireworks – or, at least, a few of the best ones have. As other diarists have noted, fireworks of all types (even the relatively harmless “Safe and Sane” types) are illegal in Los Angeles County, and I was always far too uncool (or law-abiding; depends on your point of view) to obtain them through black market channels. So the only time I ever saw or had any was during the few years when my cousin Bob and his best friend Ron came to see us on a regular basis…
Bob was my late mother’s second cousin, and for a while there when I was ten or so and he was twenty-five, he was easily one of the coolest people you’d ever want to meet. A brilliant scholar (good enough for the master’s programs in both biology and business at UCLA, although admittedly not at the same time), Bob was also a skydiver, mountaineer, master SCUBA diver, martial artist and handgunner. As far as I could tell at the time, he could eat anything, drink anything, date anything and do anything, and emerge unscathed. Even as a preteen, I thought that Bob was trying to pack as much living into every year – even every day – as if he believed that life is short, and he might not have long to enjoy it. It was many years later when I discovered that this was, in fact, exactly what he believed…
Ron was Bob’s roommate and companion in a great many adventures, notably including hiking, backpacking and mountaineering in the Sierra Nevada Mountains. Together, they represented the last gasp of my parents’ collective youth. Weekend visits from Bob and Ron would mean elaborate meals barbequed in the back yard, Mom and Dad drinking rum drinks with the dashing young cousins (Ron was, by acclaim, an honorary cousin) and listening to the pop music of the time. It was one of the only times I ever truly remember my parents as relaxed and happy, without a care in the world…
Before the dark times came; before Mom got sick and nothing was ever quite right again…
But before the clouds arrived, I can still remember the six of us out in the back yard on July 4th, watching as the four adults too turns lighting off fireworks and laughing in delight at the clouds and plumes of glorious light…
It wasn’t until many years later, when I’d finally shaken the mud of high school off of my shoes, survived college, and settled back in LA that I found that same sense of family again. In the company of a small circle of oddballs and weirdoes every bit as strange as I am; the finest people in the world. My friends…
It took me a long time to understand that this wasn’t a return to the best days of my childhood, but rather a metamorphosis into a new life and a new place. When I saw myself reflected in the eyes of the children of our little circle, with myself in my dashing cousin’s role, and it became clear to me that I hadn’t found my way back to happier times, I had found OUR time. Our own days in the sun…
And none of those days were more glorious than Independence Day; the parties in southern Orange County, where fireworks are still legal, and the larger-than-life adventurer (and hero?) lighting them off was me. The child, grown to be the man, but still giving in to the wonder I have always felt at such times…
This year finds us far from home on Independence Day, with only each other to share the light and the glory, and stare off into the night and the future. Are there more days of glory out there, ahead? Will I really be blessed enough to take the love of my life and go to them? Will I be the child again, watching in wonder, or the Seeker, painting the sky? Is there a light beyond the darkness I must travel, and can I become more than I am, one more time?
It’s Independence Day 2009, and I still have more answers than questions…
Saturday, February 27, 2010
Friday, February 26, 2010
254 Pounds of Awesome
If you’ve ever lived in a major city – not just Los Angeles, but anywhere traffic is a problem – you’ve probably had wistful dreams about personal aircraft at least once while sitting in a massive traffic jam, but unless you’re a complete geek you’ve probably never really considered what it would mean to own one. Most people will just point out that even with electronic beacons, full-time ground control, radar, ex-military pilots in charge, and the threat of being blasted out of the sky by trigger-happy F-16 pilots, we still can’t get people to stop flying airplanes into places they’re not supposed to be; and despite billions of dollars and thousands of deaths every year, we can’t seem to get people to stop driving drunk, either. Putting the two together has just never seemed like that good an idea to most people in the United States. But apparently, the New Zealanders have a different take on this issue…
According to a story on the Daily Telegraph website, a company based in Christchurch, New Zealand is planning to start selling about 500 personal aircraft per year at about $76,000 each; these “jetpack” units (which actually use ducted propellers, not jets) will have about 30 minutes endurance and a top speed of about 60 miles per hour. If the company can work out the fuel efficiency and payload issues, there’s reason to believe that the range could be increased to about 60 minutes in the air; certainly long enough for most commutes. With a ceiling of only about 8,000 feet there’d be no need to worry about life support, and with built-in landing gear, there’s no real issue about not being to land this craft without breaking your legs, detonating the gas tank, or destroying your $76,000 new toy. There’s even a parachute attachment, which means that it you are actually stupid enough to ignore the gas gage and plummet out of the sky when your engine fails, you still shouldn’t die. Flying while drunk is another story, however…
Now, in point of fact this isn’t really a new idea; people have been experimenting with ducted-fan and rotary-wing ultra-light aircraft (which is all this thing actually is) for decades now; there was a very similar design that was actually considered for use in the Second World War before they realized that the control systems of the day made the thing a deathtrap. Most places in the United States already have ordinances against flying ultra-light aircraft within city limits, and those that don’t would probably enact them as soon as these aircraft become available on the open market, which means you still couldn’t use one to commute from (for example) our place in Redondo Beach, California to UCLA in 16 minutes of flight time instead of the 60 to 110 minutes of ground travel we used to endure. You might be able to use one in a place like East Lansing, where most of the surrounding area is pastoral rather than urban, but my current commute is only about 8 minutes as it stands…
Which does nothing to change the fact that, assuming I’ve got the money (and can get clearance to fly one) I’m going to buy one of these things as soon as they become available in North America – and so will thousands (if not millions) of tech geeks just like me. Because while these things are probably rubbish for reducing commute times, they’re still 254 pounds of awesome by any other standard…
According to a story on the Daily Telegraph website, a company based in Christchurch, New Zealand is planning to start selling about 500 personal aircraft per year at about $76,000 each; these “jetpack” units (which actually use ducted propellers, not jets) will have about 30 minutes endurance and a top speed of about 60 miles per hour. If the company can work out the fuel efficiency and payload issues, there’s reason to believe that the range could be increased to about 60 minutes in the air; certainly long enough for most commutes. With a ceiling of only about 8,000 feet there’d be no need to worry about life support, and with built-in landing gear, there’s no real issue about not being to land this craft without breaking your legs, detonating the gas tank, or destroying your $76,000 new toy. There’s even a parachute attachment, which means that it you are actually stupid enough to ignore the gas gage and plummet out of the sky when your engine fails, you still shouldn’t die. Flying while drunk is another story, however…
Now, in point of fact this isn’t really a new idea; people have been experimenting with ducted-fan and rotary-wing ultra-light aircraft (which is all this thing actually is) for decades now; there was a very similar design that was actually considered for use in the Second World War before they realized that the control systems of the day made the thing a deathtrap. Most places in the United States already have ordinances against flying ultra-light aircraft within city limits, and those that don’t would probably enact them as soon as these aircraft become available on the open market, which means you still couldn’t use one to commute from (for example) our place in Redondo Beach, California to UCLA in 16 minutes of flight time instead of the 60 to 110 minutes of ground travel we used to endure. You might be able to use one in a place like East Lansing, where most of the surrounding area is pastoral rather than urban, but my current commute is only about 8 minutes as it stands…
Which does nothing to change the fact that, assuming I’ve got the money (and can get clearance to fly one) I’m going to buy one of these things as soon as they become available in North America – and so will thousands (if not millions) of tech geeks just like me. Because while these things are probably rubbish for reducing commute times, they’re still 254 pounds of awesome by any other standard…
Monday, February 22, 2010
Beating the Toad
It’s hardly news that scientists in Australia are trying to find new ways to eradicate – or at least reduce the population of – the infamous cane toad, but a new report released this week indicates that there may be an organic solution that does NOT involve introducing any additional invasive species into delicate ecosystems. For those not familiar with the situation, the cane toad is a large amphibian that secretes a hallucinogenic toxin, does nothing whatsoever to control the cane beetle that is native to Australia, and has been blamed for massive declines in the population of several already endangered indigenous creatures. It’s one of the worst examples of an invasive species being introduced into an unprepared ecosystem you can find, even in Australia, which is unfortunately known for such things. But now it seems as though there may be an answer as nearby as the pet food section of the supermarket…
According to as story from Reuters Online, scientists working on the cane toad problem have discovered that a species of ant native to Australia is apparently immune to the toads’ toxin. All you have to do is arrange for a large population of these ants to move into an area where baby toads are hatching and developing – say, by leaving an open can of cat food near a pond where the toads reproduce – and the ants will do the rest. It’s a remarkably simple (and relatively inexpensive) answer to a problem that has been plaguing the continent since the toads were mistakenly introduced in 1935. Certainly much cheaper than using pesticides or trying to find some biological agent that is lethal to toads but harmless to humans, not to mention safer; it also avoids the problem with the creation of unintentional folk songs…
Most of us have encountered some variation of the song in which a cat is used to catch a rat, then a dog is used to catch the cat, and so on; “There Was an Old Woman Who Swallowed a Fly” is one of the common American versions. It’s an excellent example of an escalation effect, in that using the same method that has failed repeatedly in the past continues to fail until the entire system collapses (the Old Woman dies at the end of the song, for example). Plans for the elimination of invasive species often involve introducing some form of predator of the target species into the same environment, but these plans generally come to nothing either because there is no available predator for the target species, or more often, because the predators will cause even worse damage to the environment than the invasive species you’re targeting – necessitating the introduction of yet another species to control the controlling predators…
Obviously, I call this to your attention not because you or I have any interest in exotic invasive species control (this is a business blog), but rather because this same syndrome occurs all too often in business. It’s common to see people trying to undo damage caused by a measure that they introduced to avoid damage caused by another measure; it’s even more common to see people continuing to spend money on purchases that are a complete waste when they should just have written off the original purchase and started over. You can’t always count on repurposing the purchase or finding someone else to sell it to – which is to say, you can’t count on finding a native ant species handy that will eat your invasive toads – but continuing to throw good resources down the rat hole is bad strategy, bad planning, and ultimately bad business…
It’s probably also worth noting that the people who make cat food in Australia probably never considered the idea that it might one day be sold as a simple biological measure for combating the cane toad – but I would be very surprised if they don’t start marketing that application for their product very soon. Which means that this story can also serve as a lesson about finding new applications for your product – but that’s a post for another day…
According to as story from Reuters Online, scientists working on the cane toad problem have discovered that a species of ant native to Australia is apparently immune to the toads’ toxin. All you have to do is arrange for a large population of these ants to move into an area where baby toads are hatching and developing – say, by leaving an open can of cat food near a pond where the toads reproduce – and the ants will do the rest. It’s a remarkably simple (and relatively inexpensive) answer to a problem that has been plaguing the continent since the toads were mistakenly introduced in 1935. Certainly much cheaper than using pesticides or trying to find some biological agent that is lethal to toads but harmless to humans, not to mention safer; it also avoids the problem with the creation of unintentional folk songs…
Most of us have encountered some variation of the song in which a cat is used to catch a rat, then a dog is used to catch the cat, and so on; “There Was an Old Woman Who Swallowed a Fly” is one of the common American versions. It’s an excellent example of an escalation effect, in that using the same method that has failed repeatedly in the past continues to fail until the entire system collapses (the Old Woman dies at the end of the song, for example). Plans for the elimination of invasive species often involve introducing some form of predator of the target species into the same environment, but these plans generally come to nothing either because there is no available predator for the target species, or more often, because the predators will cause even worse damage to the environment than the invasive species you’re targeting – necessitating the introduction of yet another species to control the controlling predators…
Obviously, I call this to your attention not because you or I have any interest in exotic invasive species control (this is a business blog), but rather because this same syndrome occurs all too often in business. It’s common to see people trying to undo damage caused by a measure that they introduced to avoid damage caused by another measure; it’s even more common to see people continuing to spend money on purchases that are a complete waste when they should just have written off the original purchase and started over. You can’t always count on repurposing the purchase or finding someone else to sell it to – which is to say, you can’t count on finding a native ant species handy that will eat your invasive toads – but continuing to throw good resources down the rat hole is bad strategy, bad planning, and ultimately bad business…
It’s probably also worth noting that the people who make cat food in Australia probably never considered the idea that it might one day be sold as a simple biological measure for combating the cane toad – but I would be very surprised if they don’t start marketing that application for their product very soon. Which means that this story can also serve as a lesson about finding new applications for your product – but that’s a post for another day…
Sunday, February 21, 2010
The Ethics of Typos
I saw a really interesting story online this week about how Google may be making as much as $500,000,000 a year on typos. On the face of it, this sounds absurd – how could anyone possibly make that kind of money on typographic errors? Granted that there is good money to be made serving as a proofreader and editor – I’ve made my living that way, although it’s much harder to do since the spell-checker function became standard on word processor software. But is still seems massively unlikely that a search engine and advertiser could make that amount of money on such mistakes – until you realize that the typos in question aren’t errors at all, and Google is only making money by providing advertising space to the actual culprits…
According to an article off the New Scientist website, the scheme known as “typosquatting” is becoming an increasing headache for online businesses (and even content providers). It’s the relatively simple process of registering a misspelled version of a popular web domain – basically taking any common dot-com destination and registering something that is one letter off from the original URL, in the way a hasty typist might misspell it. It’s a problem because hits on Google – and the sidebar ads you get when you Google something – are driven by traffic, with the more common results and ads coming closer to the top. If the number of sites using this practice is accurately estimated by the authors – and if all of the sites using the practice place Google ads – the company could be netting as much as half a billion dollars in the process…
Naturally, someone whose business was siphoned off in this fashion is suing Google for the way their search results (and ads) pop up, and may eventually win compensation for damages, although it’s hard to see why this practice is Google’s fault in the first place. If people are unable to type your domain name correctly they’re not going to find your site no matter how their search engine works – and if they’re too stupid to realize they’ve been deceived, it doesn’t seem likely that they’d be much use to your business in the first place. I’m reminded of the fact that “White House.com” is actually a porn site – the actual website for the White House is “White House.gov” just as you’d expect. If you can’t tell a porn site from a government web presence, you’re probably not someone who really needs to access the government site in the first place…
So the question is, if the practice of “typosquatting” is legal in the United States, and for the moment it is, why should Google be held responsible for selling ads to the people who are using this scheme, or for registering their sites? By the same token, Google is in no position to try to figure out which misspelled words are evil attempts to misappropriate someone else’s web traffic and which ones are simply comical misspellings chosen as the name of a legitimate site (Attytood.com and Fud.com come to mind), and even if they were, you’d effectively be asking a private company to perform a kind of mass censorship over the names of websites. Yet, at the same time, this practice could very well be costing consumers half a billion dollars each year; lost funds that drive legitimate companies to raise prices and work against the best interest of anyone who isn’t running a typosquatting scam. Should such a practice be outlawed? If it was, how could you enforce such a law? Shouldn’t we just be working on improving literacy, decreasing gullibility, and increasing the caution of Internet users? Or should we just say “Let the surfer beware!” and let things slide the way they are?
It’s worth thinking about…
According to an article off the New Scientist website, the scheme known as “typosquatting” is becoming an increasing headache for online businesses (and even content providers). It’s the relatively simple process of registering a misspelled version of a popular web domain – basically taking any common dot-com destination and registering something that is one letter off from the original URL, in the way a hasty typist might misspell it. It’s a problem because hits on Google – and the sidebar ads you get when you Google something – are driven by traffic, with the more common results and ads coming closer to the top. If the number of sites using this practice is accurately estimated by the authors – and if all of the sites using the practice place Google ads – the company could be netting as much as half a billion dollars in the process…
Naturally, someone whose business was siphoned off in this fashion is suing Google for the way their search results (and ads) pop up, and may eventually win compensation for damages, although it’s hard to see why this practice is Google’s fault in the first place. If people are unable to type your domain name correctly they’re not going to find your site no matter how their search engine works – and if they’re too stupid to realize they’ve been deceived, it doesn’t seem likely that they’d be much use to your business in the first place. I’m reminded of the fact that “White House.com” is actually a porn site – the actual website for the White House is “White House.gov” just as you’d expect. If you can’t tell a porn site from a government web presence, you’re probably not someone who really needs to access the government site in the first place…
So the question is, if the practice of “typosquatting” is legal in the United States, and for the moment it is, why should Google be held responsible for selling ads to the people who are using this scheme, or for registering their sites? By the same token, Google is in no position to try to figure out which misspelled words are evil attempts to misappropriate someone else’s web traffic and which ones are simply comical misspellings chosen as the name of a legitimate site (Attytood.com and Fud.com come to mind), and even if they were, you’d effectively be asking a private company to perform a kind of mass censorship over the names of websites. Yet, at the same time, this practice could very well be costing consumers half a billion dollars each year; lost funds that drive legitimate companies to raise prices and work against the best interest of anyone who isn’t running a typosquatting scam. Should such a practice be outlawed? If it was, how could you enforce such a law? Shouldn’t we just be working on improving literacy, decreasing gullibility, and increasing the caution of Internet users? Or should we just say “Let the surfer beware!” and let things slide the way they are?
It’s worth thinking about…
Thursday, February 18, 2010
Begun, the Coffee Wars Have
Actually, there have been coffee wars going on in the United States for decades, and in recent years the efforts of various national and regional coffee-house chains to resist the all-conquering Starbucks brand have provided business teachers like me with hours of easily-accessible lessons. It’s just that one rarely gets the chance to paraphrase Yoda in the title of a post – and it looks as if the spread of the ongoing coffee wars into additional sectors is beginning to gain momentum…
According to a story in USA Today by way of Cincinnati.com, Burger King is about to respond to the highly successful McDonald’s premium coffee product line with the introduction of coffee-house coffee, plus lattes, mochas, iced varieties and related beverages. What makes this new lineup so interesting – and potentially so problematic for the competition – is that the coffee Burger King is going to be selling is made and distributed by Starbucks. It’s the “Seattle’s Best” branded coffee – the results of an earlier attempt by Starbucks to expand their market share by developing a different brand (and to some extent a second chain of coffee houses) – which means that the company won’t technically be competing with any of its own retail locations, but this still has significant potential for both companies. Burger King now has a real answer for the “McCafe” product line (as opposed to its fairly unimpressive “BK Joe” product concept), and Starbucks is getting back at McDonald’s – which has been taking aim at Starbucks ever since their premium coffee line came out…
It remains to be seen if this development will improve Burger King’s position in the larger ongoing fast-food wars. With so-called “premium” coffee now available in fast-food restaurants, convenience stores, gas stations and bookstores as well as coffee houses, the key to marketing that product category is probably not going to be stand-alone coffee houses, just as the key to marketing soft drinks is no longer the ubiquitous “soda fountain” operations of the earlier 20th Century. If you can get what is essentially the same beverage at Burger King for $2.00 that you would wait twice as long and pay twice as much for at a Starbucks, you are not likely to bother going to the coffee house – unless that was the whole point of your purchase all along…
As I have previously noted, Starbucks isn’t really selling coffee. Since the Starbucks beverage you pay $3.50 for is made from perhaps 20 cents worth of coffee and another 10 cents worth of milk, clearly the point isn’t just buying coffee. People go to Starbucks for convenience, for the experience, for a lifestyle, sometimes for a certain degree of community – and all of these are things you can’t get in a burger stand, except possibly the convenience. To remain competitive in the midst of these expanded coffee wars, Starbucks (and the other coffee house chains) will have to emphasize the ways they create value for their customer that don’t involve speed, convenience or lower prices. They will need to move away from the fast-food model and return to the concept of a non-exclusive neighborhood social club from whence they came; more “Central Perk” than McDonald’s…
Or they can try to fight the burger chains, matching their weakest features against their competitor’s strengths, and vanish onto the scrap-heap of history next to the neighborhood soda fountain…
According to a story in USA Today by way of Cincinnati.com, Burger King is about to respond to the highly successful McDonald’s premium coffee product line with the introduction of coffee-house coffee, plus lattes, mochas, iced varieties and related beverages. What makes this new lineup so interesting – and potentially so problematic for the competition – is that the coffee Burger King is going to be selling is made and distributed by Starbucks. It’s the “Seattle’s Best” branded coffee – the results of an earlier attempt by Starbucks to expand their market share by developing a different brand (and to some extent a second chain of coffee houses) – which means that the company won’t technically be competing with any of its own retail locations, but this still has significant potential for both companies. Burger King now has a real answer for the “McCafe” product line (as opposed to its fairly unimpressive “BK Joe” product concept), and Starbucks is getting back at McDonald’s – which has been taking aim at Starbucks ever since their premium coffee line came out…
It remains to be seen if this development will improve Burger King’s position in the larger ongoing fast-food wars. With so-called “premium” coffee now available in fast-food restaurants, convenience stores, gas stations and bookstores as well as coffee houses, the key to marketing that product category is probably not going to be stand-alone coffee houses, just as the key to marketing soft drinks is no longer the ubiquitous “soda fountain” operations of the earlier 20th Century. If you can get what is essentially the same beverage at Burger King for $2.00 that you would wait twice as long and pay twice as much for at a Starbucks, you are not likely to bother going to the coffee house – unless that was the whole point of your purchase all along…
As I have previously noted, Starbucks isn’t really selling coffee. Since the Starbucks beverage you pay $3.50 for is made from perhaps 20 cents worth of coffee and another 10 cents worth of milk, clearly the point isn’t just buying coffee. People go to Starbucks for convenience, for the experience, for a lifestyle, sometimes for a certain degree of community – and all of these are things you can’t get in a burger stand, except possibly the convenience. To remain competitive in the midst of these expanded coffee wars, Starbucks (and the other coffee house chains) will have to emphasize the ways they create value for their customer that don’t involve speed, convenience or lower prices. They will need to move away from the fast-food model and return to the concept of a non-exclusive neighborhood social club from whence they came; more “Central Perk” than McDonald’s…
Or they can try to fight the burger chains, matching their weakest features against their competitor’s strengths, and vanish onto the scrap-heap of history next to the neighborhood soda fountain…
Tuesday, February 16, 2010
No Surprise
Some time ago I noted in this space the passage of a new Federal law intended to keep airlines from stranding passengers on the tarmac without food or water (or anything else) for long periods of time – a practice that even the most casual observer could have predicted would eventually cause trouble. It’s not that scheduling or dispatching functions for a transportation company the size of an airline are easy; obviously they’re not. It’s just that the practice of using a plane parked on the tarmac as a low-cost alternative to renting extra gates at a terminal is the sort of thing that saves the company money at their customers’ expense – which means that people are going to start agitating for regulation to prevent it as soon as it becomes a significant inconvenience. Unfortunately, the response to the regulations are equally predictable…
With the new “Three-hour” laws set to take effect in a couple of months, more and more airlines have begun cancelling flights instead of applying the familiar tarmac holds, according to this story from UPI online. With a three-hour violation potentially costing as much as $2.75 million for a medium-size airplane (100 passengers aboard) and a cancellation being effectively free, it would probably be difficult to find a single individual anywhere who would be surprised by this. A much more interesting question is what the next round in this war will be – assuming there is one…
Realistically, there is no way to determine which flights are cancelled because of matters beyond the airline’s control – weather, equipment malfunctions, lack of qualified personnel to operate the aircraft, lack of small lemon-soaked napkins for passenger hygiene – and which ones are caused because the company does not wish to pay for an extra gate fee, and would rather inconvenience 100 people than pay a hefty fine. Even if you could somehow pass a law about this issue, there would almost inevitably come a confrontation when some over-eager TSA type insists that the airline has to take off, the airline says the plane isn’t safe, the law enforcement personnel insist, and the plane crashes. But replacing one practice where the company makes money at the expense of its passengers with another is unlikely to end well, either for the airline or the customers…
In the end, this will probably be yet another opportunity for high-volume carriers like Southwest to gain a competitive advantage over their more conventional competitors. Southwest isn’t that much better about cancelled flights – they have all of the same reasons to scrub a takeoff that everyone else does. But if they become the only airline that does not suddenly show a massive increase in cancelled flights after the 29th of April of this year, when the new law goes into effect, it shouldn’t take much effort for them to capitalize on the situation. The major carriers would be well advised to look for another strategy…
In the case of the much-reviled baggage fees, the major carriers had a simple solution available to them from the beginning – leave the baggage alone, raise the cost of the flight enough to cover the increase in fuel costs or CEO salaries or whatever it is they’re trying to make up the cost of, and then proclaim to the world that they haven’t introduced any new fees. The increase in cost would be minimal on longer and more expensive flights ($25, the cost of a single bag fee, is not a large incremental increase on a $400 expense), and the airlines are already losing the fare wars to no-frills carriers like Southwest. Maybe there’s a similar fix possible in this case; maybe if they applied intelligence and creativity, the major carriers could find a solution that saves them money WITHOUT sticking their customers with the bill…
Of course, if they could use intelligence and creativity to solve problems, they’d never have gotten themselves into this situation in the first place…
With the new “Three-hour” laws set to take effect in a couple of months, more and more airlines have begun cancelling flights instead of applying the familiar tarmac holds, according to this story from UPI online. With a three-hour violation potentially costing as much as $2.75 million for a medium-size airplane (100 passengers aboard) and a cancellation being effectively free, it would probably be difficult to find a single individual anywhere who would be surprised by this. A much more interesting question is what the next round in this war will be – assuming there is one…
Realistically, there is no way to determine which flights are cancelled because of matters beyond the airline’s control – weather, equipment malfunctions, lack of qualified personnel to operate the aircraft, lack of small lemon-soaked napkins for passenger hygiene – and which ones are caused because the company does not wish to pay for an extra gate fee, and would rather inconvenience 100 people than pay a hefty fine. Even if you could somehow pass a law about this issue, there would almost inevitably come a confrontation when some over-eager TSA type insists that the airline has to take off, the airline says the plane isn’t safe, the law enforcement personnel insist, and the plane crashes. But replacing one practice where the company makes money at the expense of its passengers with another is unlikely to end well, either for the airline or the customers…
In the end, this will probably be yet another opportunity for high-volume carriers like Southwest to gain a competitive advantage over their more conventional competitors. Southwest isn’t that much better about cancelled flights – they have all of the same reasons to scrub a takeoff that everyone else does. But if they become the only airline that does not suddenly show a massive increase in cancelled flights after the 29th of April of this year, when the new law goes into effect, it shouldn’t take much effort for them to capitalize on the situation. The major carriers would be well advised to look for another strategy…
In the case of the much-reviled baggage fees, the major carriers had a simple solution available to them from the beginning – leave the baggage alone, raise the cost of the flight enough to cover the increase in fuel costs or CEO salaries or whatever it is they’re trying to make up the cost of, and then proclaim to the world that they haven’t introduced any new fees. The increase in cost would be minimal on longer and more expensive flights ($25, the cost of a single bag fee, is not a large incremental increase on a $400 expense), and the airlines are already losing the fare wars to no-frills carriers like Southwest. Maybe there’s a similar fix possible in this case; maybe if they applied intelligence and creativity, the major carriers could find a solution that saves them money WITHOUT sticking their customers with the bill…
Of course, if they could use intelligence and creativity to solve problems, they’d never have gotten themselves into this situation in the first place…
Sunday, February 14, 2010
The Ethics of ADA
A while back I recall seeing a story on television about a burger joint in Sacramento, California, that was just big enough for a kitchen area and a counter with 12 stools – and usually had a line out the door and down the block, of people just waiting to get some of their exceptional food. Nothing fancy – obviously – but the local people swore by the specialty of the house: a cheeseburger with so much shredded cheese that the cheese ran off the patty while it was cooking and formed a shelf (or “skirt”) around the sandwich. Despite being an almost literal hole in the wall, the “Squeeze Inn” was beloved of people in Sacramento, and customers came from miles around to wait in the huge line for their crispy fried cheese. So what could possibly force such an operation out of business?
Well, if you said “bureaucracy” or more to the point, “bureaucracy run amok,” come claim your prize. But what makes this story so remarkable is that the bureaucracy that shut the place down, and the regulations that the business had indeed violated six ways from Sunday, wasn’t anything to do with health codes, vermin infestations, business licenses, liquor licenses, noise, parking, storage or use of illegal chemicals, price fixing, price gouging, exterior signage, interior signage, false advertising, or even tax evasion. No, apparently what did in the Squeeze Inn was the ADA – the Americans with Disabilities act. And the worst part is, as far as I can tell, it wasn’t even incorrectly applied…
As I pick up the story off the Sacramento Bee website, the tiny burger stand was not in compliance with the Federal law that requires all places of public accommodation to be accessible to all Americans, even those who can’t walk without mechanical assistance. With its tiny floor space, narrow door and inconvenient parking arrangements, the Squeeze Inn was out of compliance with the basic ADA requirements, and wound up being sued by a local resident who was unable to maneuver inside the place for lunch. While the case was eventually settled, the owners decided to move their operation to a larger (and more compliant) location before someone else decided to jump on the same gravy train and sue them for even more money. Fortunately, they were able to find a new location nearby, and able to afford the move, but the situation still raises a basic question of ethics…
The ADA exists because if it didn’t, all manner of businesses would simply tell disabled Americans that the fact they were being denied equal access was their tough luck, and they could take their business to some equally unfriendly competitor. If we assume that all people, regardless of their physical limitations, should be allowed equal access to all of the same freedoms and services, then we must have laws that guarantee compliance with this principle. At the same time, there are going to be some businesses that can’t afford to bring their operations into full ADA compliance, and those companies will be driven out of business by lawsuits and bureaucrats, which harms the customers who were patronizing that business and damages the local economy and does NOTHING WHATSOEVER to help the disabled people who are, in principle, being aided by this law. Even with the best will in the world, it’s hard to see what good it does disabled people to destroy a business that they can’t use – but it’s hard to see what other threat would keep all business owners from claiming this hardship…
So what’s the answer? Should all businesses be forced to comply with ADA regulation? Should special exceptions be granted when a business can establish that compliance is not possible and there are alternative services that the disabled people in the community could use? Should people who sue businesses under ADA regulations solely for the purpose of extorting money be charged with extortion and sent to ADA-compliant Federal prisons? Should business owners who claim the hardship exemption when there isn’t one (or when they could easily comply but just don’t want to) be charged with racketeering and civil rights violations and sent to much less enlightened Federal prisons? And should such decisions be made by unelected bureaucratic officials, or should these decisions be left up to the people (and their elected representatives)? Or would that constitute the very “tyranny of the majority” that the ADA was set up to prevent in the first place?
It’s worth thinking about…
Well, if you said “bureaucracy” or more to the point, “bureaucracy run amok,” come claim your prize. But what makes this story so remarkable is that the bureaucracy that shut the place down, and the regulations that the business had indeed violated six ways from Sunday, wasn’t anything to do with health codes, vermin infestations, business licenses, liquor licenses, noise, parking, storage or use of illegal chemicals, price fixing, price gouging, exterior signage, interior signage, false advertising, or even tax evasion. No, apparently what did in the Squeeze Inn was the ADA – the Americans with Disabilities act. And the worst part is, as far as I can tell, it wasn’t even incorrectly applied…
As I pick up the story off the Sacramento Bee website, the tiny burger stand was not in compliance with the Federal law that requires all places of public accommodation to be accessible to all Americans, even those who can’t walk without mechanical assistance. With its tiny floor space, narrow door and inconvenient parking arrangements, the Squeeze Inn was out of compliance with the basic ADA requirements, and wound up being sued by a local resident who was unable to maneuver inside the place for lunch. While the case was eventually settled, the owners decided to move their operation to a larger (and more compliant) location before someone else decided to jump on the same gravy train and sue them for even more money. Fortunately, they were able to find a new location nearby, and able to afford the move, but the situation still raises a basic question of ethics…
The ADA exists because if it didn’t, all manner of businesses would simply tell disabled Americans that the fact they were being denied equal access was their tough luck, and they could take their business to some equally unfriendly competitor. If we assume that all people, regardless of their physical limitations, should be allowed equal access to all of the same freedoms and services, then we must have laws that guarantee compliance with this principle. At the same time, there are going to be some businesses that can’t afford to bring their operations into full ADA compliance, and those companies will be driven out of business by lawsuits and bureaucrats, which harms the customers who were patronizing that business and damages the local economy and does NOTHING WHATSOEVER to help the disabled people who are, in principle, being aided by this law. Even with the best will in the world, it’s hard to see what good it does disabled people to destroy a business that they can’t use – but it’s hard to see what other threat would keep all business owners from claiming this hardship…
So what’s the answer? Should all businesses be forced to comply with ADA regulation? Should special exceptions be granted when a business can establish that compliance is not possible and there are alternative services that the disabled people in the community could use? Should people who sue businesses under ADA regulations solely for the purpose of extorting money be charged with extortion and sent to ADA-compliant Federal prisons? Should business owners who claim the hardship exemption when there isn’t one (or when they could easily comply but just don’t want to) be charged with racketeering and civil rights violations and sent to much less enlightened Federal prisons? And should such decisions be made by unelected bureaucratic officials, or should these decisions be left up to the people (and their elected representatives)? Or would that constitute the very “tyranny of the majority” that the ADA was set up to prevent in the first place?
It’s worth thinking about…
Saturday, February 13, 2010
The Grad School Diaries: Sleeping for Science
So there I was, lying on my back on a hard, lumpy bed in a private room in the Sparrow Hospital (St. Lawrence Campus) sleep center, with a dozen or so wires stuck to my head with this thick white goo, six more attached to my body and legs with conventional EKG sensors, and tubes up my nose and mouth. I couldn’t move more than a couple of inches in any direction without pulling out a wire or dislodging a sensor (and generally ripping out a clump of hair in the process), my head had to stay at an uncomfortable angle for the same reason, and the remarkably uncomfortable mattress was making my knees, ankles and toes hurt…
None of which would really matter, I suppose, except I was there to sleep…
I’ve had insomnia since I was a teenager, and never thought much of it. The sad fact is, no one really knows what causes insomnia, and there’s not much anyone can do about it. However, one of the very common complications associated with diabetes and high blood pressure is sleep apnea; a condition where you stop breathing while you’re asleep, leading to excessive strain on your heart muscle, lack of restorative sleep, poor memory function, bad concentration, weight gain, mood swings, a series of endocrine and glandular problems far too disgusting to describe, and in extreme cases, death. Under the circumstances (e.g. feeling like I had not had a decent night’s sleep in a year), it seemed worth looking into…
Unfortunately, the only way to really determine what is going on inside someone’s body while they’re asleep is to have them go to sleep while connected to various sensors and then monitor them to see what happens. Which means sticking a couple of dozen wires to their body with an unpleasant, thick white goo and hope for the best. Which is how I wound up in the Sparrow/St. Lawrence sleep lab, wired like a hacker’s basement and trying to sleep under some of the worst conditions imaginable…
It probably wouldn’t have been as bad if I’d had enough slack in the sensor leads to be able to lie on my side, which is how I normally sleep. It would also have gone a lot better if I’d been able to go to the bathroom unassisted; my 45-year-old bladder won’t make it through the night anymore, and having to call for someone to disconnect the leads so you can go relieve yourself is rather undignified. Nor did it help that “calling someone” in this context meant literally calling into the empty air, since the room is monitored by audio channel and low-light/infrared camera the whole time you’re in it. Fortunately, the idea of being watched doesn’t usually creep me out; I was able to ignore the camera without too much trouble. The room itself was another matter…
Sparrow Hospital is a perfectly respectable facility, and the Sleep Center rooms are essentially normal semi-private hospital rooms, only with the usual beds removed and replaced with a single full-size mattress set. But that’s exactly the problem: without the energy of a working hospital floor (which tends to resemble an overturned anthill even during the night shift), the place feels like a morgue. It’s deathly quiet, and even if you’re not an imaginative man (which I rather am, unfortunately) it’s all too easy to find yourself wondering how many people have actually died in this volume of space, and if this is what it would be like to die alone. It’s been said that character is who you are in the dark; I would probably add something about being alone, uncomfortable, and uncertain if your condition is ever going to improve – if there is a time beyond this place, and if you will be allowed to reach it…
Finally, around 5:15 am, as I was wondering if I should call for another pee break, the technician on duty came up on the intercom and said they had the data they needed, and I could go home now. I’d originally wanted to bypass the old, dingy and otherwise unpleasant-looking shower and just go home, but I couldn’t imagine getting dressed without getting the goo out of my hair first. So I grit my teeth and went for it, hoping the thing had been cleaned more recently (and thoroughly) than it looked. When I was clean enough to manage, I dressed hastily and bolted for home…
There was a massive thunderstorm throwing lightning about, but by the time I turned onto our street the worst of it had passed by, and the first light of dawn was breaking. I ran upstairs to tell my long-suffering spouse about my night, and things immediately began to improve. Home is where the heart is; my home is wherever I shall find her…
None of which would really matter, I suppose, except I was there to sleep…
I’ve had insomnia since I was a teenager, and never thought much of it. The sad fact is, no one really knows what causes insomnia, and there’s not much anyone can do about it. However, one of the very common complications associated with diabetes and high blood pressure is sleep apnea; a condition where you stop breathing while you’re asleep, leading to excessive strain on your heart muscle, lack of restorative sleep, poor memory function, bad concentration, weight gain, mood swings, a series of endocrine and glandular problems far too disgusting to describe, and in extreme cases, death. Under the circumstances (e.g. feeling like I had not had a decent night’s sleep in a year), it seemed worth looking into…
Unfortunately, the only way to really determine what is going on inside someone’s body while they’re asleep is to have them go to sleep while connected to various sensors and then monitor them to see what happens. Which means sticking a couple of dozen wires to their body with an unpleasant, thick white goo and hope for the best. Which is how I wound up in the Sparrow/St. Lawrence sleep lab, wired like a hacker’s basement and trying to sleep under some of the worst conditions imaginable…
It probably wouldn’t have been as bad if I’d had enough slack in the sensor leads to be able to lie on my side, which is how I normally sleep. It would also have gone a lot better if I’d been able to go to the bathroom unassisted; my 45-year-old bladder won’t make it through the night anymore, and having to call for someone to disconnect the leads so you can go relieve yourself is rather undignified. Nor did it help that “calling someone” in this context meant literally calling into the empty air, since the room is monitored by audio channel and low-light/infrared camera the whole time you’re in it. Fortunately, the idea of being watched doesn’t usually creep me out; I was able to ignore the camera without too much trouble. The room itself was another matter…
Sparrow Hospital is a perfectly respectable facility, and the Sleep Center rooms are essentially normal semi-private hospital rooms, only with the usual beds removed and replaced with a single full-size mattress set. But that’s exactly the problem: without the energy of a working hospital floor (which tends to resemble an overturned anthill even during the night shift), the place feels like a morgue. It’s deathly quiet, and even if you’re not an imaginative man (which I rather am, unfortunately) it’s all too easy to find yourself wondering how many people have actually died in this volume of space, and if this is what it would be like to die alone. It’s been said that character is who you are in the dark; I would probably add something about being alone, uncomfortable, and uncertain if your condition is ever going to improve – if there is a time beyond this place, and if you will be allowed to reach it…
Finally, around 5:15 am, as I was wondering if I should call for another pee break, the technician on duty came up on the intercom and said they had the data they needed, and I could go home now. I’d originally wanted to bypass the old, dingy and otherwise unpleasant-looking shower and just go home, but I couldn’t imagine getting dressed without getting the goo out of my hair first. So I grit my teeth and went for it, hoping the thing had been cleaned more recently (and thoroughly) than it looked. When I was clean enough to manage, I dressed hastily and bolted for home…
There was a massive thunderstorm throwing lightning about, but by the time I turned onto our street the worst of it had passed by, and the first light of dawn was breaking. I ran upstairs to tell my long-suffering spouse about my night, and things immediately began to improve. Home is where the heart is; my home is wherever I shall find her…
Thursday, February 11, 2010
Not Another Follow-Up
Some time ago I wrote in this space about some customers getting banned from a popular cruise line because they not only kept complaining about everything, but once the company gave them some offers to make up for the “problems” they’d encountered, the whining customers started bragging all over the Internet about how much money they’d taken the company for, and encouraging everyone else to start the same scam. I remarked at the time that I couldn’t really imagine how losing those particular parasites could possibly harm the company – taking six cruises in four years and filing hundreds of complaints about each one already sounds suspicious, but the online bragging makes it hard for even a fair-minded person to regard them as anything other than scam artists. It would be nice to say that this is an isolated case, or even that it’s limited to cruise ships, hotels and the like, but unfortunately, it’s not…
Now, I’m certainly not saying that everyone who complains about a consumer product or service is simply out to defraud the company. Most of the time there really is something wrong, and in many of the remaining cases, the customer is genuinely trying to be helpful. I recall the case of an elderly customer we often heard from when I was delivering pizza who was perpetually calling the shop to recommend a teaspoon of this or a pinch of that get added to the sauce, for example. I didn’t have the heart to tell her that we got our sauce out of gallon-size cans and poured it into five-gallon tubs before putting it on the assembly line, and there was no way Corporate was going to let us modify the formula anyway. But on the other side of the issue, you will always have people who order something, eat or drink just about all of it, and then demand a replacement because it wasn’t good enough to suit them. I actually had a case in the drug store days when somebody tried this with an entire six-pack of beer (apparently after he drank all 6 of them he decided it wasn’t very good beer and wanted his money back)…
And then there are cases like this one from CBC News Online about Tim Horton’s, the Canadian coffee-and-doughnuts giant, banning a customer from several of their locations because he kept trying the same stunt with their coffee. Apparently, no matter what they did – even brewing a fresh pot for him while he waited – this customer kept complaining that the coffee was burnt and watered-down, and demanding replacement cups. Naturally, there’s some dispute over the facts of the case – the company claims the guy did it incessantly and always wanted his “replacement” product after finishing his own purchase, while the customer says it was only a few times and he reported the problem at once – but the upshot is the same: the customer is encouraging all of his friends to boycott, and the company is saying they’d rather just not sell product than give it away to scammers…
In the long run, it’s hard not to side with the company – if an organization that sells tens of millions of cups a day does not suit your needs, they’re really not the ones with a problem. And if you expect a fast-food company to produce products that suit your gourmet tastes, you’re probably doomed to disappointment no matter what the specific product is. The really difficult question is still where to draw the line, if you are the manager and it’s your company that keeps being taken for free product. From the company’s point of view, it really doesn’t matter if the customer in question has a legitimate grievance or not; sooner or later you’re just going to have to gently suggest that if your company can’t fulfill his or her requirements, he or she will just have to go somewhere else…
The idea is to accomplish this task WITHOUT ending up in the news…
Now, I’m certainly not saying that everyone who complains about a consumer product or service is simply out to defraud the company. Most of the time there really is something wrong, and in many of the remaining cases, the customer is genuinely trying to be helpful. I recall the case of an elderly customer we often heard from when I was delivering pizza who was perpetually calling the shop to recommend a teaspoon of this or a pinch of that get added to the sauce, for example. I didn’t have the heart to tell her that we got our sauce out of gallon-size cans and poured it into five-gallon tubs before putting it on the assembly line, and there was no way Corporate was going to let us modify the formula anyway. But on the other side of the issue, you will always have people who order something, eat or drink just about all of it, and then demand a replacement because it wasn’t good enough to suit them. I actually had a case in the drug store days when somebody tried this with an entire six-pack of beer (apparently after he drank all 6 of them he decided it wasn’t very good beer and wanted his money back)…
And then there are cases like this one from CBC News Online about Tim Horton’s, the Canadian coffee-and-doughnuts giant, banning a customer from several of their locations because he kept trying the same stunt with their coffee. Apparently, no matter what they did – even brewing a fresh pot for him while he waited – this customer kept complaining that the coffee was burnt and watered-down, and demanding replacement cups. Naturally, there’s some dispute over the facts of the case – the company claims the guy did it incessantly and always wanted his “replacement” product after finishing his own purchase, while the customer says it was only a few times and he reported the problem at once – but the upshot is the same: the customer is encouraging all of his friends to boycott, and the company is saying they’d rather just not sell product than give it away to scammers…
In the long run, it’s hard not to side with the company – if an organization that sells tens of millions of cups a day does not suit your needs, they’re really not the ones with a problem. And if you expect a fast-food company to produce products that suit your gourmet tastes, you’re probably doomed to disappointment no matter what the specific product is. The really difficult question is still where to draw the line, if you are the manager and it’s your company that keeps being taken for free product. From the company’s point of view, it really doesn’t matter if the customer in question has a legitimate grievance or not; sooner or later you’re just going to have to gently suggest that if your company can’t fulfill his or her requirements, he or she will just have to go somewhere else…
The idea is to accomplish this task WITHOUT ending up in the news…
Wednesday, February 10, 2010
At It Again
Over the past few years, I’ve been consistently amazed by the antics of the larger U.S. airlines, especially American and United. There are times when you have to wonder if these companies are actually trying to destroy their industry and/or immolate themselves, simply because it’s difficult to imagine that anyone could possibly be that tone-deaf – or make that many silly mistakes entirely by accident. Thus, we have episodes like United losing Dave Carroll’s luggage, or both companies raising checked baggage fees AGAIN after doing so not only resulted in massive market-share losses to companies like Southwest that don’t charge for checked bags but also left them still operating in the red. Earlier, I had commented on American charging extra for in-flight meals as a silly concept – you’d have to sell a lot of seven-dollar sandwiches to make up for a $3.59 billion loss over the last two years; even if the food is 50% profit, we’re still talking over a billion sandwiches or the equivalent. But I have to say, this time I think they’ve outdone themselves…
According to a story on the Associated Press wire by way of the MSNBC news pages, American is going to start charging passengers in Coach an $8 fee for a pillow and a blanket, beginning May 1 of this year. On the one hand, this will give them two opportunities to pick up some incremental income from each passenger (food and a blanket), which means they should only need 500 million or so takers in order to get back into the black – assuming, of course, that they don’t end up throwing even more money onto the tarmac or hemorrhaging any more money over the next fiscal periods. However, I think we are quite justified in questioning whether this will actually help the company’s cause – because the actual numbers do not add up…
Suppose, for a moment, that American can actually make a 50% profit on its pillow and blanket packages – which seems a bit optimistic. Let us further suppose that they achieve a 10% sales rate, which would be amazing. If an airliner hold 150 coach passengers, and American manages to sell 15 of them (10%) a blanket package, they will have made $60. But with the average coach ticket on a flight long enough that you’d consider napping on it well over $60, that means that if American loses even one passenger to another airline as a result of this new policy, they will be losing money on the deal. If they suffer even a 2% loss of passengers, they stand to lose several hundred dollars per flight, which adds up after a while. If I’m reading these numbers correctly, American would have to suffer less than half a percentage point worth of lost customers for this venture to break even – and that seems highly optimistic…
Any experience customer service representative could tell you that most of the trick to retaining customers is a matter of appearances; it’s not what you’re actually doing for your customers, it’s how it looks to them. If you’ve had your entire evening ruined by indigestible food, getting your meal for free isn’t really going to help you – especially if the event was an anniversary dinner you can’t ever have again. But if the manager offers to comp your meal – or perhaps offers you a certificate for a free one in the future, as well – you’ll accept the apology, even though your damage is done, and you know that the meal didn’t actually cost the company nearly as much as you would have paid for it. In the case of the formerly free services like blankets and checked bags, the amount the company is actually making on the fees is negligible – but the loss in their customers’ good opinion might one day cost them the company…
We’ll just have to wait and see if they stop these shenanigans while they still can…
According to a story on the Associated Press wire by way of the MSNBC news pages, American is going to start charging passengers in Coach an $8 fee for a pillow and a blanket, beginning May 1 of this year. On the one hand, this will give them two opportunities to pick up some incremental income from each passenger (food and a blanket), which means they should only need 500 million or so takers in order to get back into the black – assuming, of course, that they don’t end up throwing even more money onto the tarmac or hemorrhaging any more money over the next fiscal periods. However, I think we are quite justified in questioning whether this will actually help the company’s cause – because the actual numbers do not add up…
Suppose, for a moment, that American can actually make a 50% profit on its pillow and blanket packages – which seems a bit optimistic. Let us further suppose that they achieve a 10% sales rate, which would be amazing. If an airliner hold 150 coach passengers, and American manages to sell 15 of them (10%) a blanket package, they will have made $60. But with the average coach ticket on a flight long enough that you’d consider napping on it well over $60, that means that if American loses even one passenger to another airline as a result of this new policy, they will be losing money on the deal. If they suffer even a 2% loss of passengers, they stand to lose several hundred dollars per flight, which adds up after a while. If I’m reading these numbers correctly, American would have to suffer less than half a percentage point worth of lost customers for this venture to break even – and that seems highly optimistic…
Any experience customer service representative could tell you that most of the trick to retaining customers is a matter of appearances; it’s not what you’re actually doing for your customers, it’s how it looks to them. If you’ve had your entire evening ruined by indigestible food, getting your meal for free isn’t really going to help you – especially if the event was an anniversary dinner you can’t ever have again. But if the manager offers to comp your meal – or perhaps offers you a certificate for a free one in the future, as well – you’ll accept the apology, even though your damage is done, and you know that the meal didn’t actually cost the company nearly as much as you would have paid for it. In the case of the formerly free services like blankets and checked bags, the amount the company is actually making on the fees is negligible – but the loss in their customers’ good opinion might one day cost them the company…
We’ll just have to wait and see if they stop these shenanigans while they still can…
Tuesday, February 9, 2010
Not Always
From time to time, as most of you already know, I’ll find myself getting really unpleasant with someone for over-simplifying the issues of a discussion. I try not to be a jerk about it; everyone does this sometimes, either because they don’t know the details of the subject well enough to create a better argument or because they feel some elements of the subject are too elementary to bother describing in detail, or both – although we should acknowledge that in the first instance people don’t always realize they’ve done so. But I get very tired with people who have never studied business and have no clue how finance actually works who then make fatuous statements about how things should be. Think of it as the private enterprise equivalent of that idiot many of you saw on the news who actually said “I won’t stand for Government interference with my Medicare!” – and could not be convinced that Medicare was a Federal government program…
A good example popped up online this week, with an article about how Anthem Blue Cross is raising their rates for everyone who has an individual policy with the company. This by itself is hardly shocking; most insurance companies have regular raises, and the individual accountholders don’t have the protection of a big group – a single customer threatening to take their business elsewhere just doesn’t have the same impact as UCLA threatening to take 25,000 customers to the competition, for example. What is shocking about this story is that Anthem is raising their individual rate by up to 39 percent this year – after raising it as much as 68 percent last year. Well, that and the fact that there are still people out there who insist that our current national healthcare system isn’t broken, anyway…
Now, I should tell you that I was one of those Blue Cross Individual Policy customers for a number of years, and I never had any trouble with my coverage. But by the same token, I was healthy at the time – and I never had my rates double in less than a year…
A while back I noted that the business model behind the sub-prime mortgage market was inherently flawed, in the sense that it could not continue indefinitely without coming to grief – in other words, flawed in the same sense that a Ponzi scheme is flawed – and that if the institutions involved didn’t voluntarily regulate their industry, the government would be forced to do so or else let the industry crater and take the rest of our economy with it. Now let me suggest that the same kind of disaster is brewing on the health insurance side of the industry. Somewhere between 70 and 80 percent of our economy (it depends on how you count it) is based on the kind of small businesses that rely on individual and small-group coverage policies, and if their health insurance costs keep doubling and re-doubling each year, it will not be long before they start going under en masse – and take what’s left of our economy with them…
This is one of those cases where ideology will not change the bottom line; where the belief that our current system (where we just keep giving more money to large corporations each year) can save us is just as idiotic as the belief that the very best health coverage should be available to everyone, for free, and that there should be no increase in fees, taxes, or anything else that burdens the public. The financial crash of 2008-2009 really wasn’t that hard to predict, and neither is the next one – which could start at any time now. From where I’m sitting, the question of whether an industry can be trusted to regulate itself, and whether government intervention is better than just letting that industry crash, is generally the same answer:
“Not always…”
A good example popped up online this week, with an article about how Anthem Blue Cross is raising their rates for everyone who has an individual policy with the company. This by itself is hardly shocking; most insurance companies have regular raises, and the individual accountholders don’t have the protection of a big group – a single customer threatening to take their business elsewhere just doesn’t have the same impact as UCLA threatening to take 25,000 customers to the competition, for example. What is shocking about this story is that Anthem is raising their individual rate by up to 39 percent this year – after raising it as much as 68 percent last year. Well, that and the fact that there are still people out there who insist that our current national healthcare system isn’t broken, anyway…
Now, I should tell you that I was one of those Blue Cross Individual Policy customers for a number of years, and I never had any trouble with my coverage. But by the same token, I was healthy at the time – and I never had my rates double in less than a year…
A while back I noted that the business model behind the sub-prime mortgage market was inherently flawed, in the sense that it could not continue indefinitely without coming to grief – in other words, flawed in the same sense that a Ponzi scheme is flawed – and that if the institutions involved didn’t voluntarily regulate their industry, the government would be forced to do so or else let the industry crater and take the rest of our economy with it. Now let me suggest that the same kind of disaster is brewing on the health insurance side of the industry. Somewhere between 70 and 80 percent of our economy (it depends on how you count it) is based on the kind of small businesses that rely on individual and small-group coverage policies, and if their health insurance costs keep doubling and re-doubling each year, it will not be long before they start going under en masse – and take what’s left of our economy with them…
This is one of those cases where ideology will not change the bottom line; where the belief that our current system (where we just keep giving more money to large corporations each year) can save us is just as idiotic as the belief that the very best health coverage should be available to everyone, for free, and that there should be no increase in fees, taxes, or anything else that burdens the public. The financial crash of 2008-2009 really wasn’t that hard to predict, and neither is the next one – which could start at any time now. From where I’m sitting, the question of whether an industry can be trusted to regulate itself, and whether government intervention is better than just letting that industry crash, is generally the same answer:
“Not always…”
Monday, February 8, 2010
Don’t Let This Happen
It occurred to me this week that while I’ve been issuing advice and Public Service Announcements about the advent of Valentine’s Day for years (ever since I started this blog), I’ve never told all of you about the incident that started the whole thing; the funny story that changed my perspective on this otherwise harmless holiday forever. It begins fifteen years ago this week, when I was still working for the Sav-on Drug Store company in Studio City, California. Like most general merchandise retailers, my drug store had set up Valentine’s Day decorations and signs as soon as we took down the last of the Christmas Clearance items, and set the Seasonal aisle a few days after New Year’s. Over the five ensuing weeks the traffic gradually picked up in the Seasonal aisle. For the first week or two it was limited to the truly compulsive customers, who clearly needed something to do, since they’d already finished their income tax forms; these were gradually replaced by women who were taking the holiday seriously and men who weren’t. By the start of February the traffic was mostly male, and by the day before V-Day it was mostly very relieved men (who had clearly forgotten the holiday at least once before)…
I was working the day shift on February 14, 1995, and the traffic flowing into the Seasonal aisle was completely male by then; men who had woken up that morning to realize that they had a significant other who would be expecting an acknowledgement of the holiday – and that they were empty-handed. It was easy to imagine them blowing out of the house in a tearing hurry, telling their wives or girlfriends that they had to get to an early meeting, we’ll celebrate the holiday tonight, okay? The traffic died down a little after the morning commute was over, only to redouble at lunch time, as the men who had gotten all the way to the office before realizing what day it was (and why their significant others had been giving them funny looks this morning) dashed out to avoid coming home empty-handed – and probably sleeping on the couch until Arbor Day (which is in June, by the by)…
Not everyone is able to go shopping on their lunch hour, however; at the start of the evening commute the traffic picked up again, the men now frantically trying to avoid coming home with nothing but a dumb smile and the promise of a nice dinner (after a three-hour wait, no doubt). By the time I was about to go off-shift at 6:00 that evening, the Seasonal aisle was looking pretty picked over. But just at that moment, a man ran in from the parking lot in a total panic.
“Quick!” he yelled at me. “I need something heart-shaped!”
“Well,” I replied, “There are still a few items in the Season aisle that might –“
“No time!” he yelled, turning to grab something out of one of the “On Special” baskets in front of the registers. “What about these? Are they heart shaped?”
I looked at the yellow-and-blue boxes in his hands. “Those are suppositories, sir,” I told him.
“Yes, but are they heart-shaped?” the man yelped.
“Well… Kinda,” I replied.
“Great!” he bellowed, throwing some money on the counter. “I’ll take five boxes! Keep the change!” He grabbed his five boxes of suppositories and bolted back out into the parking lot…
The next day I scanned the news carefully, but I didn’t find any stories about a man being murdered in some fashion that involved five boxes of suppositories (received as a Valentine’s Day gift or otherwise), so I imagine that he lived through the experience. But I think it demonstrates better than any other cautionary tale could that sometimes it’s better to arrive empty-handed and make up a story about what you’re going to do to celebrate the holiday than it is to just grab something at random and take your chances on it being appropriate to the occasion. So let me close by saying to all of my readers (assuming that I have readers): don’t let this happen in YOUR family…
I was working the day shift on February 14, 1995, and the traffic flowing into the Seasonal aisle was completely male by then; men who had woken up that morning to realize that they had a significant other who would be expecting an acknowledgement of the holiday – and that they were empty-handed. It was easy to imagine them blowing out of the house in a tearing hurry, telling their wives or girlfriends that they had to get to an early meeting, we’ll celebrate the holiday tonight, okay? The traffic died down a little after the morning commute was over, only to redouble at lunch time, as the men who had gotten all the way to the office before realizing what day it was (and why their significant others had been giving them funny looks this morning) dashed out to avoid coming home empty-handed – and probably sleeping on the couch until Arbor Day (which is in June, by the by)…
Not everyone is able to go shopping on their lunch hour, however; at the start of the evening commute the traffic picked up again, the men now frantically trying to avoid coming home with nothing but a dumb smile and the promise of a nice dinner (after a three-hour wait, no doubt). By the time I was about to go off-shift at 6:00 that evening, the Seasonal aisle was looking pretty picked over. But just at that moment, a man ran in from the parking lot in a total panic.
“Quick!” he yelled at me. “I need something heart-shaped!”
“Well,” I replied, “There are still a few items in the Season aisle that might –“
“No time!” he yelled, turning to grab something out of one of the “On Special” baskets in front of the registers. “What about these? Are they heart shaped?”
I looked at the yellow-and-blue boxes in his hands. “Those are suppositories, sir,” I told him.
“Yes, but are they heart-shaped?” the man yelped.
“Well… Kinda,” I replied.
“Great!” he bellowed, throwing some money on the counter. “I’ll take five boxes! Keep the change!” He grabbed his five boxes of suppositories and bolted back out into the parking lot…
The next day I scanned the news carefully, but I didn’t find any stories about a man being murdered in some fashion that involved five boxes of suppositories (received as a Valentine’s Day gift or otherwise), so I imagine that he lived through the experience. But I think it demonstrates better than any other cautionary tale could that sometimes it’s better to arrive empty-handed and make up a story about what you’re going to do to celebrate the holiday than it is to just grab something at random and take your chances on it being appropriate to the occasion. So let me close by saying to all of my readers (assuming that I have readers): don’t let this happen in YOUR family…
Sunday, February 7, 2010
The Ethics of Fitness Programs
Let’s imagine that you work for a company that offers an employee discount on everything they sell in their retail stores; say, 20%. Let us further imagine that the company makes a whole range of fitness and wellness programs available to its employees, either at no charge or at cost. Assuming that there are no other barriers that would prevent any employee from using any or all of these programs, the question is should the company offer incentives to people for using the fitness and wellness programs, losing weight, and bringing their body-mass index (BMI) into standard acceptable ranges? Incentives beyond the obvious benefits of better health, lower medical bills, a longer life, and so on? And, if they do, does this constitute discrimination against people who can’t or don’t want to use such programs or can’t/don’t want to conform to the BMI standard for correct weight?
Before you answer, consider that (as reported by the “Consumerist” website), Whole Foods is doing exactly that; offering a larger employee discount to people with lower BMI ratings – which the company provides, free of charge. The original employee discount was 20%, and the company has presented the program as an extra 10% off for anybody who can achieve their “healthy” BMI rating, but this still raises a number of ethic questions…
On the one hand, there’s no doubt that some people are naturally more able to comply with this body mass standard than others – be it because of an active metabolism, a relatively low natural fat content, a love of sports or exercise, or many other reasons. This policy is therefore offering a greater benefit or perk to those people, while requiring much greater effort from other people to receive the same benefit, and withholding it altogether from still others. This is especially problematic in the case of individuals who do not conform to the mainstream BMI rankings. In my case, for example, the “healthy” BMI number for a man my height would require a weight I have not seen since high school (and could not safely reach under my circumstances), yet I would still be denied the higher discount rate if I fail to reach it. The same problem would occur in the case of someone of high BMI rating who can’t exercise or lose weight because of a disability, but would still like to receive the discount and eat healthier food…
On the other hand, there’s really no arguing with the fact that people who are fit will, in general, work more productively for more years while costing the company less in both health benefits and working days lost to fitness-related illness. Therefore it is definitely within the company’s interests to pay their employees to achieve and maintain better health. Certainly, there would be no controversy over the company paying employees a bonus for better or harder work, which means that paying them extra to maintain their physical condition so that they COULD do better or harder work isn’t exactly outrageous. Which leads me to pose the following questions: Does the company have the right to reward its employees for maintaining a more utilitarian physical condition? Can they incentivize people to achieve a lifestyle that benefits the employees as well as the company? Or are they required to provide all of the same compensation, including perks, to all personnel, regardless of physical condition or the consequences thereof?
It’s worth thinking about…
Before you answer, consider that (as reported by the “Consumerist” website), Whole Foods is doing exactly that; offering a larger employee discount to people with lower BMI ratings – which the company provides, free of charge. The original employee discount was 20%, and the company has presented the program as an extra 10% off for anybody who can achieve their “healthy” BMI rating, but this still raises a number of ethic questions…
On the one hand, there’s no doubt that some people are naturally more able to comply with this body mass standard than others – be it because of an active metabolism, a relatively low natural fat content, a love of sports or exercise, or many other reasons. This policy is therefore offering a greater benefit or perk to those people, while requiring much greater effort from other people to receive the same benefit, and withholding it altogether from still others. This is especially problematic in the case of individuals who do not conform to the mainstream BMI rankings. In my case, for example, the “healthy” BMI number for a man my height would require a weight I have not seen since high school (and could not safely reach under my circumstances), yet I would still be denied the higher discount rate if I fail to reach it. The same problem would occur in the case of someone of high BMI rating who can’t exercise or lose weight because of a disability, but would still like to receive the discount and eat healthier food…
On the other hand, there’s really no arguing with the fact that people who are fit will, in general, work more productively for more years while costing the company less in both health benefits and working days lost to fitness-related illness. Therefore it is definitely within the company’s interests to pay their employees to achieve and maintain better health. Certainly, there would be no controversy over the company paying employees a bonus for better or harder work, which means that paying them extra to maintain their physical condition so that they COULD do better or harder work isn’t exactly outrageous. Which leads me to pose the following questions: Does the company have the right to reward its employees for maintaining a more utilitarian physical condition? Can they incentivize people to achieve a lifestyle that benefits the employees as well as the company? Or are they required to provide all of the same compensation, including perks, to all personnel, regardless of physical condition or the consequences thereof?
It’s worth thinking about…
Saturday, February 6, 2010
The Grad School Diaries: Henry Jones Syndrome
In the third (and probably best) of the Indiana Jones movies there’s a line where Indy is asked about his father, Henry Jones (Senior, as we later discover) making an important archeological discovery. Indy just laughs, and explains that his father is not an explorer; he’s just a history teacher – “the one all of the kids hope they don’t get!” It’s a funny moment, because every history department seems to have at least one teacher like that; maybe all academic departments do. He (it’s almost always a man) may or may not be any good at his profession, but he’s got that combination of messianic devotion to the subject and professional hard-assery that makes him a total pain to spent 16 weeks with…
I REALLY don’t want to be that teacher…
It’s not really a required part of this life, of course; a lot of the best scholars in every field regard teaching as an intrusion to the world-shaking research that is their true calling, and do everything short of faking their own death to avoid it. Which probably accounts for why they’re so bad at it, but the real point is, I set out on this journey, in very large part, because I love being a teacher. It would really suck if I turned out to be bad at it…
Of course, I’ve taught before. I’ve taken the state in front of dozen of paying customers in grant writing workshops, taught hundreds of would-be entrepreneurs how to write a business plan and how to plan by objectives, even presented an original research paper to a real-live academic conference (although I was very far out of my league that time). In fact, I couldn’t tell you exactly how many times I’ve done this before without checking my datebook. But this time is different…
This isn’t some half-assed free lecture series at a community college. This isn’t even an overpriced private training class. This is a core class in the business management program of one of the best business schools in the country. Actual professors, including some of the best in the field, have taught this class before me; it’s their standard I have to live up to, even if I never complete the program and become a Ph.D. myself. If I fail this time it’s not just myself or my family or even my beloved I’m going to let down; it’s an institution four times older than I am and all of the men and women who have served it so well. This one counts; this is for real…
And just to make things more interesting, they’ve given me the section that meets on Monday morning at 9:00 am on the other side of campus from the Business Complex. As a result, I’ve only got 11 people signed up, instead of the customary 40. Of course, there aren’t a lot of classes scheduled for first thing Monday morning during a summer session, so the building itself is cool and quiet as I walk down the long hallway toward my classroom. Will anyone show up, I wonder? Will the technician from A/V services be there to check the media cart and review how to use the systems with me? Will I remember the lesson I’ve worked out, or will I just freeze up and babble?
I’m always nervous waiting in the wings for the show to start; have been since childhood. It’s only once I step up to the lectern and call the room to order that I suddenly know what to do. It works the same way during tests, finals, and other stressful events. No matter how keyed up I am beforehand, I’ll be fine once the action starts. But as I pause here in a corner of the hallway to watch my abbreviated class enter the room, I can’t help but wonder. Can I really pull this off, or am I just fooling myself?
It’s time to find out…
I REALLY don’t want to be that teacher…
It’s not really a required part of this life, of course; a lot of the best scholars in every field regard teaching as an intrusion to the world-shaking research that is their true calling, and do everything short of faking their own death to avoid it. Which probably accounts for why they’re so bad at it, but the real point is, I set out on this journey, in very large part, because I love being a teacher. It would really suck if I turned out to be bad at it…
Of course, I’ve taught before. I’ve taken the state in front of dozen of paying customers in grant writing workshops, taught hundreds of would-be entrepreneurs how to write a business plan and how to plan by objectives, even presented an original research paper to a real-live academic conference (although I was very far out of my league that time). In fact, I couldn’t tell you exactly how many times I’ve done this before without checking my datebook. But this time is different…
This isn’t some half-assed free lecture series at a community college. This isn’t even an overpriced private training class. This is a core class in the business management program of one of the best business schools in the country. Actual professors, including some of the best in the field, have taught this class before me; it’s their standard I have to live up to, even if I never complete the program and become a Ph.D. myself. If I fail this time it’s not just myself or my family or even my beloved I’m going to let down; it’s an institution four times older than I am and all of the men and women who have served it so well. This one counts; this is for real…
And just to make things more interesting, they’ve given me the section that meets on Monday morning at 9:00 am on the other side of campus from the Business Complex. As a result, I’ve only got 11 people signed up, instead of the customary 40. Of course, there aren’t a lot of classes scheduled for first thing Monday morning during a summer session, so the building itself is cool and quiet as I walk down the long hallway toward my classroom. Will anyone show up, I wonder? Will the technician from A/V services be there to check the media cart and review how to use the systems with me? Will I remember the lesson I’ve worked out, or will I just freeze up and babble?
I’m always nervous waiting in the wings for the show to start; have been since childhood. It’s only once I step up to the lectern and call the room to order that I suddenly know what to do. It works the same way during tests, finals, and other stressful events. No matter how keyed up I am beforehand, I’ll be fine once the action starts. But as I pause here in a corner of the hallway to watch my abbreviated class enter the room, I can’t help but wonder. Can I really pull this off, or am I just fooling myself?
It’s time to find out…
Friday, February 5, 2010
Too Good to Fail?
I saw an interesting item on line this week regarding the highly-anticipated and massively hyped computer game “Spore” – developed by Maxis, the creative team behind the wildly-popular “Sims” games and published by Electronic Arts, one of the biggest video game publishers in the world. For those non-geeks in the audience, Spore allows the player to create his or her own life-forms, combining various shapes and design elements as desired to produce almost anything you’d like. Once you’ve designed your creature, you can have it evolve into a sentient – and eventually star-faring – race, which must then colonize other worlds and solve various puzzles. Released to enormous fanfare, Spore was supposed to become the most successful video game ever, bigger than “Sim City,” bigger than “Pac-Man,” bigger than “Leprechaun”…
Okay, in fairness, nobody in North American ever heard of “Leprechaun,” unless you frequented a little-known video arcade in Isla Vista, California in 1985, where a lot of obscure video games went to die. But Spore was actually expected to be huge; according to this article on Yahoo News the game was supposed to sell at least two or three million copies in its first year. Yet, in almost a year and a half, the game has sold less than 1 million copies, and is still not running away with the market as it was expected to, despite the introduction of new add-on features. It’s certainly not a failure; when you include the iPhone and other mobile versions it has sold nearly 4 million copies world-wide. But the original software – the original heart of the business model – is still not the hit it was supposed to be. It’s worth asking why not…
The commentator on Yahoo blames the disappointing results on an over-hyped product (something that couldn’t help but disappoint customers when they got it, since NOTHING could have lived up to the pre-release hype Spore got) and a lack of focus – the game is too complex to appeal to the casual user, but not complex (or exciting) enough to appeal to the power gamers who made up its key audience. It’s certainly not a faulty product, having made back much more than the cost of developing it, but it appears to have missed both ends of its potential customer pool by trying to play to the requirements of both groups – and that isn’t always possible…
Which is, of course, why I am calling the situation to your attention. The idea of a product with mass appeal – a comic book that can win mainstream book awards; an animated film that can win best picture; a mass-produced hamburger that can win restaurant awards – these are the ultimate goal of every new product development team in the world. The problem is, without a clear customer base to market to, a new product has no way of actually gaining traction. In this particular case, while the Spore concept is certainly interesting, it doesn’t compete well with the high-quality, immersive narrative games that have become the standard for console gaming in recent years. Eventually the user is going to get tired of creating fantastic beasties and want to move on to a game challenge – and this is where the Spore program fell down, with unimaginative (and repetitive) game play and no clear story line to follow. Compared to a realistic simulation of modern warfare, or a heroic quest to destroy evil and return the rightful king to his throne, or even the antics of two beloved arcade characters finally getting their due, it just doesn’t stack up…
So before you release your next product, ask yourself: Does this product really have what it takes to gain and hold the projected market share? Or are we just convinced that it’s going to be a success because it has so much going for it that it MUST be too good to fail?
Okay, in fairness, nobody in North American ever heard of “Leprechaun,” unless you frequented a little-known video arcade in Isla Vista, California in 1985, where a lot of obscure video games went to die. But Spore was actually expected to be huge; according to this article on Yahoo News the game was supposed to sell at least two or three million copies in its first year. Yet, in almost a year and a half, the game has sold less than 1 million copies, and is still not running away with the market as it was expected to, despite the introduction of new add-on features. It’s certainly not a failure; when you include the iPhone and other mobile versions it has sold nearly 4 million copies world-wide. But the original software – the original heart of the business model – is still not the hit it was supposed to be. It’s worth asking why not…
The commentator on Yahoo blames the disappointing results on an over-hyped product (something that couldn’t help but disappoint customers when they got it, since NOTHING could have lived up to the pre-release hype Spore got) and a lack of focus – the game is too complex to appeal to the casual user, but not complex (or exciting) enough to appeal to the power gamers who made up its key audience. It’s certainly not a faulty product, having made back much more than the cost of developing it, but it appears to have missed both ends of its potential customer pool by trying to play to the requirements of both groups – and that isn’t always possible…
Which is, of course, why I am calling the situation to your attention. The idea of a product with mass appeal – a comic book that can win mainstream book awards; an animated film that can win best picture; a mass-produced hamburger that can win restaurant awards – these are the ultimate goal of every new product development team in the world. The problem is, without a clear customer base to market to, a new product has no way of actually gaining traction. In this particular case, while the Spore concept is certainly interesting, it doesn’t compete well with the high-quality, immersive narrative games that have become the standard for console gaming in recent years. Eventually the user is going to get tired of creating fantastic beasties and want to move on to a game challenge – and this is where the Spore program fell down, with unimaginative (and repetitive) game play and no clear story line to follow. Compared to a realistic simulation of modern warfare, or a heroic quest to destroy evil and return the rightful king to his throne, or even the antics of two beloved arcade characters finally getting their due, it just doesn’t stack up…
So before you release your next product, ask yourself: Does this product really have what it takes to gain and hold the projected market share? Or are we just convinced that it’s going to be a success because it has so much going for it that it MUST be too good to fail?
Wednesday, February 3, 2010
Two Good Points
I was reading the online news this week when a story caught my eye about first class airline tickets becoming a thing of the past. We’ve discussed airline ticket pricing in this space before, so most of you already know that first class tickets are the largest single profit center on most flights – even if you double or triple the amount of service a first class passenger receives the 500% to 5,000% markup on the tickets will tend to make up for it. Of course, many of the people flying first class these days are just using free upgrades earned with frequent flyer miles, but (as we’ve also discussed in this space) that’s getting harder to do, and even when it’s possible those frequent-flyer coupons can only be “earned” by activities that bring in vast amounts of money to the airline in the first place. It seems highly unlikely that the airline industry would abandon that sort of profit center during an economic downturn, especially considering that it’s one of the last selling points they have that discount carriers like Southwest Airlines can’t provide. But then I considered the source of the article…
If you follow the link provided, you will notice that this story comes to us from the Melbourne (Australia) Herald-Sun and is based almost entirely on the performance of first class sections on Qantas Airlines. I’m not mocking Qantas, certainly; it’s a good company and a reasonably well-run airline, but I don’t really think that we should consider the flagship airline of Australia to be representative of all airlines in all parts of the world, which is what this story implies, and what the headline (“First Class to Become a Thing of the Past!”) declaims. Even assuming that the Herald-Sun is correct, and first class travel in the South Pacific and Southeast Asia is on the decline, this really doesn’t tell us much about how such fares are doing in more heavily traveled areas, such as the trans-Atlantic routes, the main trans-Pacific routes, domestic travel in the U.S., domestic travel in the E.U., or travel anywhere in Africa or South America…
In fact, it seems likely that the reason Qantas is having trouble with its first class tickets might have something to do with the super-premium service offered aboard the Airbus A380 and Boeing Dreamliner aircraft entering service in other parts of their market. Even without the use of premium tickets (and we know that the claim that the competition does not make use of such fares is factually incorrect) the competition is still drawing passengers with the promise of greater luxury and comfort. Qantas has not, traditionally, attempted to position itself as a high-end provider in the market, and thus has trouble being taken seriously as a competitor against airlines that feature private compartments, full-sized beds, and similar ultra-luxury options. This is unfortunate, because Qantas does, in fact, offer some very nice accommodations at quite reasonable prices. But, if they are not able to sell any of those tickets, then abandoning those fares may actually be a good strategic move. We’ll have to wait and see…
I call all of this to your attention because there are actually two good points to be made from this same article. One would be, of course, that just because a local provider is abandoning a market segment as unprofitable does not mean that this segment will die off in all markets world-wide. And, just as importantly, don’t assume that just because the strategy a specific company is planning to use makes no sense in YOUR region of the world, that it also makes no sense in their region of the world. One of the realities of the Global Economy is that it’s no longer safe to assume that market conditions in somebody else’s corner of the field exactly mirror the conditions in yours…
In fact, it never really was. It’s just that today you will get news stories (and blog posts) bombarding your in-box in which some bright person will be trying to get you to expend much more attention and energy than the tempest in their local teapot really deserves…
If you follow the link provided, you will notice that this story comes to us from the Melbourne (Australia) Herald-Sun and is based almost entirely on the performance of first class sections on Qantas Airlines. I’m not mocking Qantas, certainly; it’s a good company and a reasonably well-run airline, but I don’t really think that we should consider the flagship airline of Australia to be representative of all airlines in all parts of the world, which is what this story implies, and what the headline (“First Class to Become a Thing of the Past!”) declaims. Even assuming that the Herald-Sun is correct, and first class travel in the South Pacific and Southeast Asia is on the decline, this really doesn’t tell us much about how such fares are doing in more heavily traveled areas, such as the trans-Atlantic routes, the main trans-Pacific routes, domestic travel in the U.S., domestic travel in the E.U., or travel anywhere in Africa or South America…
In fact, it seems likely that the reason Qantas is having trouble with its first class tickets might have something to do with the super-premium service offered aboard the Airbus A380 and Boeing Dreamliner aircraft entering service in other parts of their market. Even without the use of premium tickets (and we know that the claim that the competition does not make use of such fares is factually incorrect) the competition is still drawing passengers with the promise of greater luxury and comfort. Qantas has not, traditionally, attempted to position itself as a high-end provider in the market, and thus has trouble being taken seriously as a competitor against airlines that feature private compartments, full-sized beds, and similar ultra-luxury options. This is unfortunate, because Qantas does, in fact, offer some very nice accommodations at quite reasonable prices. But, if they are not able to sell any of those tickets, then abandoning those fares may actually be a good strategic move. We’ll have to wait and see…
I call all of this to your attention because there are actually two good points to be made from this same article. One would be, of course, that just because a local provider is abandoning a market segment as unprofitable does not mean that this segment will die off in all markets world-wide. And, just as importantly, don’t assume that just because the strategy a specific company is planning to use makes no sense in YOUR region of the world, that it also makes no sense in their region of the world. One of the realities of the Global Economy is that it’s no longer safe to assume that market conditions in somebody else’s corner of the field exactly mirror the conditions in yours…
In fact, it never really was. It’s just that today you will get news stories (and blog posts) bombarding your in-box in which some bright person will be trying to get you to expend much more attention and energy than the tempest in their local teapot really deserves…
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