Monday, May 31, 2010

Intelligence Wanted

For a while now, I’ve been telling people that the biggest problem with management in this country – and possibly in the rest of the world, too – is that people seem to believe that it can be accomplished with simple rules and procedures that do not require anyone involved to have a functional brain. It’s the mentality that leads to zero-tolerance rules, three-strikes laws, and similar idiocy; the fact that it’s easier to look up an set answer in a book and say “That’s the way it is” than to actually figure out an answer and take up a position. If we want to avoid the sort of decisions that would rather risk a 50 million gallon oil spill than spend $500,000 on a safety device or risk the collapse of our entire financial industry, economy and civilization rather than review basic loan applications, we’ve got to start seeing management as a profession and an active process. And I’ve rarely seen a better example of this principle than in a story that came up last week about a soldier wounded in Iraq who is being billed for losing his equipment…

You can check out the original story from the television station in his home town here if you want to, but the upshot is that this poor fellow had been issued a bunch of Army property (canteens, grenades, a tent, and so on) that was not turned in when he was hit by a sniper during a tour in Iraq and permanently disabled. There are regulations that require any soldier who can’t account for his gear to pay for whatever he doesn’t turn in – which is generally a good idea, as it keeps people from walking off with things you’d rather not lose (kitchens, computers, tanks) and then just saying “Oops!” when asked to account for them. But in this case we’re talking less than $3,000 worth of basic gear (plus interest) that was lost by a man who was wounded in action and is still suffering from the after effects. It’s clearly not a case of anyone stealing valuable military equipment and selling it on the black market – unless you’re an Army accountant, it would appear…

Now, there is an appeal process, and the soldier in our story has filed the paperwork to explain what happened to his gear and request that the Army stop billing him for it, but they’re insisting they never got it and they can’t let him off the hook anyway. If this sounds like something you’ve read about online (or in this space) with cell phone companies billing for services a customer doesn’t have or cable companies billing people for premium channels they never had and then refusing to remove the charges or admit they ever got the paperwork, that’s probably because it’s exactly the same syndrome. Anyone who has ever worked for a large organization already knows that a bureaucracy is only as capable as its least intelligent member, and the only way to prevent this sort of foul-up from turning into a major humiliation (with millions of people all over the Internet calling you and your agency fools and idiots) is for an actual manager to make an actual decision and take an actual stand – unlike the Army officials in this story…

It’s probably also worth noting that the time when you generally see this kind of non-thinking is when the organization in question is already in trouble – and that if our various Asian quagmires continue on the way we’re going, the Army is going to have more and more trouble convincing anyone to join up. Especially if word gets around that after you get shot and disabled they’re going to hold you up for money…

Sunday, May 30, 2010

The Ethics of Pet Liability

This week I noticed an online story about a family whose dog had been hit by a car and killed, who were now being billed by the driver’s insurance company to recover the cost of repairs to the car. It seems like a completely cruel and heartless thing to do, doesn’t it? People have just lost a beloved member of the family, are still trying to cope with the loss, and then they get hit with a bill for the damage caused during the accident. Certainly, that’s how the case is being portrayed online and in the media, but then I read the rest of the story and discovered that the family would routinely let their dog wander about the neighborhood alone and unsupervised, and that the community where all of this happened does have a lease law, and I had to admit that, as usual, the situation isn’t quite as simple as headline writers or Internet wags would have you think…

First of all, it’s not as if the driver who actually hit the animal is turning around and asking for money. The motorist reported the accident and called on their insurance company to pay for fixing the car, just as you’d expect. Second, the insurance company has a responsibility to its owners (or stockholders, if it’s a publicly-traded company) to contain costs as much as possible; they are therefore quite reasonably asking the people whose actions caused the loss to pay for the cost of making things whole again. Without a court judgment the insurance company can’t force the family to pay them anything – and it’s debatable if the company will actually file suit, since this would be a small claims action. Until they do, this isn’t a legal demand; it’s just a request to fix something you broke…

And we should remember that the family did cause the accident. Even if there was no law against letting your dog run free on the books in their community – and there was – most people who’ve ever seen one know that dogs will sometimes run into traffic if you don’t stop them. Letting your dog run around the neighborhood whenever it wants to, however quaint and charming that might sound, means that there is a non-zero chance that one day somebody is going to hit it. The family in this story knew about that possibility and continued to let their dog roam freely anyway…

So there’s no question that the company has a legal right to do what they are doing; they do in fact have a fiduciary responsibility to take these actions. The question is, should they refrain from doing so in order to spare the family additional grief and sorrow (and possibly guilt) from having allowed their pet to wander into harm’s way? Does whatever responsibility the company might have to people who are not their customers (and did cause the situation through simple negligence) on the basis of their shared humanity over-rule their responsibility to their customers (to keep prices low) and their stockholders (to maximize profit)? Does the fact that the family was both willfully careless and knowingly in violation of municipal law negate their entitlement to humane treatment? Should the company absorb the cost of the repair rather than risk potential fallout from dog-lovers and libertarians who think dogs should be allowed to run free, or would doing so simply encourage more people to let their pets roam into traffic?

It’s worth thinking about…

Saturday, May 29, 2010

The Grad School Diaries: In My Recurring Dream

In my dream, I close the door behind me and start off down the street. As I arrive at the bus stop nearest the house, a bus pulls up and I get on. Normally, a bus ride is a boring and uncomfortable few minutes that seem like hours, but this one is not; before I know it, the bus pulls up in front of an airport terminal, and I disembark and enter the building…

Normally, passing through an airport terminal is a boring and tedious experience that seems to last for days, but this time it isn’t; I pass through at a slow walk, the people around me insubstantial as mist. They’re present, I know they’re all around me, but I can’t hear them and can only see vague forms drifting about. After only a few minutes, I come to a gate, and find the doors open and a plane waiting. I get on…

Normally, an airplane ride is a boring and uncomfortable few hours that seems to last for eternity, but this one is not; the time seems to fly past, and in just moments, I find myself emerging off the ramp and into Terminal 1 at LAX, an airport I’ve come to know much too well over the years…

Terminal 1 is the most familiar to me of them all; I know every brick, board and stone in the place. I walk past the small food court with the Starbuck’s and California Pizza Kitchen on one side, the Waterstone bookshop on the other, and the escalator between them drops me quickly to street level. A quick walk takes me across the loop road and out to Sepulveda Boulevard and the bus stop there. The people here are real to me; jostling, sweating, talking, moving in all directions. I can feel the familiar air, and the smell of home…

This time there’s a short delay before the bus arrives, but I spend it staring into the swirling traffic patterns; an experience I’ve also come to know too well. Eventually a bus comes along, and I climb on and start dumping quarters into the fare box until it beeps to signal a full fare has been paid. This time it’s a real bus ride, too, but I hardly notice; I’m watching the familiar sights stream past me. There’s the dim, flickering light of the Sepulveda Tunnel; here’s the Unocal station where I used to fill my propane tanks; the supermarket with the Starbuck’s and Robeck’s stands in the parking lot; the oil refinery reservation, and the new and old malls in Manhattan Beach…

Finally, my bus arrives at Sepulveda and Manhattan Beach Boulevard. I dismount and start walking down the street and then up the reverse slope of the modest costal ridge. This isn’t dreamlike either; I know every foot of this road; every rise and fall; every tree and dip. As I reach the top of the ridge, the ocean finally comes into view; the clear, vast, blue expanse of the Pacific, extending to the horizon. And in the foreground, the main street of Manhattan Beach, California, leading down to the pier, with the dear old Roundhouse on the end…

Standing at the end of the pier, I inhale deeply, savoring the smell of the ocean. To the south, the great bulk of the Palos Verdes Peninsula rises out of the blue water like my memories of Diamond Head, in Hawaii. To the north, the broad sweep of the Santa Monica Bay and the familiar mottled brown of the coastal range beyond frame the great city where it all begins and ends for me. I’m home…

Even in my dream, I know I can’t stay here. I have work to do; tasks yet to accomplish; challenges still to meet. Even if I am successful, and that remains to be seen, there is no guarantee that I will ever come here again as a living man; let alone get to make my home here again, on the shores of this sapphire bay. But until that time comes, if indeed it ever does, part of me will always be here, on the end of the Manhattan Beach Pier, behind the Roundhouse, watching the tide roll in…

Friday, May 28, 2010

Slow News Day

From time to time, you’ll find yourself watching the news, or reading the newspaper, and a story will come on that tells you absolutely nothing you wanted or needed to know. Some of these are harmless, such as profiles on the marginally remarkable people in your community; others are “human interest” pieces, like a feel-good story about a 4th Grade class decorating rubber ducks as an art project. None of these stories actually hurt anything; they’re just indications that either nothing actually happened today, or else nothing happened that isn’t too controversial for the local news team to cover it. One such story, which migrated onto the Internet this week, concerned a woman who sent a naked picture of herself to her husband using an iPhone – and the picture getting pirated and distributed all over the Net…

You can reference the story off the original site here if you want to, but the upshot is that the woman in our story was using an iPhone photo sharing application to send a topless photo of herself to her husband, who is currently overseas serving in the military. Unfortunately, the application’s internal security wasn’t very well conceived, and the picture was stolen and illegally distributed all around the ‘Net. What makes this a story at all is that the application wasn’t a “free app,” which means that the woman in question actually paid money to use it, and that the application was marketed as being a (relatively) secure way to send pictures over the Internet. What makes it a non-story is that anyone over the age of ten already knows that there is no such thing…

Even in its earliest days, the Internet was never really secure. Long before there were websites and blogs and social networking and all of the other conventions we take for granted now, there were hackers – men and occasionally women who lived to crack security, nose around systems they weren’t supposed to be in, and steal data for fun and profit. It’s probably fair to say that even twenty-five years ago, before there were cell phones, digital cameras or photo-sharing sites, no one who understood the first thing about computers would have put a naked picture of themselves on one – unless they were prepared to have it stolen by the first hacker who came along. There’s a reason that computers with really important data on them are not connected to the Internet, and it has nothing to do with conspiracy theories…

So if it’s a total non-story, why am I calling it to your attention? Well, for one thing, this particular data theft wasn’t managed by a daring hacker; the photo-sharing app (and its parent company) had a major security problem that they had apparently failed to address until much too late. For another, the woman whose naked picture was stolen is suing the company, claiming that when the pictures were posted online and then sent to her family and her employer her whole life was destroyed. So if we want to be fair, in this case, we should probably stop blaming the topless woman, who was merely far too trusting, and start blaming the software company, which was apparently too stupid to grasp concepts like “data security,” “reasonable expectation of privacy,” “public relations fiasco” or “expensive/catastrophic liability lawsuit…”

Let’s hope they grasp the concept of “get a good lawyer,” because if they don’t, everyone who paid for this particular iPhone app is going to end up having wasted their money. And if your company sells a product that can be hacked, cracked, or otherwise used to embarrass the heck out of somebody, please don’t assume that no one would really be na├»ve enough to make themselves vulnerable to such an event…

Tuesday, May 25, 2010

Beware the Crystal Skull

Anyone who saw the last “Indiana Jones” movie already has reasons to be wary of anything called a crystal skull, of course, but the item mentioned in the title of this post does not have anything to do with space aliens, evil Soviet scientists, or the ability of a college professor to survive an atomic explosion at ground zero by hiding inside a lead-lined refrigerator. No, this crystal skull is actually a bottle, which contains the beverage known as Crystal Head vodka. It’s remarkable for at least three reasons: One, the company is owned by actor Dan Aykroyd; Two, it’s an unusually clear and unadulterated version of this spirit, without any of the oils or sugars normally used to flavor vodka; and Three, it began as a lark, a product the actor expected to sell at most 5,000 bottle of as a novelty, and is now expected to gross between $40 million and $50 million in retail sales this year alone. It’s also remarkable because the bottle has been banned in Mr. Aykroyd’s home province of Ontario…

Since the whole thing is being treated as a humorous (or human interest) story and not a business piece, it’s currently on the Food and Wine page of the Globe and Mail website, but I was immediately struck by the several business lessons contained in this text. First, of course, there’s the issue of banning a product because its packaging has a dark or negative connotation. This is the sort of publicity you can’t possibly buy; the one thing that will turn almost any blandly corporate product into something “edgy” and “dangerous” overnight, and you really can’t beat gothic- or death-imagery for this purpose. Almost as important, however, is the fact that the company is offering a superior product in a package that would be instantly recognizable even if it wasn’t contraband. But I think what strikes me as the most amazing is that the product was already flying off the shelves BEFORE the Ontario Provincial government decided to ban it…

Now, in fairness, some people do find the depiction of the human skull, and its association with both death and the occult, to be somewhat disturbing. If you’re not from the American Southwest, where such things are common every November, it could be a bit off-putting. But the story goes on to note that in the 14 months the product and its distinctive bottles have been selling in British Columbia, there have be no public complaints whatsoever, and thus far there haven’t been any from south of the border, either. More to the point, perhaps, there’s no explanation of why that would be against Canadian law in the first place. Certainly, in the U.S., companies that have selected advertising or packaging graphics that disturb people and potentially interfere with sales have been allowed to plummet into obscurity and bankruptcy unassisted…

As a side note, one of the comments to the original story noted the existence of a microbrewery in Utah that produces a product called the Polygamy Porter and features the sales slogan “Why have just one?” I don’t know much about liquor regulation and similar product control laws myself, but it strikes me that if Utah can survive the production and distribution of such a brew, it’s hard to imagine what harm a skull-shaped bottle is going to do to a Canadian province. Personally, I hope Mr. Aykroyd goes on to make a huge fortune on his Clear Head products, and I commend the company to your attention…

Because anybody this good at marketing products and gaining free publicity will probably be back…

Monday, May 24, 2010

Can of Worms

Imagine for a moment how great it would be if you could just declare that you have a new middle name, and therefore all of the debts you ran up under your original name are no longer your responsibility. You could go from being Joe Wilbur Smith to being Joe Wilbur Hannibal Smith, and declare that, as such, the obligations of Joe Wilbur Smith no longer apply to you. Normally, this requires declaration of bankruptcy, the intervention of several sympathetic government agencies, and a bank that needs to find a few more bad investments to get in under TARP, or the equivalent; it may also require the services of a lawyer and the goodwill of at least one judge. Now imagine how awesome it would be if the same trick would work for a business…

Well, if you’re living in Washington County, Pennsylvania, you don’t have to imagine, because that’s exactly what a company called Excel Homes is doing. According to a story in The Patriot-News by way of the Penn Live website, two years ago the company held a sweepstakes with the grand prize of $100,000 worth of prefabricated building parts, mainly as a typical publicity/public relations/business development stunt, but also to try to convince construction companies to start using the aforementioned prefabs. The winners of this grand prize decided to use the resources to build themselves a house, and actually started the project, only to be told that Excel Homes is under new management and is now called Excel Homes Group. Accordingly, it will not be honoring any of the obligations of the prior Excel Homes…

If this action was the result of a bankruptcy and reorganization, for example, things would be different. In that case, the owners might be protected from the debts incurred by the previous ownership; at the very least, the contest “winners” would have the chance to contend with the company’s other creditors for whatever share of the old company’s assets they felt they were entitled to. But in this case, at least as reported in the news story, there is no such action. The new owners simply acquired Excel, and then decided that they were going to keep all of the company’s assets and disavow its obligations…

I’m not sure how the Pennsylvania state laws governing lotteries and sweepstakes (and you can bet your bottom dollar that there are such laws) would handle this sort of tactic, and honestly I don’t really care. In some states sweepstakes “prizes” are closely regulated and fall into the same accounting categories as wages owed – in which case, the “winners” in our story could sue, and would have every reason to believe that they will get whatever funds or assets they were promised. But even if there are no such laws in Pennsylvania, and the company can get away with screwing over whoever it wants, this is still one of the most asinine management decisions I’ve seen in years – and it’s likely to end up costing the company a lot more than $100,000…

First off, the construction industry isn’t that large a community; eventually every company that Excel does business with is going to learn about this decision. Whether this prompts anyone else to try to screw over Excel remains to be seen – it would certainly make for an interesting moment in a court case, if nothing else – but even companies who are not themselves interested in pulling shenanigans are going to look a bit askance at this. If there is any other source for their product, they’ve probably just lost a bunch of their more cautious and/or ethical customers, and there’s a real chance that the public relations fallout will also have a negative impact on the company’s future sales…

I’m not sure if Excel or its new corporate ownership will be able to spin this, undo the damage to their image and reputation, avoid criminal investigations, or even win the court case that will almost certainly be following. All I know is they’ve just opened up a huge can of worms – and they’d best start looking for a bigger can…

Tuesday, May 18, 2010

Airline Follies Part 23

Today in our occasional series on things the American airline industry is doing to provide me with opportunities for sarcasm-based humor, we have the issue of small animal fees – those ticket surcharges that some airlines impose on passengers who want to bring their pets along with them as carry-on luggage. This has become a growing concern in recent years, both because customers are losing confidence in the ability of airline baggage services to actually deliver their checked bags (see my last Airline Follies post, “ Dude, Where’s My Dog” for more details) and also because people are treating their companion animals more and more like people every year, and are therefore reluctant to treat them as cargo. It’s only when the carry-on pet fee becomes more expensive than the owner’s ticket that I have to ask if the tail has started wagging the dog…

According to the story on the Fox News Travel page, some airlines (including Frontier and Southwest) have started charging $75 fees for carrying any small animal onto your flight, as opposed to the $150 they charge for shipping the same creatures as checked baggage. Since both airlines are discount carriers that occasionally feature tickets as low as $29, there’s a definite chance that it would cost more to bring your companion animal with you than it cost you to fly in the first place. So far, the larger carriers haven’t followed suit, but with most of the airlines now charging $25 to $75 for each checked bag, it’s hard to believe that they wouldn’t want to get in on high-return shenanigans like these. It’s also hard to believe that most of the people who travel this way would care…

Travelling with a companion animal (not a service animal; that’s a whole other set of complications) means committing yourself to staying only in hotels that will accept pets, only patronizing businesses that will accept pets, and only going to places that are pet-appropriate. Unless you’ve got a pet that doesn’t mind being left alone in a strange hotel room for hours at a time (or spending its days in your portable carrier) you’ve already planned your entire trip around taking your pet with you; it’s not likely that you’d balk at an extra $75 for each flight you’re going to be on, especially when you consider that checking the pet carrier as luggage would cost you at least twice as much. You’re probably also the sort of person who finds the idea of being without your companion animal for a week to be more difficult than giving up all destinations that are not pet-appropriate. But none of that changes the fact that you’re being charged extra for using space you’re already paying for under the seat in front of you…

Missing from this discussion, of course, is why having pets in the cabin costs the airline anything in the first place. Granted, if your companion animal is barking, yowling, clawing or otherwise disrupting the flight, the cabin crew might have to spend a few moments dealing with the situation and/or apologizing to other customers who have been annoyed by you and your pet, but those employees are already being paid for that time. If your pet gets loose it might conceivably cost the airline something to remove various pet “accidents” from the interior of the plane, but it’s hard to imagine that requiring $75 worth of time or chemicals, either. For the moment, it would appear that this is just another way for the airlines to squeeze a little more money out of their passengers by charging money for something that has traditionally been free…

I don’t know about anyone else, but it makes me wonder what they’ll come up with next. Stay tuned, folks…

Monday, May 17, 2010

Can You Hear Me Now?

Here’s an interesting follow-up to our Blamestorming ethics question. A story that broke this morning presents the curious case of a woman whose extramarital affair was exposed by her cellular phone provider. It seems that she was using a cell phone to carry on an affair with an unnamed third party when the cellular carrier decided to consolidate all of the accounts being billed from the same mailing address; the result was a single billing statement and a substantial savings for the customers, so the company apparently felt there wouldn’t be a problem with this. Unfortunately, the consolidated bill allowed the woman’s husband to find the hour-long cell phone calls to an unknown number, call that number, and discover the affair. He then walked out on his cheating spouse and sued for divorce. None of this is particularly unusual; what made this story an Internet sensation is that the woman in question is now suing the cellular company…

According to the story in the Toronto Star, the customer is claiming that if the company hadn’t unilaterally and without her permission decided to merge her account (which was in her maiden name) with that of her (now ex-) husband, the affair would never have been detected and her life would not currently be in ruins. She further claims to have been so upset by these proceedings as to have lost a very lucrative job, required medical treatment, and generally lost everything – all because of the cellular carrier’s betrayal of her trust. All of which may be true, in fact, but does not address the fact that she was still having an extramarital affair while married to someone who would react to such a betrayal by walking out on her. Which makes blaming the cellular company for everything a bit difficult to swallow…

On the one hand, giving someone else access to a customer’s cell phone records without the customer’s permission is generally considered an invasion of privacy, and would be illegal in most of the states of the U.S. and most of the Canadian provinces as well. On the other hand, there is no such law in Ontario, and the cell company certainly didn’t force the customer into doing something that would predictably destroy her marriage (and potentially her entire life). Currently, the company is denying all responsibility for the situation, saying that they did nothing wrong under national or local law, and there was no way a reasonably prudent person could have known that such a situation would result. It remains to be seen how the court will rule, of course…

Personally, I have to believe that if you’re married to someone who would have that violent a reaction to infidelity, you would probably know that, which makes going ahead and having an affair completely asinine. On the other hand, given that people frequently make use of cell phones to conceal conversations that they don’t want overheard, the practice of merging cell phone accounts without asking permission first is very obviously going to result in some kind of breach of confidentiality sooner or later, even if it can’t be predicted in any specific case. It’s one of the best examples of Murphy’s Law I’ve ever seen, and a reminder to all business people: if something can go wrong, eventually it will – so don’t take chances and don’t assume that people won’t be doing something outstandingly stupid when you do…

And regardless of what you do for a living, don’t commit illicit acts using instruments that leave an automatic paper trail – unless you’re prepared to face the consequences when everyone in the world finds out what you did…

Sunday, May 16, 2010

The Ethics of Blamestorming

Let’s consider a hypothetical situation for a moment. Suppose your company had leased a property for business purposes, and you paid the people who owned it to build the structures and set up the equipment you would need to do business there – a very common arrangement, similar to the build-to-suit real estate contracts. Now let’ suppose that shortly after you were scheduled to take possession of the site, the main building caught fire and exploded, killing eleven people and causing a great deal of collateral damage to surrounding businesses, homes, and the local environment. An initial investigation indicates that a piece of equipment in the building was faulty, and the property owners blame the contractor who sold them the equipment and installed it for the whole situation. The contractor, in turn, claims that they were working from blueprints and specification provided by the property owner, and the disaster is not their fault; they were just fulfilling their contractual obligation. Meanwhile, the local residents, businesspeople, state and local governments, the media and the U.S. Congress are all blaming you for the whole situation…

What are you going to do? If your employees caused the actual disaster, either through negligence or through incompetence (or bad equipment design) you’d have a legal and ethical responsibility to clean things up and make everyone whole again, including compensation for the families of the victims, but what it you’re just leasing the property and none of your own people were involved in the breakdown? Do you still have an ethical responsibility to pay for all of the damage, just because it was your business that was operating the property at the time things blew up, or should the company that was actually responsible for the design, construction, and operation of the site take the blame for it? Does it make any difference that your company has a miserable safety record (meaning that you should have been anticipating future disasters) or that the company you were leasing from has an exceptionally good one (meaning that you shouldn’t have been expecting any problems)?

In the present case going on in the Gulf of Mexico, none of the players are particularly sympathetic; BP has a miserable safety record, Transocean is blaming their contractor, and Haliburton (the contractor) is saying they were given faulty plans and specs and blaming Transocean, who are saying its all BP’s fault for wanting to drill there in the first place. It’s a neat little tail-chasing circle, and it probably doesn’t help that BP and Haliburton are two of the most hated companies in America, and Transocean soon will be. But my question isn’t really about what the CEO of BP should be doing; it’s what you would be doing if you found yourself in an analogous position…

Would you assume full responsibility for such a disaster, knowing that your company wasn’t actually at fault and that the decision would destroy your organization, bankrupt hundreds of your shareholders and throw tens of thousands of people out of work, just because it might be the right thing to do? Or would you argue that you had obeyed all laws, regulations and industry standards, and that the failed equipment doesn’t even belong to your company (you’re just renting it)? Clearly you have a responsibility to your stockholders, your employees, and all of the other people who will be hurt by the destruction of the company; you also have the responsibility to do the job you’ve been accepting that large salary for and protect your company’s best interests. The real question here is whether those responsibilities outweigh any responsibility you might have to the people who will be impacted by the disaster. After all, no one forced you to rent that property, and you could have insisted on a different contractor and a different kind of machinery, or taken your business somewhere else. So if your company was the one caught in the middle of this sort of fiasco, what would you do?

It’s worth thinking about…

Saturday, May 15, 2010

The Grad School Diaries: At the Party

I’ve been in larger ballrooms than this one, and I’ve been in spaces that were more crowded than this, but I can’t ever remember being in a space this large that was also this jammed with people. A least the food is good. They told us that the Italians throw a good party, and they weren’t kidding…

I’m in Chicago for the Academy of Management Conference, the second week of August, 2009. There are a number of professional organizations associated with business faculty, but the Academy is the biggest one; there are people here from both the micro (Organizational Behavior) and macro (Strategic Management) sides of Management, plus folks from Marketing, Supply Chain, Logistics, Information Technology, Finance, and a dozen other fields. Each day there are literally hundreds of individual sessions, with panel discussions of various topics and dozens of scholar presenting original research papers to the assembled delegates. It’s all just a little overwhelming…

Up until now, the largest professional conference I’ve ever attended was the J. Lloyd Eaton Conference on Science Fiction and Fantasy Literature, to which I presented a paper in 1986. The Eaton Conference is not a large gathering, even now; in 1986 there were just over 30 speakers for the entire event, and we were all using a single lecture hall at the University of California, Riverside campus. This year’s Academy meetings take up all of the conference rooms and ball rooms in four large hotels in downtown Chicago, and just knowing which building to be in on any given day is a challenge. And as previously noted, I know maybe a dozen of the 8,000 plus people who are here…

I quickly noticed that most of the faculty (and the older graduate students) aren’t paying that much attention to the official sessions anyway; unless there’s someone you know (personally or by reputation) or whose work you find especially interesting presenting a paper, you really can’t hope to take much of it in. As it turns out, the real attraction of these meetings is the parties…

Most of the larger and better funded business schools are throwing some kind of bash during the Academy meetings. Some of these are out of reach – UCLA holds theirs at a steakhouse, for example, and they don’t provide free food to party-crashers. I don’t know what it would take to get an invitation to that party, but apparently being a completely unknown first-year doctoral student from a rival business school isn’t it. But on the other side of things, you have open-to-all-comers events, like the ones being thrown by the National University of Singapore, the event being hosted by the Australia-New Zealand Academy of Management (ANZAM), and this one, which is being thrown by one of the big Italian universities…

In the future, I expect my experience at the Academy meetings will be different from this one. Next year I may not attend; I’ll be busy studying for Comprehensive exams in September. By the following year, though, I’m going to try to submit a paper for consideration; maybe I’ll even get to present it at the 2011 Academy meeting, wherever that turns out to be. And the following year, as a fourth-year student, I’ll be looking for people from schools I’d like to interview at; trying to convince someone to interview me for my dream job as a professor – or at least, something that offers a living wage and a reasonable shot at tenure in a location I can stand living in for long enough to get that far…

It took me a while to realize that this is a learning experience too; that coming to these meetings is encouraged by the Department and the School because it’s the only way to learn how to move in these circles, relate to these people, and answer the increasingly difficult questions about what you want to study – and what theory or theories make you think there might be some point in studying that. Someday soon, the critical skills for my entire cohort will not be statistical or mathematical analysis, but rather how well we can convince total strangers that were are both fun people to have around and potentially useful assets to their institution. I’ve had more practice at this type of social interaction than most of the others, and I might have some advantages in terms of speaking well, telling good stories, and knowing just a little about stand-up comedy, but there’s no doubt that I need the practice…

Someday soon, events like this may well take on a life-or-death importance to all of us. For now, though, I’m going to go and get more of this flank steak…

Friday, May 14, 2010

“Tea, Earl Grey, Hot”

I wasn’t planning to do a follow-up to the gold vending machine story, but things hit my desk as they will, and this one was just too good to let slip away. I’m sure most of you have encountered coffee vending machines, which will stir up a blend of instant crystals, sweetener, artificial (powdered) creamer, and whatever amount of water is appropriate, and dispense an approximation of your favorite coffee drink. Older readers may just remember when soda machines existed, which would mix your choice of syrup and carbonated water into a paper cup with ice, producing something that might almost taste like your preferred pop. But the new development coming from the Coca-Cola people is starting to look more and more like a Star Trek ™ replicator ™…

According to a story off the Fast Company technology website, the Coke people are planning to roll out a new vending machine that uses the technology from ink-jet printers to combine a set of syrups into any one of 104 different combinations, effectively reproducing just some of the thousands of mixtures the company sells around the world. While it’s expected that most of the sales for these things will come from people mixing up a standard product, the field tests of the system resulted in most customers mixing up very strange combinations, just to taste them and find out what Strawberry-Litchi-Nut Diet Coke would be like. If this behavior translates into regular consumer behavior, the new Coke machines – called “Freestyle” machines – could completely change the way people buy soft drinks. It could also result in massive sales and even more massive profits…

Unlike a bottled soda, where the costs of the bottle, the cap, filling and sealing the container, stamping the sell-by date on somewhere, and so on must all be taken into consideration, the drink you get from a fountain operation costs almost nothing to make. In fact, the most expensive part of a food-service soft drink is usually the cup. In the case of the Freestyle machines, the only significant costs should be depreciation on the machine itself, and whatever the costs of keeping its advanced sprayers and super-chillers working might be; the cost of the syrup is no higher than any other soft drink and the water and electrical costs should be negligible. If the engineers have done their job as well as the Coke people have with their creation of flavor choices, these things should simply be little profit centers…

Of course, Coke doesn’t currently sell any hot beverages. But modifying these machines to produce the flavor of tea – or even coffee – should just be a matter of figuring out how much of which flavor component goes into each cup; heating it would then be a simple matter of microwave or electrical element. It’s not hard to imagine the same technology being used to produce an on-demand source for literally any beverage you can think of, although alcohol would increase both the logistic and political complexities by several orders of magnitude, and should probably be avoided. Still, at that point, all you’d really need to do is improve the voice-recognition software that people are already using on desktop computers and add that option to the touch-screen controls currently on a Freestyle, and you’ve effectively got the machines we all wanted to have in the kitchen when we were kids…

Of course, as with the gold vending machines, this could just be an expensive toy that flashes briefly in the pan before ending up in our “Where are they now?” file. But, if some day in the near future, you find yourself in an airport or a break room walking up to a machine and saying “Diet Coke, twist of lemon, cold” or the equivalent for whatever it is you drink, just remember: you heard it here first…

Thursday, May 13, 2010

There's Gold in Them Thar Vending Machines!

Over the years, I’ve encountered a lot of strange things being sold from automated kiosk operations, from postal products and services to iPods to beer and spirits – although that last was in Japan, where they apparently sell much weirder things from vending machines, too. Some of these have been very impressive, such as the ice cream vending machines that use a vacuum pump on the end of a robotic arm to pull your purchases out of an internal chest freezer, or the ones that will thaw out a burger and fries, microwave them up to proper temperature, and dispense them – sort of an unhealthful T.V. dinner. But I ran across a news story today that takes the idea of there being gold in the vending machine business to a new level…

According to a story on the Gizmodo website a company in Germany is introducing a vending machine that sells actual gold bars and wafers – in 1, 5 and 10 gram denominations. The company is charging a 30% markup over the current market price, which worked out to be about $42 a gram when the story posted, but the machines check and adjust the price every two minutes, so they may have shifted by the time you get to the Frankfurt Airport and look. The website notes that given the high markup and small quantities involved it’s doubtful that these things will attract any real gold investors; the product is more of a novelty (and a magnet for thieves) than anything else. Although I suppose if they only install these things in airports, security may not be that big a problem; the real issue remains who will buy gold at those prices…

I’m not sure if the business model will work – they’re basically counting on customers wanting the unique experience of purchasing investment-grade substances out of the same type of device that you’d normally use to obtain pre-paid phone cards, munchies, or really bad coffee, which doesn’t seem like much of a basis for sales at a 30% surcharge. Granted, the novelty factor does work – I’ve purchased things from one of the advanced vending machines that sells iPods and accessories just for the fun of doing it, but all of those purchases were made at list price (e.g., the same price you’d pay in a conventional retail outlet) and under conditions where the convenience of getting the thing NOW outweighed the inherent risk of getting merchandise that doesn’t work with no way of returning it. It seems unlikely that gold will ever be a convenience item, and the company openly admits that they’re charging a huge markup on it, which just leaves fun…

On the other hand, I’ve been wrong about consumer behavior before. Maybe people will flock to the German locations where these machines are installed and pony up their Euros for the shiny metal wafers. If so, what other products will we start seeing in automated sales arrangements? Will you one day be able to buy jewelry, laptop computers, flat-screen television sets, or musical instruments in vending machines? Will this completely change the retail industry as we know it, or will these devices function more like the automated self-check you’re starting to see at more and more retailers, where live employees help you with everything about your shopping experience except the check-out process?

I would expect to see a lot of people – not just random bloggers, but a lot of folks in the vending machine and retail industries – keeping an eye on this project. Sometimes this sort of thing represents evolutionary change in an industry, as in the case of machines that sold bottles of cold beverage in the last century. And sometimes they represent expensive toys that never amount to anything, as in the case of the iPod vending machines over the past ten years. But most of the time, the only way to tell the difference is to wait and see…

Wednesday, May 12, 2010

Dude, Where’s My Dog?

I know I should stop writing about airline follies in this space, before this turns into the Airlines Being Stupid blog. After all, it’s not like we’re not seeing idiotic behavior from oil companies, automobile makers, movie studios and food makers, just to name a few. But if I’m going to write about developments in the world of business as culled from various news stories and personal observations, then I’m going to be writing about current events, and the last few years have seen more silly, self-destructive behavior in the airline industry than a diabetic having a shopping spree in a candy factory. The race for the bottom in that industry continues, with a new low point arriving last month when Delta Airlines managed to lose a passenger’s dog…

According to the story, which you can pick up on the Consumerist website, a passenger had adopted a dog in Mexico and was flying back to the States when his dog failed to turn up in baggage claim. He called the airline and was told that the animal was being cared for at the Mexico City airport, and would be delivered the next day, but when no dog ever showed up he called back and was told that no one at Delta had any idea what had become of his new pet or its carrier. The airline offered him a coupon good for $200 off his next Delta flight, which didn’t really help since the passenger had already decided he won’t be flying Delta again in the future, but would not compensate him for the animal’s medical care, the time and effort spent cleaning it and getting it ready to travel, or even for the cost of the carrier. It wasn’t until the Consumerist people got involved and dozens of derisive emails began piling in from all over the globe that the airline changed its tune…

Now, I’m not going to start ragging on Delta for these decisions; I think the Consumerist people have already done a fine job of that. I’m also not going to comment on the airline’s claim that the dog somehow got out of his carrier and escaped, which was apparently their fallback position when saying “what dog? What are you talking about? We don’t know anything about any dogs” didn’t work. In its particulars, this story isn’t really any different from the one a month or so earlier, when a passenger’s missing luggage was found abandoned in a flood control basin 20 miles from the airport: somebody wanted either the dog or its carrier or both and stole them. Or, for that matter, several hundred similar events each year, when light-fingered (or unusually stupid) airport personnel make off with something they think will be easy to sell, something that they think will be easy to trade for drugs, or something that they think will look really good in their living quarters. Instead, I’m going to ask you to consider how Delta should have handled this incident…

First off, the airline’s people should already know that losing someone’s pet isn’t the same as losing something easily replaceable, like typical luggage items. Second, they’ve got to realize that losing anything you’ve been paid to transport is going to annoy your customers, and losing something that you’ve paid hefty fees to have shipped is going to result in a major outcry. Third, they’ve got to realize that lying to get the customer off the telephone or away from the counter is just going to explode in your face if you can’t, in fact, produce the article promised the following day. And fourth, they’ve got to realize that this isn’t just a few hundred dollars worth of clothing, accessories, or pets they’re taking so lightly; it’s their entire relationship with the customer and anyone who will listen to that customer if he or she complains – which, in the Internet Age, means anyone with access to a computer…

I’m not saying that every lost bag and carrier should be treated like a major disaster that could potentially destroy your entire company; I’m just saying that sooner or later one might be – and when that day comes, you’re going to wish that you had a better policy in place than “Lie, blow off the customer, and then offer them something of no effective value to make them go away…”

Tuesday, May 4, 2010

I Don’t Think It’s Wrong…

From time to time the issue of whether a given business practice is “wrong” in moral terms will surface, as in the case of hotels raising prices during the Icelandic volcano eruption stranded travelers all over Europe. People who seem to be unclear on the whole “free market” idea will claim that charging as much people are willing to pay for something is wrong, while people who don’t quite grasp the concept of “price gouging” will say that over time markets will always correct themselves – which ignores the fact that in the short run, some people will try to screw as much money as possible out of people who have no choice. Clearly, no one is going to defend the concept of charging people a fortune during a crisis, but what always surprises me is the number of people who seem to think the whole idea of supply and demand is wrong. Especially when it comes to luxury items like expensive coffee…

Consider, for example, the new wave of super-premium coffee houses in New York, which are said to be charging up to $12 for a specialty cup of joe. You can read the Fox News story if you want to, but idea is that these establishments are taking much longer to custom-roast their own beans, producing a one-of-a-kind flavor, which presumably justifies the massive labor costs involved. This is nonsense, of course - the the Dana Street Roasting Company in Mountain View has been doing this for years, and the most expensive coffee on their menu is under $4 – but it’s no worse than some of the other insane coffee fads we’ve seen in recent years. My personal favorite (the story, not the drink – I don’t drink coffee) is still luwak coffee, which is made from coffee beans that have been eaten and then “eliminated” by a weasel-like creature called a luwak, a member of the civet family. Premium civet coffee can cost as much as $250 a pound, although you can get cut-rate versions on Amazon for as little as $50 a pound. But none of this addresses the question of whether this is right or wrong…

Now, I’m not suggesting that anyone should have to conform to my ideas about value; I’m just saying that paying somewhere between two and ten times the normal price for coffee beans that have been eaten and then pooped out by a weasel seems slightly insane to me; so does paying three or four times the usual price for a cup of coffeehouse coffee. But if there are people who can afford to squander money on this stuff, why is it wrong to provide it to them? Granted, these same people could purchase ordinary Starbuck’s coffee products and donate the residual $9 per cup to charity, but short of that, it’s hard to see how this product is hurting anyone. On the contrary; the sales should make it possible for the coffeehouse owners to afford their rent, pay their personnel, invest money in new furnishings and equipment when needed, and pay for their other operating expenses, thus creating jobs, generating tax revenue, and boosting the local economy. Which doesn’t change the fact that you probably had the same reaction to $12 coffee that I had…

In the movie “Loose Cannons” actor Dan Ackroyd’s character, speaking of another off-beat lifestyle choice, tells his partner (played by Gene Hackman) “I don’t think it’s wrong; I think it’s stupid!” I could the same about civet coffee and many other super-premium consumer products that make no sense in my world; and I’m sure all of you reading this (assuming that anyone reads this) could easily say the same about many additional products, services and experiences. It’s just important to remember that we may not always be speaking of the same things when we do this…

Saturday, May 1, 2010

When Customer Service Goes Horribly Wrong

By now, most of you already know that I’ve spent a fair amount of time in customer service roles over the years, and I continue to think of these jobs as the worst-conceived parts of corporate life. In most cases, the only contact a customer will have with a company is with that front-line customer service representative (CSR), and will quite reasonably judge the entire company by their interactions with the CSR, since they have nothing else to go on. Unfortunately, that CSR is probably making minimum wage, or possibly a little more with bonuses for processing as many calls as possible each day, and is almost certainly being housed in a cube farm, denied anything resembling benefits or perks, and worked to the point of nervous exhaustion. In other words, most companies are placing the most critical relationships they have on the weakest link of their company, and still they can’t understand why they’re losing customers to the one firm in their field that’s actually paying for a better class of CSR. Although the story this week about someone actually trashing a customer’s front yard is still something special…

You can click on the link here for the local news account, but basically the woman who runs a dog-waste removal service lost her temper with a customer who had failed to pay her bill for a few months running. So she went over to her customer’s house and gave back four months worth of dog waste – all over the front lawn. The police were called when neighbors realized what was happening, and the irate service provider was taken away, clearly embarrassed at losing her cool in this fashion. Although the dog-waste removal person was quoted at the scene as saying that it felt really good to be tossing the stuff all over the place…

Now, I don’t want to be too critical of anyone associated with the story. The non-paying customer claims to have been preoccupied with medical issues for the last few months, which I can verify WILL make you forget basic things like whether the dog-poop-removed bill has been paid regularly. And it’s hard to blame someone who does a service as inherently unpleasant as cleaning dog waste out of people’s yards for getting a little irate with someone who does not pay their bill, ducks telephone calls, ignores reminder and overdue notices, and so on. The fact is, most people who have ever worked front-line customer service can tell you about at least one customer who they would really have liked to go and bury in dog waste, even if they didn’t actually work for a dog waste removal company at the time. But that really doesn’t change the fact that this is still about the worst example of customer service I’ve ever seen…

Why does he tell us this? I hear some of you asking. It’s not like any of you are in this business, or that you’d ever wig out and do something like this if you were. All of which is true, but recall what I said about how every CSR has wanted to do this at least once in their career. That means that your CSRs, if you have any working for you, have wanted to do this at least once in their careers. One of them might be considering doing so right now…

I’m not saying that we should all take better care of our customer service personnel; I’m not saying that better pay, job enrichment, or rotation through different departments and stations are actually critical, or that you should drop what you’re doing and look into such things. I’m just saying you should consider doing so at some future point, before one of your customers winds up with a yard full of dog waste, and your company is the one on the evening news…