There’s an interesting story that cropped up this week on the Technology page of the New York Times which I think illustrates the inherent dangers of painting yourself into a corner through the over-use of legal actions – or, possibly, of not having a sense of humor. There’s no question that suing everybody and everything under the sun just because you can – or because you think there might be some potential strategic advantage in doing so – is going to be problematic after a while. By the same token, believing your own hype – and getting angry with people for not showing enough “respect” for your presumed greatness – is going to get you into trouble even faster. But when you start sending the competition cease and desist letters for ad spots that parody your company, you’re definitely a disaster looking for a place to happen…
I case you’ve missed it, the online retailer Newegg has been running a television commercial where a sales clerk in a blue shirt and khakis is asked to explain the difference between to laptop computers and ends up having nothing to say. Unfortunately, the sales clerks at Best Buy (who represent Newegg’s primary real-world competition) wear uniforms consisting of a blue short-sleeved shirt and khaki pants very much like the ones worn by the actor in the parody ad, and the tag line (“Take it from a Geek”) can be construed as reminiscent of the “Geek Squad” service trademarked by Best Buy. Accordingly, the real-world retail giant is demanding that Newegg stand down the ads and stop suggesting that Best Buy’s sales associates are “slovenly and uninformed about computer products” and also stop using the tag line…
Now, I don’t claim to be any sort of legal expert, especially not a Constitutional Law expert, but it struck me that given some of the nutty things we’ve seen defended as free speech over the past few decades, a parody of a competitor’s operations (which are considered protected speech) shouldn’t be that hard to defend. However, the legal analysts at the Times point out that it’s actually worse than that in this case: if Best Buy claims that their customer service is actually excellent, then this Newegg commercial is clearly a parody, and can’t be attacked by conventional lawsuit. If Best Buy argues that the commercials are an accurate depiction of their operations, they would have legal grounds to sue – but they’d also be publically admitting that their sales associates are incompetent (and possibly slovenly), which doesn’t seem like a good strategy either…
From where I’m sitting, it would make much more sense for Best Buy to counter-attack with their own advertising parody – which wouldn’t be all that hard; Newegg’s business model relies on user reviews full of jargon and technobabble that really only appeal to hard-core tech geeks. Producing and running an ad about everyday users who just want to talk to a live person and take their purchases home the same day would not only refute the attacks, but also hit the competition in their own weak point. In fact, if you did it correctly, such an ad would also position Best Buy to compete with Dell, Amazon, and every other on-line retailer who sells computers, since all of them are vulnerable to the same point (e.g. that you have to rely on user reviews and self-taught knowledge of the product if you are purchasing on-line, and there will be no one to help you)…
Of course, such an approach would require at least a minute or two of planning, as well as an intelligent appraisal of the competition and a moment of thought as to how to counter an attack without simply picking up a big legal club and bludgeoning your opponent with it. Failing to do so, however, can leave you in the sort of no-win situation where you’re being mocked by competitors, customers, and scruffy bloggers everywhere – as well as the New York Times Technology Page…
Thursday, June 30, 2011
Tuesday, June 28, 2011
This Will Not End Well...
Another common Internet meme of the past few years is a high-speed picture of what is about to become a catastrophic accident – or some combination of factors that could cause one – and the phrase “This will not end well…” employed as a caption. Most often these are intended to be humorous – a picture of a person who has just fallen off of a BMX bicycle during a jump, for example, or a mid-air shot of a cat falling into a pool of water. In a business or operations context, however, we often borrow the concept to express skepticism about a business model that has an obvious weak spot. For example, if your business model depends on random customers being courteous, generous, cooperative, or anything other than random, greedy paranoids, you are likely to experience problems; if your business requires that people not act purely in their own selfish interest it’s just possible to succeed – but there is an excellent chance that things will not end well…
Now, I’m not suggesting that every daring, chancy or idealistic business concept will invariably come to grief. The Panera Bread stunt where patrons are allowed to name their own price and the profits go to charity seems to be working, for example, and Radiohead seems to have done just fine with their “pay whatever you want to” stunt for their last album (they made something like 400% of what they would have made on a conventional release of the same number of copies). That said, I still can’t help thinking that Malaysia Airlines is going to have trouble with their announced new policy of banning infants from the First-Class section of its airliners…
Regular readers of this space (assuming I have regular readers) will recall that I’ve speculated about airlines having a special section for families travelling with small children in past blogs. However, if the story that broke this week on The NBC Affiliate station in Rochester, New York (by way of the MSNBC web site) is correct, Malaysia Airlines is going about it the other way, banning infants from the front of the cabin where people are paying ten to twenty times more for their seats. On the one hand, you could see this working – people who are paying that kind of money for airline tickets are going to complain a lot more when they can’t sleep because the baby behind them won’t stop screaming for 14 hours straight, or whatever. On the other hand, you can see this being a huge problem – because anybody who has that kind of money to spend on airline tickets is probably used to getting their own way, and they’re not going to take kindly to being told they can’t sit up front with their infant…
For the moment, this is being limited to long-haul routes from Kuala Lumpur to Amsterdam, London and Sydney, and should not run into either U.S. laws or the type of American so widely parodied abroad who can’t understand why the whole world doesn’t enjoy listening to their infant shrieking as much as they do. However, the same article notes that other carriers (including Virgin Atlantic and British Airways) are considering applying the same policy to entire flights, and they do operate from U.S. airports – which means that sooner or later they’re going to be sued for discrimination against infants, parents with small children, or anyone else who cares to hire an attorney and bring on the lawsuit. If such flights become popular, however, there’s a non-zero chance that customers who like such flights will counter-sue, trying to block the original actions and keep infant-free flights available…
Either way, I can’t help thinking that there is going to be even more trouble ahead for an industry that is not doing well in terms of customer satisfaction these days. Or, as the meme puts it, This Will Not End Well…
Now, I’m not suggesting that every daring, chancy or idealistic business concept will invariably come to grief. The Panera Bread stunt where patrons are allowed to name their own price and the profits go to charity seems to be working, for example, and Radiohead seems to have done just fine with their “pay whatever you want to” stunt for their last album (they made something like 400% of what they would have made on a conventional release of the same number of copies). That said, I still can’t help thinking that Malaysia Airlines is going to have trouble with their announced new policy of banning infants from the First-Class section of its airliners…
Regular readers of this space (assuming I have regular readers) will recall that I’ve speculated about airlines having a special section for families travelling with small children in past blogs. However, if the story that broke this week on The NBC Affiliate station in Rochester, New York (by way of the MSNBC web site) is correct, Malaysia Airlines is going about it the other way, banning infants from the front of the cabin where people are paying ten to twenty times more for their seats. On the one hand, you could see this working – people who are paying that kind of money for airline tickets are going to complain a lot more when they can’t sleep because the baby behind them won’t stop screaming for 14 hours straight, or whatever. On the other hand, you can see this being a huge problem – because anybody who has that kind of money to spend on airline tickets is probably used to getting their own way, and they’re not going to take kindly to being told they can’t sit up front with their infant…
For the moment, this is being limited to long-haul routes from Kuala Lumpur to Amsterdam, London and Sydney, and should not run into either U.S. laws or the type of American so widely parodied abroad who can’t understand why the whole world doesn’t enjoy listening to their infant shrieking as much as they do. However, the same article notes that other carriers (including Virgin Atlantic and British Airways) are considering applying the same policy to entire flights, and they do operate from U.S. airports – which means that sooner or later they’re going to be sued for discrimination against infants, parents with small children, or anyone else who cares to hire an attorney and bring on the lawsuit. If such flights become popular, however, there’s a non-zero chance that customers who like such flights will counter-sue, trying to block the original actions and keep infant-free flights available…
Either way, I can’t help thinking that there is going to be even more trouble ahead for an industry that is not doing well in terms of customer satisfaction these days. Or, as the meme puts it, This Will Not End Well…
Friday, June 24, 2011
How Stuff Works: Variable Costs
Today in our occasional series on How Stuff Works I thought it might be helpful to explain what variable costs are and how they differ from fixed costs. It’s one of those concepts that isn’t really as simple as the people from Accounting like to make it sound, and even people who really should know better can often get tripped up by the difference – as is being illustrated in Georgia right now, where the recent change in immigration law has driven off all of the undocumented workers who used to find employment in the summer picking crops. People on the pro-immigrant side are claiming that the crops will be lost because no one else will be willing to do these jobs, while those on the anti-immigrant side are saying that labor costs have never represented more than 10% of the total cost we pay for produce, so any change in who harvests the crops shouldn’t matter. I look at this and point out that both sides appear to know more about politics than they do about economics…
To begin with, the contention that no one will harvest crops except for undocumented workers is nonsense; it would be more correct to say that no one else will do these jobs for the horrific wages normally offered. But if you raise the hourly rate enough, eventually people will agree to do the job; try offering people $100 an hour, for example, and see if people are willing to tend the fields for the equivalent of $365,000 per year. Wages are an example of a variable cost: the amount it costs the company varies depending on how many people you employ and the rate at which you pay them, which in turn varies on the amount of work that must be done, how much of it each worker can do in an hour, and how much money people are willing to accept in return for that labor. In the case of agricultural firms, most of the other costs are set, or fixed, in advance: the mortgage on the land, the property tax you pay, the cost of the equipment (if any) and so on are all known well in advance; only consumables like water, fertilizer and seeds will vary depending on what you want to grow (and how much of it) – as will the number of people you need to accomplish these tasks…
On the other hand, the contention that labor costs have never made up more than 10% of the price you pay for produce at the supermarket is just as silly. People can’t live without food; if your grocery bill suddenly rises you may cut back in other areas (entertainment, travel, other consumer products) and you might write to your government officials, but you can’t just stop buying food. But, by the same token, farmers need to make enough money selling their crops in order to pay their own costs and feed their own families, which means that if their labor costs suddenly double, they will have to pass the increase in price along to the buyer – which ultimately means the consumer. It’s possible to estimate variable costs from past experience: in this case, labor has usually made up about 10% of the costs involved in raising food crops. But if the price of labor were to suddenly drop – if there were no jobs, no welfare programs, no safety nets, and no other way to make a living, or of somebody invented a series of really inexpensive robots that could do the same jobs for less than an unskilled worker’s wages – then those historical projections would be meaningless. And if the price of labor were to suddenly rise – say, if some idiot drove off all of the people who were willing to work for a certain low wage level – then the historical pricing information would also be useless…
Personally, I’ve always felt that the contention that foreigners were coming into this country to take away jobs from those hypothetical “hard-working Americans” was xenophobic, racist, protectionist crap, but I’ll admit I’m no expert on either politics or agriculture. I do, however, have two graduate degrees in Business, and I’m fairly sure that the people who passed this so-called “Immigration Reform” act in a state where the largest industry is Agriculture weren’t thinking things through – and that people on both sides of this issue appear to be unclear on the concept of variable costs. Hopefully, the rapid influx of cheaper produce from states (and countries) that still have cheap agricultural labor forces will help explain the difference – or at least stabilize food prices before there are riots in the streets…
To begin with, the contention that no one will harvest crops except for undocumented workers is nonsense; it would be more correct to say that no one else will do these jobs for the horrific wages normally offered. But if you raise the hourly rate enough, eventually people will agree to do the job; try offering people $100 an hour, for example, and see if people are willing to tend the fields for the equivalent of $365,000 per year. Wages are an example of a variable cost: the amount it costs the company varies depending on how many people you employ and the rate at which you pay them, which in turn varies on the amount of work that must be done, how much of it each worker can do in an hour, and how much money people are willing to accept in return for that labor. In the case of agricultural firms, most of the other costs are set, or fixed, in advance: the mortgage on the land, the property tax you pay, the cost of the equipment (if any) and so on are all known well in advance; only consumables like water, fertilizer and seeds will vary depending on what you want to grow (and how much of it) – as will the number of people you need to accomplish these tasks…
On the other hand, the contention that labor costs have never made up more than 10% of the price you pay for produce at the supermarket is just as silly. People can’t live without food; if your grocery bill suddenly rises you may cut back in other areas (entertainment, travel, other consumer products) and you might write to your government officials, but you can’t just stop buying food. But, by the same token, farmers need to make enough money selling their crops in order to pay their own costs and feed their own families, which means that if their labor costs suddenly double, they will have to pass the increase in price along to the buyer – which ultimately means the consumer. It’s possible to estimate variable costs from past experience: in this case, labor has usually made up about 10% of the costs involved in raising food crops. But if the price of labor were to suddenly drop – if there were no jobs, no welfare programs, no safety nets, and no other way to make a living, or of somebody invented a series of really inexpensive robots that could do the same jobs for less than an unskilled worker’s wages – then those historical projections would be meaningless. And if the price of labor were to suddenly rise – say, if some idiot drove off all of the people who were willing to work for a certain low wage level – then the historical pricing information would also be useless…
Personally, I’ve always felt that the contention that foreigners were coming into this country to take away jobs from those hypothetical “hard-working Americans” was xenophobic, racist, protectionist crap, but I’ll admit I’m no expert on either politics or agriculture. I do, however, have two graduate degrees in Business, and I’m fairly sure that the people who passed this so-called “Immigration Reform” act in a state where the largest industry is Agriculture weren’t thinking things through – and that people on both sides of this issue appear to be unclear on the concept of variable costs. Hopefully, the rapid influx of cheaper produce from states (and countries) that still have cheap agricultural labor forces will help explain the difference – or at least stabilize food prices before there are riots in the streets…
Thursday, June 23, 2011
Try This the Other Way…
I pulled a story off of the news aggregation sites this week that I think the authors – and probably whoever green-lighted the story in the first place – are looking at backwards. On the face of it, this is an amusing little story about a store in Elma, New York, which purports to sell only products made in America – they call it the “Made in America Store” – which can be seen as mocking people who take the “Buy American” campaign to extremes, mocking trade protectionists in general, or mocking the current state of American commerce (the story carries virtually no electronics and is built into an abandoned Ford dealership, for example) depending on which one you find amusing. However, it struck me that there is at least one, and more likely a whole series, of serious topics being raised by this operation, and that somebody really ought to look into them…
Consider, for example, the primary issue this store addresses: what product categories are still made in the US, and how many of them are competitive against foreign options in either price or quality, let alone both? If there are American industries that are actually superior to the competition in either category it’s probably worth asking why; if there are any that are superior in both measures (and not just because they receive government subsidies or trade protection) it would be interesting to find out if those advantages can be transplanted into other manufacturing sectors. By the same token, if those products are not superior in quality or price (or both) but are simply being featured in the store because of their American origin, it would be interesting to see if the products (or the companies that produce them) can be improved to equal or exceed foreign standards – or if the fact that they are American-made will translate to sales sufficient to keep the manufacturers in business…
Even more interesting, in my opinion, would be the reverse question: which products (and product categories) are no longer made in America, and is there any way we can restore those industries? In some cases it may not be possible to resurrect those industries, and in others it might not even be desirable to do so, but a simple comparison between this company’s inventory and ordering databases and those of a typical general merchandise retailer (like a Wal-Mart or a Meijer) would tell you which American manufacturing sectors are effectively extinct. Meanwhile, a price point comparison would tell you how much of a markup people would be willing to accept in order to purchase American-made consumer products in a wide range of categories in which country of origin isn’t normally a selling point…
Now, I realize that a lot of these points are the sort of abstract operational analysis that could only be of interest to management students and policy wonks; most of the appeal of the Made in America store is just random patriotism and the sort of jingoistic rhetoric that appeals to people during an economic crisis that can be (at least in part) attributed to international market conditions. But if you go to check out the original story on the NPR site , just keep in mind that sometimes the answers to how to change an entire manufacturing sector aren’t found in some industry insider’s secret information, or at the bottom of a huge governmental think-tank study. Sometimes they’re a tourist attraction on the highway near Elma, New York…
Consider, for example, the primary issue this store addresses: what product categories are still made in the US, and how many of them are competitive against foreign options in either price or quality, let alone both? If there are American industries that are actually superior to the competition in either category it’s probably worth asking why; if there are any that are superior in both measures (and not just because they receive government subsidies or trade protection) it would be interesting to find out if those advantages can be transplanted into other manufacturing sectors. By the same token, if those products are not superior in quality or price (or both) but are simply being featured in the store because of their American origin, it would be interesting to see if the products (or the companies that produce them) can be improved to equal or exceed foreign standards – or if the fact that they are American-made will translate to sales sufficient to keep the manufacturers in business…
Even more interesting, in my opinion, would be the reverse question: which products (and product categories) are no longer made in America, and is there any way we can restore those industries? In some cases it may not be possible to resurrect those industries, and in others it might not even be desirable to do so, but a simple comparison between this company’s inventory and ordering databases and those of a typical general merchandise retailer (like a Wal-Mart or a Meijer) would tell you which American manufacturing sectors are effectively extinct. Meanwhile, a price point comparison would tell you how much of a markup people would be willing to accept in order to purchase American-made consumer products in a wide range of categories in which country of origin isn’t normally a selling point…
Now, I realize that a lot of these points are the sort of abstract operational analysis that could only be of interest to management students and policy wonks; most of the appeal of the Made in America store is just random patriotism and the sort of jingoistic rhetoric that appeals to people during an economic crisis that can be (at least in part) attributed to international market conditions. But if you go to check out the original story on the NPR site , just keep in mind that sometimes the answers to how to change an entire manufacturing sector aren’t found in some industry insider’s secret information, or at the bottom of a huge governmental think-tank study. Sometimes they’re a tourist attraction on the highway near Elma, New York…
Tuesday, June 21, 2011
I Can’t Tell
There’s an Internet meme which is coming up more and more often these days: it’s a cartoon character (the version I’ve seen most often features Fry from Futurerama) with half-closed eyes, signifying skepticism, and the legend which reads “I can’t tell: are you trolling or just really stupid?” It’s a measure of how common our fun-loving friends the Internet trolls are becoming that just about everybody has encountered an example of their work that is hard to distinguish from some real aspect of our weird world – or, perhaps, it’s a mark of just how weird our world is becoming. Still, it’s getting harder to imagine any political or philosophical standpoint that is so exotic that there absolutely couldn’t be someone somewhere who actually holds that position to be true, or any product or service that could be offered that would be too stupid for anyone to actually wish to purchase. That said, I’m still not sure if the people behind the $100,000 razor are serious…
You can visit the website here if you want to, but the basic idea is simple enough: The Zafirro Iridium (that’s what they’re calling it) has blades made out of real sapphires, a handle made out of pure iridium, and the screws holding it together are made from jewelry-grade platinum. It’s guaranteed for 10 years, complete with sharpening and repair services, and if the materials are really as described it should be almost impossible to damage the thing anyway; iridium is the second-densest known element (about .1% lower than osmium), doesn’t corrode at temperatures below 2,000 degrees centigrade, and won’t actually melt below 2,466 degrees centigrade (4,471 degrees Fahrenheit). Synthetic sapphire is used to make armor for military vehicles (and in some forms of body armor), and sapphire “glass” (actually transparent crystals made with synthetic sapphire) is used to make shatter-resistant windows for armored vehicles. And, of course, if anything does break, the company’s warranty would include repairs anyway…
A much more immediate question is why anyone would buy such a thing in the first place. Even if we are willing to assume an individual with sufficiently high disposable income to make $100,000 USD a negligible amount, it’s still hard to imagine why such an individual would be willing to pay this much for a personal grooming device. There are any number of outrageously expensive luxury goods that would make marginally more sense than this would – and since there’s no practical way to test-drive such a thing, you’d be spending that sum on something that might be completely worthless, or (even worse) might not work any better than a 99-cent disposable razor…
Of course, the over-arching question here is whether this whole thing is a hoax or not. Fake Internet retailers have been around for years; I’ve referenced the Penguin Warehouse example before, and we’ve also talked about a mythical company selling pirate-hunting tours around the Horn of Africa, among other examples. On the other hand, it’s getting harder and harder to say how far someone might be willing to take wretched excess these days. If cashmere toilet paper, bottled water that sells for $40 a liter, and mattresses that cost more than my car (actually, more than all of the cars I have ever owned put together) can all really exist, I can’t imagine why somebody might not try to sell a safety razor for $100,000 – especially if the product costs them only a few thousand dollars to make (iridium was cheaper than gold the last time I looked – only $500 to $800 an ounce)…
In the long run, I suppose, it really doesn’t matter; if the demand for such a product actually exists, someone will start making them even if the current advertisement is just a hoax. Because unlike importing penguins or transporting tourists into war zones, selling ridiculously over-priced consumer products is legal. It’s just a matter of whether the people behind this are testing the waters to see if such a product will sell or are just trying to make fun of people who attempt to purchase a $100,000 consumer product. From where I’m sitting, I can’t tell which one it is…
You can visit the website here if you want to, but the basic idea is simple enough: The Zafirro Iridium (that’s what they’re calling it) has blades made out of real sapphires, a handle made out of pure iridium, and the screws holding it together are made from jewelry-grade platinum. It’s guaranteed for 10 years, complete with sharpening and repair services, and if the materials are really as described it should be almost impossible to damage the thing anyway; iridium is the second-densest known element (about .1% lower than osmium), doesn’t corrode at temperatures below 2,000 degrees centigrade, and won’t actually melt below 2,466 degrees centigrade (4,471 degrees Fahrenheit). Synthetic sapphire is used to make armor for military vehicles (and in some forms of body armor), and sapphire “glass” (actually transparent crystals made with synthetic sapphire) is used to make shatter-resistant windows for armored vehicles. And, of course, if anything does break, the company’s warranty would include repairs anyway…
A much more immediate question is why anyone would buy such a thing in the first place. Even if we are willing to assume an individual with sufficiently high disposable income to make $100,000 USD a negligible amount, it’s still hard to imagine why such an individual would be willing to pay this much for a personal grooming device. There are any number of outrageously expensive luxury goods that would make marginally more sense than this would – and since there’s no practical way to test-drive such a thing, you’d be spending that sum on something that might be completely worthless, or (even worse) might not work any better than a 99-cent disposable razor…
Of course, the over-arching question here is whether this whole thing is a hoax or not. Fake Internet retailers have been around for years; I’ve referenced the Penguin Warehouse example before, and we’ve also talked about a mythical company selling pirate-hunting tours around the Horn of Africa, among other examples. On the other hand, it’s getting harder and harder to say how far someone might be willing to take wretched excess these days. If cashmere toilet paper, bottled water that sells for $40 a liter, and mattresses that cost more than my car (actually, more than all of the cars I have ever owned put together) can all really exist, I can’t imagine why somebody might not try to sell a safety razor for $100,000 – especially if the product costs them only a few thousand dollars to make (iridium was cheaper than gold the last time I looked – only $500 to $800 an ounce)…
In the long run, I suppose, it really doesn’t matter; if the demand for such a product actually exists, someone will start making them even if the current advertisement is just a hoax. Because unlike importing penguins or transporting tourists into war zones, selling ridiculously over-priced consumer products is legal. It’s just a matter of whether the people behind this are testing the waters to see if such a product will sell or are just trying to make fun of people who attempt to purchase a $100,000 consumer product. From where I’m sitting, I can’t tell which one it is…
Monday, June 20, 2011
You Can’t Say That in Public!
This week another story popped up in our ongoing collection of examples that prove life in the Internet age really is different – and that anyone who believes that it isn’t is living in a fool’s paradise. Apparently, according to the story in the Minneapolis – St. Paul Star Tribune , a local contractor was having a dispute with a customer over the quality of some concrete work, and the whole thing had degenerated into a series of court cases, when the customer’s daughter decided to post a bunch of nasty comments about the contractor and his company on Craig’s List. This might have stayed in the grey area, except for the fact that the daughter used actual legal terms (such as “fraud”) in her Craig’s List post, and the terms were not supported by the company’s history or the court records. As a result, the contractor counter-sued for defamation and won…
If you’re a consumer advocate, you probably see this as a case of the company doing crappy work (the original customer won the original customer complaint) and then profiting when they counter-sued. If you’re a small-business advocate (the firm in question has only a few employees) you probably see this as a case of someone attempting to screw money out of the company by threatening to write nasty Craig’s List posts unless they get what they want – and then doing so. If the cases are being reported correctly in the linked article, it would appear that the company did offer to fix the problems, but the customer demanded that they refund their entire fee AND pay the “customer” an additional $800 into the bargain (for a total of $6,200), and the court would only allow the customer $440 for the repairs – which is when the customer’s daughter decided on a smear campaign online…
Now, you and I weren’t there when any of this happened, and we don’t have access to either the original contract or the court documents – but none of these points are being disputed by either party. If this is how it went down, then it does appear to be a customer making unreasonable demands on a company that is just trying to complete their obligations and make a living, and that both the customer and her daughter eventually got their just desserts. A much more interesting point, at least from where I’m sitting, is the complaint about the Craig’s List posting – and the subsequent judgment supporting that complaint…
In the days before there was an Internet, the client’s angry offspring would most likely have told friends, acquaintances, and anyone else in the community who would listen about how badly her mother was treated by this paving contractor, and how no one should ever do business with this company. This would be annoying and unfortunate for the company, and if enough people did it they’d probably have trouble getting new customers, but there wouldn’t have been anything actionable involved, and there would probably have been no occasion to counter-sue. Publicly accusing someone of a crime is another matter, however; even in the old days, you’d probably have been a bit more careful about calling someone a fraud in public, and you’d certainly hesitate before doing so in front of tens of millions of people…
Unfortunately, that’s exactly what you’re doing when you post such accusations on Craig’s List – or anywhere else online. As I’ve noted in some of our previous musings on the information age, in cyberspace everyone can hear your stupid, unfair and ultimately incorrect accusations of wrong-doing – which means that so can the person you’re maligning. And not only is that not likely to change any time soon, as more and more of the world becomes interconnected through the Web, the number of people listening to you rant is only going to get larger. So be careful about what you say in public, because I can almost guarantee you that if the people you’re excoriating aren’t watching you yet, they will be…
If you’re a consumer advocate, you probably see this as a case of the company doing crappy work (the original customer won the original customer complaint) and then profiting when they counter-sued. If you’re a small-business advocate (the firm in question has only a few employees) you probably see this as a case of someone attempting to screw money out of the company by threatening to write nasty Craig’s List posts unless they get what they want – and then doing so. If the cases are being reported correctly in the linked article, it would appear that the company did offer to fix the problems, but the customer demanded that they refund their entire fee AND pay the “customer” an additional $800 into the bargain (for a total of $6,200), and the court would only allow the customer $440 for the repairs – which is when the customer’s daughter decided on a smear campaign online…
Now, you and I weren’t there when any of this happened, and we don’t have access to either the original contract or the court documents – but none of these points are being disputed by either party. If this is how it went down, then it does appear to be a customer making unreasonable demands on a company that is just trying to complete their obligations and make a living, and that both the customer and her daughter eventually got their just desserts. A much more interesting point, at least from where I’m sitting, is the complaint about the Craig’s List posting – and the subsequent judgment supporting that complaint…
In the days before there was an Internet, the client’s angry offspring would most likely have told friends, acquaintances, and anyone else in the community who would listen about how badly her mother was treated by this paving contractor, and how no one should ever do business with this company. This would be annoying and unfortunate for the company, and if enough people did it they’d probably have trouble getting new customers, but there wouldn’t have been anything actionable involved, and there would probably have been no occasion to counter-sue. Publicly accusing someone of a crime is another matter, however; even in the old days, you’d probably have been a bit more careful about calling someone a fraud in public, and you’d certainly hesitate before doing so in front of tens of millions of people…
Unfortunately, that’s exactly what you’re doing when you post such accusations on Craig’s List – or anywhere else online. As I’ve noted in some of our previous musings on the information age, in cyberspace everyone can hear your stupid, unfair and ultimately incorrect accusations of wrong-doing – which means that so can the person you’re maligning. And not only is that not likely to change any time soon, as more and more of the world becomes interconnected through the Web, the number of people listening to you rant is only going to get larger. So be careful about what you say in public, because I can almost guarantee you that if the people you’re excoriating aren’t watching you yet, they will be…
Friday, June 17, 2011
If This Goes On…
Every once in a while you run across a story about an event that has almost no importance on its own – for example, a bill passing in the U.S. Senate that has no hope of passing in the House, and even less chance of being signed by the President – which is, nevertheless, a landmark occurrence in terms of its potential. Reporters and publishers love stories like these, because if you break them first, and especially if the competition misses them or fails to recognize their importance, you could gain the exclusive rights to the biggest news item of the year. Most of the time, however, all you get is the premiere coverage of a non-event. One such story hit this week when a bipartisan majority of the Senate voted to end the Federal subsidies for ethanol…
You can pick up the Wall Street Journal coverage of the story if you want to, but the basic idea is that 33 Republicans broke ranks to join 40 of their Democratic counterparts in voting to end the subsidy for produces of ethanol for use as a motor fuel. For more than 30 years, ethanol has been at the heart of the “renewable energy” movement – or, at least, the parts of it that involve huge companies increasing their profits by taking government funding to produce something for which there was already a high demand. But the problem with ethanol, either as an additive for gasoline or as the major component of the “E85” motor fuel you see sometimes here in the Midwest, is that so far no one has been able to produce the equivalent of a gallon of gasoline without spending more than the equivalent of one gallon of gasoline to make the ethanol – and the ratio is occasionally much higher than that. Far from saving natural resources, ethanol is actually taking more petroleum to make than it saves, and that doesn’t even count the petroleum-based fertilizers that are used to grown the corn from which the ethanol is made…
Even worse, in my opinion, is the fact that the increasing demand for corn has created massive increases in food prices in many communities that rely on corn for food – and the fact that, despite these problems, the Federal government is also still providing subsidies for corn production and paying some farmers not to grow more corn, in addition to the ethanol subsidy. Providing subsidies to gasoline producers and agribusiness corporations that are already obscenely rich is bad enough, but when doing so causes financial hardship (and occasionally famine) in poor populations and does nothing to provide the affordable motor fuel it was supposed to provide in the first place, someone really does need to call shenanigans. This is jus the first time anyone in Washington has actually done so…
For the moment, of course, it’s still a non-issue. The bill would have to get through the House of Representatives, which is apparently gearing up to protest that since legislation is supposed to start in the House, and this measure didn’t, the whole thing has to be thrown out and start over. The repeal would also have to be signed by the President, which is not likely to happen this close to the 2012 election, when the support of corn-producing states might be critical. And even if some miracle were to occur, this would still be only one set of government spending that drains our resources and does absolutely nothing for who doesn’t own stock in oil companies or agribusiness corporations; a cut of only $6 billion in a multi-trillion dollar deficit. But the system as it stands is broken; the reform politicians are not wrong when they say that the United States must embrace radical change, and soon, or go down in bankruptcy. And if legislative reform ever does occur, then it’s just possible that we saw the first stages of it this week, in a meaningless non-story in the back pages of the newspaper…
Stay tuned, folks. This could get interesting…
You can pick up the Wall Street Journal coverage of the story if you want to, but the basic idea is that 33 Republicans broke ranks to join 40 of their Democratic counterparts in voting to end the subsidy for produces of ethanol for use as a motor fuel. For more than 30 years, ethanol has been at the heart of the “renewable energy” movement – or, at least, the parts of it that involve huge companies increasing their profits by taking government funding to produce something for which there was already a high demand. But the problem with ethanol, either as an additive for gasoline or as the major component of the “E85” motor fuel you see sometimes here in the Midwest, is that so far no one has been able to produce the equivalent of a gallon of gasoline without spending more than the equivalent of one gallon of gasoline to make the ethanol – and the ratio is occasionally much higher than that. Far from saving natural resources, ethanol is actually taking more petroleum to make than it saves, and that doesn’t even count the petroleum-based fertilizers that are used to grown the corn from which the ethanol is made…
Even worse, in my opinion, is the fact that the increasing demand for corn has created massive increases in food prices in many communities that rely on corn for food – and the fact that, despite these problems, the Federal government is also still providing subsidies for corn production and paying some farmers not to grow more corn, in addition to the ethanol subsidy. Providing subsidies to gasoline producers and agribusiness corporations that are already obscenely rich is bad enough, but when doing so causes financial hardship (and occasionally famine) in poor populations and does nothing to provide the affordable motor fuel it was supposed to provide in the first place, someone really does need to call shenanigans. This is jus the first time anyone in Washington has actually done so…
For the moment, of course, it’s still a non-issue. The bill would have to get through the House of Representatives, which is apparently gearing up to protest that since legislation is supposed to start in the House, and this measure didn’t, the whole thing has to be thrown out and start over. The repeal would also have to be signed by the President, which is not likely to happen this close to the 2012 election, when the support of corn-producing states might be critical. And even if some miracle were to occur, this would still be only one set of government spending that drains our resources and does absolutely nothing for who doesn’t own stock in oil companies or agribusiness corporations; a cut of only $6 billion in a multi-trillion dollar deficit. But the system as it stands is broken; the reform politicians are not wrong when they say that the United States must embrace radical change, and soon, or go down in bankruptcy. And if legislative reform ever does occur, then it’s just possible that we saw the first stages of it this week, in a meaningless non-story in the back pages of the newspaper…
Stay tuned, folks. This could get interesting…
Monday, June 13, 2011
What Do They Know?
Very early on in this blog I wrote about our family trip to Disneyland; a few months later I wrote about my amazement at learning about the Disney Institute program (where members of the Company will teach your organization to do things the Disney way) and my overall admiration for the company. Since then, a number of people have expressed their surprise to me when I’ve acknowledged that I do not own stock in the company, and that the 2007 trip was the first time I’d been to the park in at least twenty years. It’s important to note that while I admire the company, and in particular the way the park operations have made money during times when no other aspect of their business was profitable, I don’t have any personal connection to Disney – and most of the people I’ve known who have worked there have been dubious at best about wanting to go back. But when I see the company making moves that do not make sense, I find myself wondering what they know that we don’t…
A note that turned up in the Orlando Sentinel website last week mentioned that Disney is raising prices at the Disney World facility for the second time in less than a year; they’re also planning price increases in their other amusement parks, including Disneyland in California. With families all over the country still struggling to make mortgage payments and afford food and clothing this seemed a bit tone-deaf to me – an impression that was rendered even more surreal by the little temperature information block at the top of the Sentinel website (it was 99 degrees Fahrenheit as of 6:00 PM on June 13th). Coming as this does on the same day when we’re hearing about further increases in both gasoline and airline ticket prices, even more preposterous TSA outrages, and air traffic control failures, it doesn’t sound like the best of times to be doing things to discourage travel. If any other company were to do such I thing I’d just assume it was another boneheaded move, but when it’s Disney, you have to wonder…
Do the folks running the Disney Empire know something we don’t? Is it possible that improvements in the economy will result in greater disposable income, which will lead people to take summer vacations in Orlando? Or that recovery in various International economic indicators will bring enough foreign visitors to South Florida to make up the difference? Does this Disney pricing change constitute their belief that many exceptional experiences will be had this summer and fall, causing people to commemorate them by “going to Disneyland!” as the commercials urge them to? Or does this action suggest that calamity and woe are going to spread across the American scene, forcing people to book Disney vacations just to get their children to stop crying for long enough to acknowledge the trip?
I kid, of course, but as usual there is a serious point under my humorous mockery. No corporation is anything more than the sum of its people, and even the combined insight and knowledge of dozens of forward planners and thousands of employees will not keep such institutions from making disastrous (and stupid) choices from time to time. But it’s also true that the Walt Disney Company is much larger than you or me; it’s also much wealthier, much more powerful, and has many more resources to gain and analyze data. So when I see such an entity doing things that seem like madness to me, I always want to ask: “What do they know that I don’t?”
A note that turned up in the Orlando Sentinel website last week mentioned that Disney is raising prices at the Disney World facility for the second time in less than a year; they’re also planning price increases in their other amusement parks, including Disneyland in California. With families all over the country still struggling to make mortgage payments and afford food and clothing this seemed a bit tone-deaf to me – an impression that was rendered even more surreal by the little temperature information block at the top of the Sentinel website (it was 99 degrees Fahrenheit as of 6:00 PM on June 13th). Coming as this does on the same day when we’re hearing about further increases in both gasoline and airline ticket prices, even more preposterous TSA outrages, and air traffic control failures, it doesn’t sound like the best of times to be doing things to discourage travel. If any other company were to do such I thing I’d just assume it was another boneheaded move, but when it’s Disney, you have to wonder…
Do the folks running the Disney Empire know something we don’t? Is it possible that improvements in the economy will result in greater disposable income, which will lead people to take summer vacations in Orlando? Or that recovery in various International economic indicators will bring enough foreign visitors to South Florida to make up the difference? Does this Disney pricing change constitute their belief that many exceptional experiences will be had this summer and fall, causing people to commemorate them by “going to Disneyland!” as the commercials urge them to? Or does this action suggest that calamity and woe are going to spread across the American scene, forcing people to book Disney vacations just to get their children to stop crying for long enough to acknowledge the trip?
I kid, of course, but as usual there is a serious point under my humorous mockery. No corporation is anything more than the sum of its people, and even the combined insight and knowledge of dozens of forward planners and thousands of employees will not keep such institutions from making disastrous (and stupid) choices from time to time. But it’s also true that the Walt Disney Company is much larger than you or me; it’s also much wealthier, much more powerful, and has many more resources to gain and analyze data. So when I see such an entity doing things that seem like madness to me, I always want to ask: “What do they know that I don’t?”
Saturday, June 11, 2011
The Grad School Diaries: ID4 Revisited
If our first Independence Day in Lansing had been a departure from previous experience, our second was more distinctive still. Since graduate students (even the exceptionally good ones, which I am not) are not paid like movie stars, there was never any reasonable chance that we’d be going back to Orange County and celebrate the day with our usual band of pyromaniacs; our celebration was instead limited to what we could manage in our own back yard. In this case, literally…
In the event, our fireworks party included our daughter and son-in-law and a few of their friends in addition to the two of us. I had also invited two of my fellow graduate students, but one of them had gone back to Kansas to visit his family and the other flaked on me at the last moment (sending his regrets by email literally AFTER he was supposed to arrive), but the two of us and a half-dozen college-age adults, all of whom have managed to retain enough of their sense of wonder to still enjoy a fireworks show made for a lively enough little party as we settled in for a while to paint the sky…
Michigan is about middle of the road regarding fireworks; which is to say, it’s midway between California, where only a few cities permit them at all, and states like Georgia, Tennessee and Oklahoma, where you will encounter huge fireworks warehouse stores scattered every few miles at random along the highway. Professional-grade mortars and military flash-bangs and gunfight simulators are closely controlled here, but nothing else is, and even items like Roman candles and bottle rockets can be purchased – although you have to be discrete about letting the bigger ones off. Of course, I’ve always found buying the various cones and fountains (and trying to figure out which ones are a good deal and which ones are over-priced rubbish) to be half the fun – and in Michigan you don’t have to buy them from a temporary roadside stand and then furtively pile onto the freeway hoping to get away before the police stop you…
Not that far from our house in Lansing there’s a large retail outfit that calls itself a “Hardware Store” – and is, in a very general sense. They do sell tools, and plumbing supplies, and so on, but they also sell bulk candy and costumes for Halloween, Christmas trees at Christmas time, Easter candy and decorations for Easter, and so on. For Independence Day, the place is packed with every kind of firework you can imagine (except for the really dangerous kinds), from tiny fountains that last less than three seconds (and only go a few inches high) to giant boxes full of gunpowder and color elements that are, effectively, a ten-minute fireworks display in a package (just light a single fuse and then run like heck). I took the kids with me the day before, and we brought home a good assortment of different styles; earlier in the week I had acquired some sheets of scrap plywood to use as a launch pad, some barbeque lighters to set off fireworks, and a whole bunch of citronella candles to try and hold off the mosquitoes…
In the event, we actually wound up with more ordinance than we could set off before everybody got tired of the oppressive, muggy heat, the bug bites, and the smell of cordite. I suppose we can use them next summer, although I don’t really know what will happen by then. Will I be done with my exams and remaining classes, and on my way to a dissertation and an eventual degree? Will the kids still be here in Lansing, or will they have migrated in search of work in a state whose economy isn’t as fried as Michigan? Will there be a party in our backyard, or will it just be the two of us, staring off into that searing black night as we look for better days? Sometimes I wish I could look ahead to the end of the book – and most of the time I’m really glad I can’t…
In the event, our fireworks party included our daughter and son-in-law and a few of their friends in addition to the two of us. I had also invited two of my fellow graduate students, but one of them had gone back to Kansas to visit his family and the other flaked on me at the last moment (sending his regrets by email literally AFTER he was supposed to arrive), but the two of us and a half-dozen college-age adults, all of whom have managed to retain enough of their sense of wonder to still enjoy a fireworks show made for a lively enough little party as we settled in for a while to paint the sky…
Michigan is about middle of the road regarding fireworks; which is to say, it’s midway between California, where only a few cities permit them at all, and states like Georgia, Tennessee and Oklahoma, where you will encounter huge fireworks warehouse stores scattered every few miles at random along the highway. Professional-grade mortars and military flash-bangs and gunfight simulators are closely controlled here, but nothing else is, and even items like Roman candles and bottle rockets can be purchased – although you have to be discrete about letting the bigger ones off. Of course, I’ve always found buying the various cones and fountains (and trying to figure out which ones are a good deal and which ones are over-priced rubbish) to be half the fun – and in Michigan you don’t have to buy them from a temporary roadside stand and then furtively pile onto the freeway hoping to get away before the police stop you…
Not that far from our house in Lansing there’s a large retail outfit that calls itself a “Hardware Store” – and is, in a very general sense. They do sell tools, and plumbing supplies, and so on, but they also sell bulk candy and costumes for Halloween, Christmas trees at Christmas time, Easter candy and decorations for Easter, and so on. For Independence Day, the place is packed with every kind of firework you can imagine (except for the really dangerous kinds), from tiny fountains that last less than three seconds (and only go a few inches high) to giant boxes full of gunpowder and color elements that are, effectively, a ten-minute fireworks display in a package (just light a single fuse and then run like heck). I took the kids with me the day before, and we brought home a good assortment of different styles; earlier in the week I had acquired some sheets of scrap plywood to use as a launch pad, some barbeque lighters to set off fireworks, and a whole bunch of citronella candles to try and hold off the mosquitoes…
In the event, we actually wound up with more ordinance than we could set off before everybody got tired of the oppressive, muggy heat, the bug bites, and the smell of cordite. I suppose we can use them next summer, although I don’t really know what will happen by then. Will I be done with my exams and remaining classes, and on my way to a dissertation and an eventual degree? Will the kids still be here in Lansing, or will they have migrated in search of work in a state whose economy isn’t as fried as Michigan? Will there be a party in our backyard, or will it just be the two of us, staring off into that searing black night as we look for better days? Sometimes I wish I could look ahead to the end of the book – and most of the time I’m really glad I can’t…
Thursday, June 9, 2011
Non-Story
I was wandering around on some of the online news sites this week when I came across a story from Reuters on the MSNBC site about how Americans are getting fed up with poor customer service according to a new poll conducted this past March. In particular, the study noted that 64 percent of respondents reported having walked out of a retail store because of poor customer assistance, and 67 percent reported hanging up on a customer service call before their problems were even addressed by the company. It struck me as a complete non-story – all of the problems people are complaining about on the survey have been with us for decades, if not generations, and the fact that people hate having to spend half an hour working their way through a computerized phone tree before getting a live person on the telephone can’t possibly be news to anyone. A much better question is why so many companies are still failing to correct such basic failures in their business model…
To begin with, let’s consider how these things are actually supposed to work. In retail, the primary duty of the sales clerks is to keep the shelves full of product (whatever it is the store sells) and neat; the two primary tasks that make up their day are stocking and straightening. Naturally, this puts them at odds with customers, who love to take things off of shelves and redistribute them at random around the store before buying a few of them. Nor does it help that customers will ask for products you don’t have, inventory you can’t get, or products your company has never carried in the first place, and then ask if you have anything hidden in the back room – and this doesn’t even consider people who will let their children run wild rather than discipline them, shoplifters who believe they’re putting one over on “the man,” or people who do things in the Incontinent Supplies aisle that you really don’t want to hear about. You can combat some of this by hiring the right people, paying and training them well, and rotating them through different tasks and assignments each month, but it’s still going to be impossible to make every customer who passes through the store happy every time they come in…
Automated phone systems have two basic issues: they do not handle anything but routine calls well, and everyone believes that their call is special, important, and not routine at all. If you try to make an automated phone system complex enough to handle all situations people will complain that it’s too complicated, and if you try to make it simple enough to get through quickly, people will complain that it doesn’t have the option they need. You can cut through a lot of this by having the “Agent” option (you can speak with a live person anytime by saying the word “agent”), but this will drive up your costs, making your entire company and all of your products/services less appealing. And unless you’re willing to hire three shifts worth of telephone representatives, you’re going to have people going berserk just because your customer service department is closed and they can’t speak to a live person at 3:00 in the morning…
Now, I don’t mean to suggest that there aren’t bad retail clerks or idiotic voice systems; I’ve had to confront both over the years – and oddly enough, I’ve been responsible for managing both over the years. But I’ve also encountered outstanding examples of both kinds of customer service (Nordstrom for the first, and American Express Travel for the second come to mind), and there is no reason that all businesses can’t live up to those standards. It’s just that doing so will require the investment of significant amounts of time and money on the part of the company, and doing so will not always result in any significant improvement in revenue, especially when the company has no strong competition or is attempting to follow a low-cost strategy. The bottom line is that consumers will always complain about bad customer service and poorly-designed automated telephone systems, regardless of how good or bad the company’s service actually is, but the real deciding factor lies in the importance that the company places on good customer service – or the lack of it. And that will always remain a matter of strategy…
To begin with, let’s consider how these things are actually supposed to work. In retail, the primary duty of the sales clerks is to keep the shelves full of product (whatever it is the store sells) and neat; the two primary tasks that make up their day are stocking and straightening. Naturally, this puts them at odds with customers, who love to take things off of shelves and redistribute them at random around the store before buying a few of them. Nor does it help that customers will ask for products you don’t have, inventory you can’t get, or products your company has never carried in the first place, and then ask if you have anything hidden in the back room – and this doesn’t even consider people who will let their children run wild rather than discipline them, shoplifters who believe they’re putting one over on “the man,” or people who do things in the Incontinent Supplies aisle that you really don’t want to hear about. You can combat some of this by hiring the right people, paying and training them well, and rotating them through different tasks and assignments each month, but it’s still going to be impossible to make every customer who passes through the store happy every time they come in…
Automated phone systems have two basic issues: they do not handle anything but routine calls well, and everyone believes that their call is special, important, and not routine at all. If you try to make an automated phone system complex enough to handle all situations people will complain that it’s too complicated, and if you try to make it simple enough to get through quickly, people will complain that it doesn’t have the option they need. You can cut through a lot of this by having the “Agent” option (you can speak with a live person anytime by saying the word “agent”), but this will drive up your costs, making your entire company and all of your products/services less appealing. And unless you’re willing to hire three shifts worth of telephone representatives, you’re going to have people going berserk just because your customer service department is closed and they can’t speak to a live person at 3:00 in the morning…
Now, I don’t mean to suggest that there aren’t bad retail clerks or idiotic voice systems; I’ve had to confront both over the years – and oddly enough, I’ve been responsible for managing both over the years. But I’ve also encountered outstanding examples of both kinds of customer service (Nordstrom for the first, and American Express Travel for the second come to mind), and there is no reason that all businesses can’t live up to those standards. It’s just that doing so will require the investment of significant amounts of time and money on the part of the company, and doing so will not always result in any significant improvement in revenue, especially when the company has no strong competition or is attempting to follow a low-cost strategy. The bottom line is that consumers will always complain about bad customer service and poorly-designed automated telephone systems, regardless of how good or bad the company’s service actually is, but the real deciding factor lies in the importance that the company places on good customer service – or the lack of it. And that will always remain a matter of strategy…
Wednesday, June 8, 2011
Beyond Belief
In fiction there is a concept called “suspension of disbelief” which is what enables us to read about (or watch) stories that we know are not and could never be true and still enjoy them, such as stories about magic, alien cultures in far-away galaxies, politicians who aren’t greedy and self-serving, and so on. Just how far one can push this concept depends on the nature of the audience, the nature of the story, and how well it is told; beyond certain limits anyone hearing it will be unable to suspend their disbelief and start objecting to aspects of the tale – at which point the storyteller has lost, and should probably start over (or try something else). This failure has traditionally be called “failure of suspension of disbelief,” although in more contemporary jargon it is sometimes called “rupture” or “jumping the shark.” As a storyteller, I’m always reluctant to do this, since I rely on people’s ability to suspend disbelief for a whole range of things that I do – but I still had to call shenanigans on the story of a woman who claims to have been sent into a diabetic crisis when a Dunkin Doughnuts put sugar in her coffee instead of sugar-free sweetener…
First off, there’s the issue that most Dunkin locations (certainly all of the ones I’ve ever visited) don’t put sweetener in coffee – they hand you the coffee and the sweetener and let you do it yourself. I suspect this is precisely to avoid the kind of problem I wrote about Tim Horton’s having last year, where they had to permanently ban a “customer” from all of their store locations after he repeatedly complained about their coffee and demanded multiple free cups. If they hand you the condiments and you put too much of something in your cup, the company can quite reasonably say that it was your mistake and the resulting product is not their problem. But even if there is a Dunkin location somewhere that does put the sweetener in for your, we have the additional questions of why the customer couldn’t tell that there was real sugar and not artificial sweetener in the cup by taste, why she didn’t watch to see what was put in, and (most important of all) why she would trust her life to a minimum-wage counterperson if her sensitivity to glucose was so severe that she could theoretically die from a misunderstood drink order…
For the record, there are people in the world who have a severe enough case of diabetes that a few extra spoonfuls of sugar would kill them – but that level of sensitivity is rare, and it takes years (and sometimes decades) to reach that point. If your condition is such that a casual mistake could be fatal you would already know that, and would already have taken a variety of measures to make sure that you don’t accidentally ingest something and expire during a routine business transaction. An individual with such a condition would never take anyone’s word for what was in their cup; those people order their coffee black and carry their own packets of sugar-free sweetener precisely because an otherwise trivial mistake could kill them. By the same token, people whose sensitivity to sugars is severe enough to cause an instant reaction would also be aware of their condition, and would not gulp down anything that might (or might not) contain real sugar in the first place…
You can pick up the original story from the Philly.com site if you want to. If the case actually goes to trial it will be interesting to see what evidence the plaintiff has – if any. If the Dunkin location actually added the sugar for her she will have to prove that she asked for a sugar substitute and didn’t get it (which could be difficult without video or audio recordings); if it didn’t she will have to prove that there was some action taken by the company that kept her from noticing that she was adding real sugar to her own cup. She will also have to explain why anyone who could be killed by a spoonful of sugar would do something as suicidally stupid as letting someone pour sweetener into her cup in the first place. Either way, unless the judge who hears this case is a major shareholder in Tim Horton’s or Krispy Kreme, I’d have to say that the smart money is on the company in this one. I’ll keep you posted…
First off, there’s the issue that most Dunkin locations (certainly all of the ones I’ve ever visited) don’t put sweetener in coffee – they hand you the coffee and the sweetener and let you do it yourself. I suspect this is precisely to avoid the kind of problem I wrote about Tim Horton’s having last year, where they had to permanently ban a “customer” from all of their store locations after he repeatedly complained about their coffee and demanded multiple free cups. If they hand you the condiments and you put too much of something in your cup, the company can quite reasonably say that it was your mistake and the resulting product is not their problem. But even if there is a Dunkin location somewhere that does put the sweetener in for your, we have the additional questions of why the customer couldn’t tell that there was real sugar and not artificial sweetener in the cup by taste, why she didn’t watch to see what was put in, and (most important of all) why she would trust her life to a minimum-wage counterperson if her sensitivity to glucose was so severe that she could theoretically die from a misunderstood drink order…
For the record, there are people in the world who have a severe enough case of diabetes that a few extra spoonfuls of sugar would kill them – but that level of sensitivity is rare, and it takes years (and sometimes decades) to reach that point. If your condition is such that a casual mistake could be fatal you would already know that, and would already have taken a variety of measures to make sure that you don’t accidentally ingest something and expire during a routine business transaction. An individual with such a condition would never take anyone’s word for what was in their cup; those people order their coffee black and carry their own packets of sugar-free sweetener precisely because an otherwise trivial mistake could kill them. By the same token, people whose sensitivity to sugars is severe enough to cause an instant reaction would also be aware of their condition, and would not gulp down anything that might (or might not) contain real sugar in the first place…
You can pick up the original story from the Philly.com site if you want to. If the case actually goes to trial it will be interesting to see what evidence the plaintiff has – if any. If the Dunkin location actually added the sugar for her she will have to prove that she asked for a sugar substitute and didn’t get it (which could be difficult without video or audio recordings); if it didn’t she will have to prove that there was some action taken by the company that kept her from noticing that she was adding real sugar to her own cup. She will also have to explain why anyone who could be killed by a spoonful of sugar would do something as suicidally stupid as letting someone pour sweetener into her cup in the first place. Either way, unless the judge who hears this case is a major shareholder in Tim Horton’s or Krispy Kreme, I’d have to say that the smart money is on the company in this one. I’ll keep you posted…
Tuesday, June 7, 2011
You Got Lucky
Over the past few years we’ve been hearing a long litany of abuses (if not outright atrocities) committed by the banking industry against various homeowners as the housing bubble burst and lenders of all types began trying to cut their losses and cash in on the possibilities. For a lot of people these abuses seem particularly egregious because not only did the banking industry bring the housing market disaster on itself through business dealings that a six-year-old could have identified as idiotic, but they then went crying to the Federal government to save them from their own disaster and were given the better part of $1 trillion to fix the problem. If you tried such a thing you’d be sued, jailed, berated by your neighbors, and mocked by scruffy bloggers all over the world for years to come, but you can’t, because you’re an individual and not an industry whose loss to bankruptcy would probably have caused our entire economy to collapse. For that matter, if you tried to foreclose on a property which you did not own and in fact had no interest in whatsoever, you’d probably be charged with fraud, arrested, and vigorously sued – and if you ignored the judgments against you, you’d be jailed for contempt of court and then have the damages against you increased…
Unfortunately, none of those things seem to have happened to any of the banks that have been trying to foreclose on people who don’t have loans with them; not even Bank of America, which has been repeatedly exposed for doing this and then mocked on the Internet (and vigorously sued). In one of the more recent cases, the company somehow became convinced that a Florida couple who had paid cash for their house and did not have a mortgage with Bank of America or anyone else was behind on their mortgage payments, and tried to foreclose on them. The bank dropped the proceedings last February when it became clear they had no legal basis for the case, but apparently decided that they also didn’t have to abide by the judge’s ruling that they had to pay for the couple’s legal bills (a common judgment in such cases). For the past four months, the company has just ignored all communications on the subject, subjected the couple (and their attorney) to miles and miles of stonewalling, and assumed that nothing would come of it. Which worked out well enough until the couple and their attorney decided they’d had enough and called upon the local Sherriff to foreclose on the nearest bank branch…
You can read about the case in the if you want, but basically the plaintiffs got to enjoy what the newspaper calls a foreclosure victim’s fantasy by walking into their local Bank of America branch with a court order, two large Sherriff’s deputies, and a moving van standing by, and demanding that the company either pay up or lose the contents of the branch (which would be sold at public auction). After a brief but no doubt intensely satisfying standoff, the branch manager wrote a check for the amount in question and the heroes of our story were able to go on their way. I’m sure it was an unpleasant morning for the branch manager, and having the whole thing splash across the local media (and the Internet) can’t have been good for the company’s increasingly tattered reputation. But as bad as this was, I still can’t help thinking that things could have been much, much worse…
topnews
text
Home"> News-Press story here
For starters, consider that the bank really was in contempt of a legal court order, and could easily have been fined for every day they failed to comply with the judgment. This could easily have gone much higher than the $2,534 they were refusing to cough up; even a token fine like $100 per day would have reached nearly $6,000 by now, and if the judge had been really incensed, she could have upped it to $1,000 ($60,000) or even $10,000 per day ($600,000). Then there’s the possibility that the couple could sue the bank for punitive damages – and given this laughably incompetent handling of the case by Bank of America, it’s possible they’d win. That could run into millions of dollars, especially if the bank annoyed the trial judge enough (as ignoring a court order is wont to do). Now multiply that by the literally dozens of such cases that have popped up over the past few years, and you’ve got a crisis to rival the original housing crash…
Of course, Bank of America would just go running back to Congress for another bailout. But if it was just them, and not the entire industry, it would be a lot harder to get the Federal government to play along – and if they keep doing this, it’s always possible that sooner or later their friends in Washington will just let them meet the disaster they keep courting. For the moment, they’ve been lucky, but as the old saying goes, if you play chicken with a train you’ve got to be lucky every time; the train only has to get lucky once…
Unfortunately, none of those things seem to have happened to any of the banks that have been trying to foreclose on people who don’t have loans with them; not even Bank of America, which has been repeatedly exposed for doing this and then mocked on the Internet (and vigorously sued). In one of the more recent cases, the company somehow became convinced that a Florida couple who had paid cash for their house and did not have a mortgage with Bank of America or anyone else was behind on their mortgage payments, and tried to foreclose on them. The bank dropped the proceedings last February when it became clear they had no legal basis for the case, but apparently decided that they also didn’t have to abide by the judge’s ruling that they had to pay for the couple’s legal bills (a common judgment in such cases). For the past four months, the company has just ignored all communications on the subject, subjected the couple (and their attorney) to miles and miles of stonewalling, and assumed that nothing would come of it. Which worked out well enough until the couple and their attorney decided they’d had enough and called upon the local Sherriff to foreclose on the nearest bank branch…
You can read about the case in the if you want, but basically the plaintiffs got to enjoy what the newspaper calls a foreclosure victim’s fantasy by walking into their local Bank of America branch with a court order, two large Sherriff’s deputies, and a moving van standing by, and demanding that the company either pay up or lose the contents of the branch (which would be sold at public auction). After a brief but no doubt intensely satisfying standoff, the branch manager wrote a check for the amount in question and the heroes of our story were able to go on their way. I’m sure it was an unpleasant morning for the branch manager, and having the whole thing splash across the local media (and the Internet) can’t have been good for the company’s increasingly tattered reputation. But as bad as this was, I still can’t help thinking that things could have been much, much worse…
topnews
text
Home"> News-Press story here
For starters, consider that the bank really was in contempt of a legal court order, and could easily have been fined for every day they failed to comply with the judgment. This could easily have gone much higher than the $2,534 they were refusing to cough up; even a token fine like $100 per day would have reached nearly $6,000 by now, and if the judge had been really incensed, she could have upped it to $1,000 ($60,000) or even $10,000 per day ($600,000). Then there’s the possibility that the couple could sue the bank for punitive damages – and given this laughably incompetent handling of the case by Bank of America, it’s possible they’d win. That could run into millions of dollars, especially if the bank annoyed the trial judge enough (as ignoring a court order is wont to do). Now multiply that by the literally dozens of such cases that have popped up over the past few years, and you’ve got a crisis to rival the original housing crash…
Of course, Bank of America would just go running back to Congress for another bailout. But if it was just them, and not the entire industry, it would be a lot harder to get the Federal government to play along – and if they keep doing this, it’s always possible that sooner or later their friends in Washington will just let them meet the disaster they keep courting. For the moment, they’ve been lucky, but as the old saying goes, if you play chicken with a train you’ve got to be lucky every time; the train only has to get lucky once…
Monday, June 6, 2011
Spear Phishing
About ten years ago I was still working in corporate America when an email warning came down from the company’s Information Technology department warning of a nation-wide virus attack that would arrive as an attachment to an email titled “I Love You.” The folks in IT warned all of us not to open any attachments from unknown senders, and advised that we should just delete any messages with that title for the next few days; they also made a point of warning everyone who had their email set to automatically open all attachment to uncheck the boxes, and in fact included the instructions for how to do that. One might reasonably expect that everyone in the company would have complied with these instructions, especially when a follow-up message came from the senior management team commending the IT department on this timely warning (which had been all over the news for the previous 48 hours already) and ordering everyone to take heed…
You’ve already guessed what happened, haven’t you? Yes, that’s right: nearly every member of senior management opened at least one of these infected emails, and every one of them had their email program set to automatically open attachments. In fact, the officer who sent around the follow-up message and condescending orders opened no less than a dozen of them (or possibly his secretary did to make him look even stupider than usual). It took our IT people almost two days of working around the clock to get all of the virus packets out of our system, and a hard as it may be to believe, within minutes of their finishing the job and bringing our email back up, a half-dozen people opened MORE infected emails, again with automatically opened attachments, and crashed everything for another couple of days. The following week, people from the IT building went around to every office and deleted the “automatic open” setting whether the user agreed to it or not – which caused some fireworks up in the executive suite, as you might imagine…
It all seems so quaint now, given the way virus attacks, email fraud and identity theft have become part of our lives. But anyone who thinks that the war between online thieves and security people is over really needs to read this article from The New York Times about a new practice called “spear phishing.” These attacks are similar to the more familiar email scams where someone will attempt to convince you to enter your password or personal information into a fake interface (so they can steal your identity, drain your bank account, run up fraudulent charges on your credit card, and so on), collectively known as “phishing” schemes, except that these new outrages are specifically targeted and meticulously researched, in order to make the target think they are legitimate. For many years now the majority of phishing schemes have failed because they are so shoddily constructed in the first place, with absurd grammatical and spelling mistakes, outrageous requests, and idiotic appeals to do things that no sane person would do – and I’ve been wondering when someone would finally realize that even a few attacks that actually work would be better than millions that are automatically deleted, and plan accordingly…
Of course, as time goes on and the race between measure and counter-measure grows ever more complex, there will inevitably come a time when the computer security of this time appears childishly primitive, and the fact that anyone ever fell for a spear phishing attack will seem as quaint as the people who were fooled by the “I Love You” virus do to us now. The real lesson here, I think, is that the ongoing war between hackers and counter-hackers is not likely to end within our lifetimes; if we expect to be considered competent managers and business people (or at least to avoid complete fiduciary misconduct) we will have to continue to learn and adapt, and remain vigilant. Because I can almost guarantee you that the hackers will…
You’ve already guessed what happened, haven’t you? Yes, that’s right: nearly every member of senior management opened at least one of these infected emails, and every one of them had their email program set to automatically open attachments. In fact, the officer who sent around the follow-up message and condescending orders opened no less than a dozen of them (or possibly his secretary did to make him look even stupider than usual). It took our IT people almost two days of working around the clock to get all of the virus packets out of our system, and a hard as it may be to believe, within minutes of their finishing the job and bringing our email back up, a half-dozen people opened MORE infected emails, again with automatically opened attachments, and crashed everything for another couple of days. The following week, people from the IT building went around to every office and deleted the “automatic open” setting whether the user agreed to it or not – which caused some fireworks up in the executive suite, as you might imagine…
It all seems so quaint now, given the way virus attacks, email fraud and identity theft have become part of our lives. But anyone who thinks that the war between online thieves and security people is over really needs to read this article from The New York Times about a new practice called “spear phishing.” These attacks are similar to the more familiar email scams where someone will attempt to convince you to enter your password or personal information into a fake interface (so they can steal your identity, drain your bank account, run up fraudulent charges on your credit card, and so on), collectively known as “phishing” schemes, except that these new outrages are specifically targeted and meticulously researched, in order to make the target think they are legitimate. For many years now the majority of phishing schemes have failed because they are so shoddily constructed in the first place, with absurd grammatical and spelling mistakes, outrageous requests, and idiotic appeals to do things that no sane person would do – and I’ve been wondering when someone would finally realize that even a few attacks that actually work would be better than millions that are automatically deleted, and plan accordingly…
Of course, as time goes on and the race between measure and counter-measure grows ever more complex, there will inevitably come a time when the computer security of this time appears childishly primitive, and the fact that anyone ever fell for a spear phishing attack will seem as quaint as the people who were fooled by the “I Love You” virus do to us now. The real lesson here, I think, is that the ongoing war between hackers and counter-hackers is not likely to end within our lifetimes; if we expect to be considered competent managers and business people (or at least to avoid complete fiduciary misconduct) we will have to continue to learn and adapt, and remain vigilant. Because I can almost guarantee you that the hackers will…
Friday, June 3, 2011
What Ever Happened to Blockbuster?
I was stopping off to get a sandwich on the way to the office today, and I couldn’t help noticing that the storefront that used to house our local Blockbuster Video was being remodeled into two or three smaller spaces. Most of the other locations near us have also closed down, and things aren’t looking good for the company’s long-term survival. And yet, I can remember a time only a few years ago when Blockbuster was dominating the industry; driving most of the local, independent video rental stores out of the market in a way that even Wal-Mart can only dream about and refusing to carry any content that did not conform to some of their right-wing ownership group’s ideas about morality. Since I’m still a student of institutional failure (no matter what becomes of my academic career) I thought there might be a lesson here, and I went looking for supporting data…
First off, it’s important to remember that the business model Blockbuster was using depended on both technological and business conditions remaining a constant – and that none of these things are as commonplace as people seem to think. Pay-per-view services came online nearly twenty years ago in major cities, and while they were initially limited in menu choices and more expensive than renting video tape or DVDs they were also much more convenient. The evolution of video-on-demand services (with their much wider selection of programming) went a long way toward eroding Blockbuster’s product advantage, but the arrival of Netflix and then of streaming video services effectively eliminated the company’s product advantages, as well. However, what happened to them in terms of business model and pricing policy was even worse…
As a story that popped up this week on C-News pointed out, Blockbuster had based their business model on getting special deals direct from the movie studios, which allowed them to undercut the prices offered by their smaller competitors and corner the market, whereupon they raised prices to increase their profit percentage. This policy alienated a lot of consumers, and angered entire communities, but from a strategy standpoint, the really unfortunate part was that it also assumed that these business conditions would never change. As it turned out, competitors operating without brick-and-mortar stores of any kind have an ever lower overhead than Blockbuster did with their special deals – and Blockbuster’s very aggressive policies (notably high prices and relatively high late fees) had left them with no customer loyalty to fall back on. So far, at least, attempts to compete with Netflix on either the return-by-mail or the streaming video platforms have not proven successful, and the company is being driven into the same strategy (catering to niche markets with obscure or vintage content) that failed when the independent video stores tried it in the face of Blockbuster’s original expansion…
So how could the company have avoided this situation? I would suggest that while some of the specifics were unforeseeable, the general principles were not; some things are always a bad idea, and some business practices are predictably so. Poor customer relations, for example – and constantly trying to screw more money out of people with hidden or confusing fee structures is one of the worst – will always be a poor strategic choice; so will strategy based on either economics or technology remaining static. Streaming video may eventually do Blockbuster in, but the original Netflix model was based on just mailing DVDs back and forth (made possible by lower costs for the DVDs) and that already cut deeply into the company’s profits. Blockbuster could easily have launched their own mail-based service earlier, and if they had been willing to make the investment in the changing technology they could probably have started a streaming video service before Netflix did. Certainly, they were already entrenched in the industry, connected to the movie studios, and bringing in massive cash flow at the time…
Now, I’m not saying that avoiding the situation – or turning it around once it started – would have been easy, or that preparing to do so should have been obvious. I am saying that the company’s strategy was clearly flawed in at least three respects, and those flaws (if not their eventual consequences) were obvious. Changes in technology and in the overall business environment may be hard to predict, but a business model based on neither one EVER changing is obviously unwise – and a business model based on practices that actively annoy your customers has very rarely produced anything other than bankruptcy proceedings…
First off, it’s important to remember that the business model Blockbuster was using depended on both technological and business conditions remaining a constant – and that none of these things are as commonplace as people seem to think. Pay-per-view services came online nearly twenty years ago in major cities, and while they were initially limited in menu choices and more expensive than renting video tape or DVDs they were also much more convenient. The evolution of video-on-demand services (with their much wider selection of programming) went a long way toward eroding Blockbuster’s product advantage, but the arrival of Netflix and then of streaming video services effectively eliminated the company’s product advantages, as well. However, what happened to them in terms of business model and pricing policy was even worse…
As a story that popped up this week on C-News pointed out, Blockbuster had based their business model on getting special deals direct from the movie studios, which allowed them to undercut the prices offered by their smaller competitors and corner the market, whereupon they raised prices to increase their profit percentage. This policy alienated a lot of consumers, and angered entire communities, but from a strategy standpoint, the really unfortunate part was that it also assumed that these business conditions would never change. As it turned out, competitors operating without brick-and-mortar stores of any kind have an ever lower overhead than Blockbuster did with their special deals – and Blockbuster’s very aggressive policies (notably high prices and relatively high late fees) had left them with no customer loyalty to fall back on. So far, at least, attempts to compete with Netflix on either the return-by-mail or the streaming video platforms have not proven successful, and the company is being driven into the same strategy (catering to niche markets with obscure or vintage content) that failed when the independent video stores tried it in the face of Blockbuster’s original expansion…
So how could the company have avoided this situation? I would suggest that while some of the specifics were unforeseeable, the general principles were not; some things are always a bad idea, and some business practices are predictably so. Poor customer relations, for example – and constantly trying to screw more money out of people with hidden or confusing fee structures is one of the worst – will always be a poor strategic choice; so will strategy based on either economics or technology remaining static. Streaming video may eventually do Blockbuster in, but the original Netflix model was based on just mailing DVDs back and forth (made possible by lower costs for the DVDs) and that already cut deeply into the company’s profits. Blockbuster could easily have launched their own mail-based service earlier, and if they had been willing to make the investment in the changing technology they could probably have started a streaming video service before Netflix did. Certainly, they were already entrenched in the industry, connected to the movie studios, and bringing in massive cash flow at the time…
Now, I’m not saying that avoiding the situation – or turning it around once it started – would have been easy, or that preparing to do so should have been obvious. I am saying that the company’s strategy was clearly flawed in at least three respects, and those flaws (if not their eventual consequences) were obvious. Changes in technology and in the overall business environment may be hard to predict, but a business model based on neither one EVER changing is obviously unwise – and a business model based on practices that actively annoy your customers has very rarely produced anything other than bankruptcy proceedings…
Thursday, June 2, 2011
Gaming the System Yet Again
Over the past few years I’ve written in this space about a number of activities that can be described as “gaming the system” – actions that do not break any actual laws, for the most part, but use loopholes, exceptions, or scenarios that the framers never imagined in order to pervert government or business offerings to their own benefit. Whether this is a good thing or a bad thing depends somewhat on your point of view; there are some cultures in the world where this type of behavior is both expected and advocated (to the point where if you told people from those cultures that “gaming the system” was wrong they would have no idea what you were saying), while other people would tell you that they are actually doing good by pointing out the holes in the system and helping the agency responsible to write better regulations and think things through. People of very strict moral compass will still claim that this sort of thing is no better than fraud, while more and more these days, people seem to be thinking that if the executives of huge companies can enrich themselves at taxpayer expense while impoverishing their employees and customers, it’s everyone for him or her self...
Even those last people might find the idea of car dealerships “buying” their own hybrid cars to get the $7,500 tax incentive and then selling the vehicles as “used” (for a 2% discount over sticker price) to be repugnant, however. I found the story on the MSNBC site , but it’s turning up in a number of other places online. Just how widespread it might be remains in question, but the linked story documents at least three cases of it occurring in the Los Angeles area – and quotes an automobile dealer who refers to it as “gaming the system” and not outright fraud. Certainly, the IRS code (which is also cited in the linked article) is murky enough to put this well into the grey area – there does not appear to be anything in the law that says you can’t do this, probably because in the normal course of business no one ever would. Declaring a car to be “used” normally drops its book value enough that no dealer would dream of doing so; it’s only because of the demand for Volts that this is possible at all. Of course, there’s also some question about how often this is happening…
According to the GM spokesperson cited in the article, the company is only aware of ten such cases since the Volt was first introduced to the public, and half of those are clearly dealerships selling Volts to other businesses (in some cases, other dealerships) in places where no Volt units are available for purchase. More to the point, the company can’t take responsibility for such actions anyway; as noted before in this space, dealerships are franchise businesses that are not owned or controlled by the company that makes the cars. The IRS could change the regulations relating to hybrid tax credits, or Congress could pass laws that make this sort of chicanery illegal, but so far neither of these things has happened, which means that this is just another case of companies (the dealerships) who are taking advantage of poorly-written Federal programs to make money off of the taxpayers – which is to say, you…
Now, I’m not suggesting that any of my readers (assuming I have readers) are actually trying to game the system in any way, or condoning anyone else who does. I’m just pointing out that most of the time the system is bigger than you are, wealthier than you are, and unlikely to allow itself to suffer in order for some random schmendrick to make a few bucks at its expense. When somebody talks about gaming the Federal government, the dollars that they’re taking are yours, and one of the people being defrauded (in principle, if not by the letter of the law) is you. It’s something you might want to keep in mind the next time the subject of gaming the system comes up…
Even those last people might find the idea of car dealerships “buying” their own hybrid cars to get the $7,500 tax incentive and then selling the vehicles as “used” (for a 2% discount over sticker price) to be repugnant, however. I found the story on the MSNBC site , but it’s turning up in a number of other places online. Just how widespread it might be remains in question, but the linked story documents at least three cases of it occurring in the Los Angeles area – and quotes an automobile dealer who refers to it as “gaming the system” and not outright fraud. Certainly, the IRS code (which is also cited in the linked article) is murky enough to put this well into the grey area – there does not appear to be anything in the law that says you can’t do this, probably because in the normal course of business no one ever would. Declaring a car to be “used” normally drops its book value enough that no dealer would dream of doing so; it’s only because of the demand for Volts that this is possible at all. Of course, there’s also some question about how often this is happening…
According to the GM spokesperson cited in the article, the company is only aware of ten such cases since the Volt was first introduced to the public, and half of those are clearly dealerships selling Volts to other businesses (in some cases, other dealerships) in places where no Volt units are available for purchase. More to the point, the company can’t take responsibility for such actions anyway; as noted before in this space, dealerships are franchise businesses that are not owned or controlled by the company that makes the cars. The IRS could change the regulations relating to hybrid tax credits, or Congress could pass laws that make this sort of chicanery illegal, but so far neither of these things has happened, which means that this is just another case of companies (the dealerships) who are taking advantage of poorly-written Federal programs to make money off of the taxpayers – which is to say, you…
Now, I’m not suggesting that any of my readers (assuming I have readers) are actually trying to game the system in any way, or condoning anyone else who does. I’m just pointing out that most of the time the system is bigger than you are, wealthier than you are, and unlikely to allow itself to suffer in order for some random schmendrick to make a few bucks at its expense. When somebody talks about gaming the Federal government, the dollars that they’re taking are yours, and one of the people being defrauded (in principle, if not by the letter of the law) is you. It’s something you might want to keep in mind the next time the subject of gaming the system comes up…
Wednesday, June 1, 2011
That’s Cold
As a long-suffering fan of the once-mighty Los Angeles Dodgers, I can say with some confidence that the biggest problem with professional sports today is the extent to which it has become not only a business but a faceless, impersonal business that would make the average bank or telephone company look good in comparison. One could legitimately point out that most professional sports teams are, in fact, giant corporations that employ thousands of people (beyond the 25 or 65 or 12 players on the team itself) and have to claw for their profits in an Entertainment industry that becomes more and more crowded with each passing day. But, as previously noted in this space, the problem with all giant corporations, entertainment-oriented or not, is that they are only as good as the front-line customers-service personnel who represent the face of the company – and the team – where your customers are concerned. And that means that unless every employee at every level is actually committed to providing the best possible experience, you’re eventually going to have a story pop up where it is clear that your entire organization just doesn’t care…
Consider, if you will, the curious case of the Atlanta Thrashers hockey team. Following a series of not especially sterling performances, the team was sold to a Canadian corporation, which promptly announced that it was moving the team to Winnipeg. There’s nothing particularly wrong about the move in itself; hockey is far more popular in Canada than it is in the United States, and there’s certainly reason to believe that the new owners might do better for themselves if they moved the team. What was somewhat off-putting was the fact that, according to this piece from Yahoo Sports , the team was still promoting – and selling – season ticket packages for the next season right up until the time when the move was officially announced…
Now, I’m sure that all of the people who ordered season tickets will eventually get their money back – assuming that they didn’t just cancel their credit card order or dispute the charge as soon as they heard about the move announcement. And I don’t think we can blame this on the people working the season ticket ordering phone lines, since they were almost certainly instructed to keep selling tickets and ignore whatever they might have heard about a sale and the team’s plans to move, or even on their supervisors, who would have been told to keep pushing tickets until the last moment. After all, every day the team can hang onto the funds before having to return them is a day they can earn interest on that money – and at $1,000 per seat for the cheap seats, that kind of thing adds up after a while. But what this tactic tells me is that whoever owned the team up until now is either sleazy enough to want to skim off a few extra days or weeks of interest or lazy enough not to care – and either way, they’re defrauding their own fan base…
Of course, in the long run it won’t matter. The Thrashers are leaving town, and even if the same ownership group eventually purchases another local sports franchise, the average fan won’t remember that this group was using them to make money when their last team moved away. But whether we consider this to be fraud or incompetence, I think this one simple act tells us everything we need to know about the Thrasher’s outgoing ownership group – and exactly what they think of their loyal fans. It may be legal; it might even become customary some day, but it’s still a very cold thing to do to your customers…
Consider, if you will, the curious case of the Atlanta Thrashers hockey team. Following a series of not especially sterling performances, the team was sold to a Canadian corporation, which promptly announced that it was moving the team to Winnipeg. There’s nothing particularly wrong about the move in itself; hockey is far more popular in Canada than it is in the United States, and there’s certainly reason to believe that the new owners might do better for themselves if they moved the team. What was somewhat off-putting was the fact that, according to this piece from Yahoo Sports , the team was still promoting – and selling – season ticket packages for the next season right up until the time when the move was officially announced…
Now, I’m sure that all of the people who ordered season tickets will eventually get their money back – assuming that they didn’t just cancel their credit card order or dispute the charge as soon as they heard about the move announcement. And I don’t think we can blame this on the people working the season ticket ordering phone lines, since they were almost certainly instructed to keep selling tickets and ignore whatever they might have heard about a sale and the team’s plans to move, or even on their supervisors, who would have been told to keep pushing tickets until the last moment. After all, every day the team can hang onto the funds before having to return them is a day they can earn interest on that money – and at $1,000 per seat for the cheap seats, that kind of thing adds up after a while. But what this tactic tells me is that whoever owned the team up until now is either sleazy enough to want to skim off a few extra days or weeks of interest or lazy enough not to care – and either way, they’re defrauding their own fan base…
Of course, in the long run it won’t matter. The Thrashers are leaving town, and even if the same ownership group eventually purchases another local sports franchise, the average fan won’t remember that this group was using them to make money when their last team moved away. But whether we consider this to be fraud or incompetence, I think this one simple act tells us everything we need to know about the Thrasher’s outgoing ownership group – and exactly what they think of their loyal fans. It may be legal; it might even become customary some day, but it’s still a very cold thing to do to your customers…
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