Buying Tickets or Not?

Every so often the question come up about whether parents bringing infants into a place of public accommodation should be required to purchase an additional seat for the child, or whether they should be allowed to just keep the child on their laps. Airlines usually allow lap children, despite the risk of injury to the infants in the event of an accident (or even a rough landing) because they weren’t in car seats because the added expense would keep a lot of families from flying at all (you generally can’t leave the kid with a sitter for your entire vacation). Movie theaters and some concert venues allow this because it’s too much trouble to try to prevent it; sporting venues allow this because who really cares if a baby is crying when the entire building too noisy to hear him or her. But the real question isn’t so much how this practice affects the customers, or even how being held in someone’s lap for the whole event affects the baby; it’s whether or not this practice is fair to the other customers – a point brought home this year when the organizers for the Summer Olympics in London posted a policy of requiring all children attending to have their own tickets…

There was a short article about this on MSNBC.com, but the really interesting part of it was reading the (often spirited) debate in the comments section at the bottom of the page. You would probably expect people who have small children to be outraged by this policy, and complain bitterly about this discrimination against children and families; you might also expect people who don’t have small children to counter by pointing out that such activities are bad for the child, unpleasant for everyone else in the grandstand, and potentially disruptive to the events themselves (in situations where the athletes need to concentrate, for example). What was surprising was the number of parents with small children who shot back saying they would never be so rude as to inflict their infants on an unsuspecting public, or so careless as to expose their baby to a stadium-full of germs and pollutants – and the number of people who claim not to have small children who insist that it is wrong to limit someone’s freedom by telling them where they can or can’t take their infants…

I find myself focusing on the fact that no one in London or on the Olympic Committee is saying you can’t bring a child to these events – they’re saying that if you do, you have to buy the child a ticket, just like anyone else. This might be seen as a way of selling more tickets (several of the on-line commentators made that point), but it would certainly be more comfortable for all parties involved, avoid trouble with fire regulations and venue capacity, and eliminate arguments about why somebody under the age of 2 is there in the first place – if the parents bought an extra ticket they clearly aren’t bringing the kids along just because they’re too cheap to hire a sitter. At the same time, however, it won’t settle the arguments about whether the crying and other behaviors are fair to the other customers, or the claims that parents should be allowed to take their children anywhere they want, so long as the children don’t require any additional space…

In general, these questions should have common-sense solutions, based on the actual conditions. If you have a child who will just sleep through a sporting event in a sling you wear, I can’t see the harm in bringing him or her to the stadium. On the other hand, bringing any child to an age-inappropriate event (a PG rated movie, for example) is potentially harmful to the child, and extremely rude to anyone who wants to watch event in peace (toddlers in Lord of the Rings movies? Really?). The problem is, most people have no common sense, and all too many people believe that they should be allowed to do anything they want, regardless of how it affects anyone else. All of which leads me to conclude that while an “everyone buys a ticket” rules may be unpleasant, they’re probably a better idea than the alternative…

The Ethics of Weeding

I want to state up front that I have no issues, ethical or otherwise, with removing invasive and unwanted plants from your lawn or garden; this post isn’t about that kind of weeding. I refer here to the practice of using test questions, homework assignments, or other class/program requirements to remove unwanted students from the pool of candidates for a specific degree. It’s an article of faith among students at all levels – not just slackers, but average and good students, too – that teachers do this to reduce their workload (they get paid the same for grading 8 exams or 80), and that schools do this to increase revenue (if you fail something, you may have to pay to take it twice). It wasn’t until I became a teacher myself that I learned that this practice is far less common – and far more controversial – that most students imagine. I also realized that the ethics of weeding isn’t as black and while as I had believed…

On the one hand, every student who has met the entrance requirements, paid the fees, and been admitted to the school or the program has a right to be there; if they don’t deserve to be part of the school then they should not have been admitted in the first place. Some schools will take students on a provisional basis pending the completion of remedial classes, but that isn’t a weeding process; every one of those students knew they were being admitted with conditions, and would need to meet those requirements or leave. And most college programs require that students learn about and/or gain proficiency in certain areas in order to progress; that’s kind of the point of having a school or a course of study in the first place. But testing someone on any knowledge or skill that is not part of the entrance requirements or part of the curriculum is stupid as well as unethical, and obviously can’t be supported…

On the other hand, any experienced teacher can tell you stories about students who were given comprehensive instruction in a subject and informed well in advance of what the passing requirements would be who not only failed to achieve the required proficiency but demanded to be passed anyway because they had paid their tuition and were therefore entitled to the degree or certificate promised. Admission to a school isn’t intended to be a guarantee of success, and neither is paying your tuition; you still have to earn the degree (or certificate) by completing all of the work in an acceptable fashion. In that sense, every exam is intended to “weed out” those individuals who are unable to learn the material, or unwilling to put forth the effort to do so. And in many cases that weeding is necessary; an engineer who can’t pass elementary mathematics is a very bad thing, and so are a doctor who fails biology and an illiterate attorney. Especially if they were admitted with that shortcoming and have resisted all efforts to help them overcome it…

Educators will tell you that this paradox is one of the great mysteries of their profession, but from a business standpoint it looks more like a direct conflict between antithetical requirements – which leads me to ask the question. Do we have a responsibility to make sure that any student who can pass the entrance requirements, do the work, and pay for their tuition will pass and receive their degree? Do we have a responsibility to make sure that any student who we feel is fatally unsuited to their field of study (literally, in the case of the healthcare professions) does not complete the program and go on to do (perhaps dangerously) substandard work? Or do we set out the requirements, tell all of our students exactly what we will expect them to do, and the performance they will need to pass, and let them sink or swim as they see fit?

It’s worth thinking about…

You Make the Call

There’s been a lot of ink over the past week about the response Carnival Cruises (the company that owns the giant cruise ship that ran aground off the Tuscan coast) to the accident and the demands from both the passengers and the public that they do something about the situation. The company has apologized for the incident at length; they’re blaming the captain for the whole situation, and offering to refund the cost of the trip and all expenses incurred while on board the ship. Unfortunately, that doesn’t seem to be enough to satisfy some of the passengers, who apparently feel that the company owes them something more than just a refund for endangering their lives. The question of what the company does owe the passengers will be up to the courts to decide, but from a business standpoint the question is what should the company offer the passengers – and can they avoid additional trouble by doing so?

First off, the company can’t really expect that the refunds are going to be enough; their initial offer of 30% off on any future cruise would be asinine if that was really going to be their final position, but I think we are justified in being skeptical about that. The fact that the passengers really were in danger of their lives is hard to deny, given that at least a dozen of them were actually killed in the accident; it’s also hard to deny that the company was to blame for the event, since they hired the captain and gave him command of the ship. I don’t know if Italy has strict liability laws like the ones in the US, but even if they don’t it’s going to be very difficult for the company to claim that they had nothing to do with the wreck. And even if the company could defend all of these actions and walk away scot-free, they shouldn’t – because that effectively sends the message of “screw the customers, we don’t care if a bunch of them die and the rest have to abandon ship, we’re looking out for ourselves!”

I don’t pretend to know a lot about the cruise industry, but the concept of value added applies here just as much as anywhere else, and the number of technological innovations or management breakthroughs available is going to be limited. If you’re going to add value to a ship’s cabin, you might be able to get something out of larger rooms or better furniture, but it’s more likely to come down to how well the cabins are cleaned, how good the food and other services aboard are, and how good the customer service provided is. And none of that is going to matter if potential customers are convinced that the company is going to throw them to the sharks – either figuratively, in the sense of ignoring their claims, or literally, in the sense of letting them sail on ships that could be crashed onto a rocky coast because the person at the wheel is an idiot…

At the same time, the company can’t simply hand each passenger a blank check; they have a responsibility to their stockholders, not to mention their employees and all of the vendors and their people who will be out of a job if the company guts itself. Refunding all of the tickets from one cruise doesn’t sound like much, but with 4,200 people aboard, even a thousand dollars each takes us into multiple millions, and the company still has to worry about repairing the ship, assuming it can be repaired and also assuming that their insurance company doesn’t refuse to pay out on the grounds that the accident was human error, and the company should have known better than to give someone that careless his own ship. Add in the clean-up costs and whatever the Italian government decides to fine them for, and the company may not have the funds available to pay out much. And that doesn’t even consider how much revenue they might lose if people stop booking cruises over this incident…

Somewhere between a basic refund and a settlement package that will bankrupt the company is the optimal choice for Carnival in this situation. If the call was yours to make, how would you balance the needs of the company and your responsibility to your stakeholders with the needs of the customers and the need to maintain public relations and customer relationships? If you were CEO of the cruise line, what would your call be?

Do the Smart Thing

There was a news story from ABC News on Yahoo last week that drove home to me once again how much of management practice is just common sense – and how uncommon that kind of thinking really is. According to the report, a hospital located in a small town in Oklahoma solicited a donation of $500,000 from the most successful person who ever lived there and supposedly promised to name their new building in honor of his mother. However, the hospital is claiming that the donation was made anonymously and without conditions, while the donor is claiming that the hospital development people showed him sketches and mock-ups of the building that included his mother’s name on the sign, and are now going back in their word. The hospital is claiming that they can do whatever they want with the money “without further discussion,” and the donor is suing the facility to recover the entire amount of the donation. If I were the judge hearing this case, the urge to have my bailiff kick at least one of these parties in the behind would be overpowering…

First off, major gifts are solicited on the basis of two factors, ability and affinity: whether a given donor has the ability to give you half a million dollars at the stroke of a pen, and whether he or she likes you (or your cause) enough to want to do that. Both of these qualities are rare enough that annoying a major donor is completely asinine, especially when all he is requesting is a sign on the front of a building. If they actually agreed to a naming arrangement, and then backed out of it once they had the money, these actions exceed stupid and plummet directly into fraudulent, but even if the celebrity is just asking for naming rights after the fact it’s still probably not worth alienating him. Especially when the community you serve is as small as Yukon, Oklahoma (population 22,000) and the celebrity is as big as Garth Brooks…

On the other side of the issue, I think we can safely assume that a man who is the second best-selling solo artist in the United States in history (only Elvis Presley has sold more albums) knows something about contracts and their enforcement, and could at least find out about donations and grants. Half a million dollars may not be that significant to Mr. Brooks, but I would still expect him to have required a contract specifying what his money would be used for, and what consequences would occur if it wasn’t, before signing the check. At the very least, given some of the professional misconduct cases we’ve been seeing in the past years, I’d want something in writing that guarantees the people I’m giving the money to don’t just pay themselves $500,000 in annual bonuses and refuse to discuss it with me any further. On the other hand, if Mr. Brooks actually has such a contract, this should be a very short trial and a very long afternoon for the hospital board…

Most of my readers (assuming I have readers) have already heard me say that Major Gifts solicitation is a specialist function – not as much as Planned Giving, which usually requires the services of a probate lawyer, but still not something that should just be casually undertaken by whoever has the afternoon off. The sad fact is that if you’re going to be a philanthropist – or even if you’re just a wealthy celebrity – you probably shouldn’t just make random donations without written agreements, and even if you have a contract you can probably expect someone to try to screw you over every so often. I don’t know if the hospital board sold the naming rights to more than one donor (which is fraud, and will probably result in criminal charges), or was planning to siphon off the funds for some other purpose (which is at least unethical, and is potentially breach of contract or fraud as well), or is just getting caught in the crossfire, but I hope they’ll at least consider doing the smart thing. I know a really good sign painter they could use…

Expensive Covers

Every so often I’ll run across a story about a new consumer product that seems excessively expensive for its ostensible purpose – we’ve seen examples such as a $100,000 safety razor, a $200,000 bottle of scotch, a $40 bottle of water, and so on. Earlier this month I brought you the story of the Panda Tea, and the $2,000 an ounce price tag slapped on it because the tea plants are fertilized with panda dung instead of more common chemical and animal by-products. Some of these are signs of wretched excess (there’s no real justification for spending $40 for a liter of water just because you can) while others do offer value to the customer, if only for a specific definition of “value” (for all I know, the $200,000 bottle of scotch might actually be that good; I don’t drink alcohol anymore, and I don’t like scotch anyway). Where this category of consumer goods gets really interesting is when we consider products that will actually appreciate in price – despite the fact that they don’t appear to have any real value in the first place…

Consider, for example, the Richard Mille RM56 watch as featured on the Born Rich website and described on the Gizmodo news page. What distinguishes this time piece from a Rolex or other super-luxury watch is the fact that the entire housing has been carved from a single piece of clear sapphire crystal, allowing the observer to see all of the tiny gears and part of the mechanism. Well, that and the fact that this watch comes with a price tag of $1,650,000 USD. It’s an intricate piece of work, of which only five are being offered for sale; there’s no question that the mechanism is some of the finest in the world, or that it’s incredibly difficult to carve anything out of pure sapphire crystal. That doesn’t change the fact that for that price you could purchase a basic Rolex for 500 or so of your closest friends (or one of the really showy Rolex models for 100 of your closest friends) at that price – or for that matter that you could purchase houses for ten of your closest friends here in Lansing, Michigan for what they’re charging for this watch. But what is truly mind-blowing is that it might not be a bad investment…

A recent article in Businessweek discussed the increasing interest in luxury watches as an investment, much like art or jewelry. As with most other collectibles, it’s important to select the right ones to invest in, but the rare and exotic tend to be the best choices – and it’s hard to be rarer or more exotic than a run of only five examples, each carved out of single pieces of sapphire crystal. If the author of this article is correct, it’s possible that this watch could appreciate several times over, assuming you’re willing to hang onto it over a period of a decade or two. In fact, it would appear that such investments aren’t even that unusual; Sotheby’s and Christie’s both have departments that specialize in watches and hold regular auctions of collectible items. It may seem a little odd to non-collectors, but it’s hard to imagine why this would be any different from purchasing baseball cards, ingots of specific metals, or ownership shares in publicly-held companies for the same purpose…

I’ll admit that when I first saw this article, I just thought it was another case of wretched excess – people paying more for a watch than the average American will earn in a lifetime, just to show off how much disposable income they have. And it’s possible that somebody will, of course; we’ve seen people paying much more than that for consumer products with much shorter service lives in recent years. But assuming that all such purchases are made merely to flaunt someone’s wealth is just another case of judging a book by its cover – a very expensive cover, in this case, but still…

The Ethics of Landlords

A few years back I wrote in this space about a relatively high-rent part of Los Angeles, and how the owners of the retail properties located there were letting the storefronts stand fallow in order to write off the losses on their taxes. I’m not generally in favor of rent control – the system is too easily exploited by the wrong people – but I have to ask if destroying an area’s commercial life for your own benefit isn’t also perverting the tax codes. Recently, however, a different variation on the same question has been called to my attention: do landlords have any responsibility to keep the rent down on their retail spaces so that small businesses can afford them? It’s one of those cases where charging whatever the market will bear isn’t necessarily the best answer, and I thought we should take a closer look at it…

First off, there’s nothing wrong with selling something for the highest price people are willing to pay for it, and that certainly applies to renting and leasing services (and properties) as well. It’s also true that you can’t be expected to rent anything for free, given that there are recurring costs involved in ownership. Any piece of property is going to have a floor level below which you can’t rent it without losing money – add together the property tax, the cost of the bank loans (if you have any), maintenance on the building (if applicable), county or state fees, and so on. And since any funds you spend owning a piece of property are funds you can’t invest in other things, it’s only reasonable to expect to bring in the same amount of income that you could realize if you’d put the funds in the bank, instead…

On the other hand, commercial operations aren’t just customers who are giving you money in return for using your real estate. Any business will have to spend money on supplies, utilities, salaries, and services that will remain in your community; they may also do business with suppliers or resellers in the community, all of which makes the city, county and state more prosperous and raises the amount of money people will have available to spend on things like rent. Most businesses will have to pay fees or even taxes to the local governments, as well, which means that your county and state will have more money to spend on roads, schools, police and fire protection, and other things that benefit you, directly and indirectly. So I think we can say that having a thriving commercial community in your town benefits you as the landlord, as well as you the citizen/taxpayer…

Where we wander into an ethical gray area is in the middle of the spectrum. Clearly there’s an enlightened self-interest in promoting commercial operations in your community, just as there is a basic self-interest in making as much money as possible from your rental properties. Just as clearly, there’s a minimum level you will have to charge for rent to avoid bankruptcy, and a maximum level you can charge beyond which no one can afford to pay you. But assuming that you are meeting all of your own expenses and making a living, do you have any responsibilities to your tenants, to the other members of your community, or to the local or state governments to keep your rent as low as possible? If you have backers, partners or stockholders you may be responsible to them for maximizing profit on their investments, but assuming it’s just property you own, do you have any ethical obligation to avoid bleeding your tenants for your own personal enrichment?

It’s worth thinking about…

Avast, Ye Scurvy Dogs!

I suppose there ought to be a post about the SOPA/PIPA controversy, since this is a web log, and I did actually write to my congressman and senators this week and ask them not to pass the bills in question. I don’t know that I have anything to add to the millions of pages that have already been written about the language and intent of the bills themselves, but it struck me today as I was reading the MPAA response to the “blackout” protests of January 18 and 19, that there was at least one aspect of the situation that seems to be getting lost in the background noise – the way our world is changing, and the way some people who should really know better are acting as though if they just stomp their feet and scream for long enough all of those mean Internet people will just go away…

Consider, for example, the official responses of the MPAA and RIAA to the online protests over the anti-piracy legislation. Both organizations are calling the protests “an abuse of power,” which is really quite precious coming (as it does) from organizations which are prone to throwing huge amounts of money at political issues in order to get their own way, as well as suing people for sums of money that most national governments could not produce. But whether such protests are themselves abuses of power (you could make a case for either side), it’s hard to imagine why anyone associated with either industry would think that Internet giants like Google or Wikipedia would care about their opinions in the first place. Especially since the proposed anti-piracy laws have the potential to destroy the lives and livelihoods of thousands or millions of people who make their living online…

For all that the free speech issues surrounding this legislation are appalling – and they are – the due process aspects may be even worse. If a given company believes that someone on the Internet is using their intellectual property without permission they can always send that individual a “cease and desist” letter; if the online entity (whoever it is) continues using the material the owners are welcome to sue in civil court, and press criminal charges where applicable. All of this requires evidence, or at least probable cause and search warrants; it may also require depositions, discovery, and enough legal activities to make sure that the legal profession doesn’t go away any time soon. But none of it allows a private company – or even a government agency – to arbitrarily shut down an online business because that entity might be connected to pirates, without a trial, a hearing, evidence, warrants, or anything more legitimate than the word of an agency that is already known for abusing power and intimidating people…

We’ve heard a lot of debate in recent years as to whether record companies have any relevance in a world where anyone can record music and distribute it over the Internet, and while it seems likely that it will be a while before private citizens can make movies on their own, the failure of Blockbuster Video and the rise of Netflix streaming video service suggests that DVDs are going the way of vinyl records and reel-to-reel tapes. I don’t know how much power these two industry groups have left, or how much longer they expect to have any power, but I can’t imagine that they actually believe they can intimidate an entire community of hundreds of millions of people who live and work in online companies and groups…

There was a time, not that long ago, when the MPAA and RIAA could do as they pleased, and no one had the money or the power (popular or political) to oppose them. But those days are fading now, and neither of these agencies appears to have any idea of how widely disliked they have become, or how little relevance they are likely to have in the new century. I don’t know how the motion-picture and recording industries will operate going forward, or how they expect to remain relevant (let alone powerful), but I can say with some certainty that public tantrums and political support for unpopular legislation probably won’t work…

Worse Than That

Quick! What’s the worst thing you can imagine an employee doing with a large company asset that has nothing to do with his or her normal responsibilities? Sleeping or playing computer games while flying a commercial airliner has possibilities, and so does navigating a supertanker full of crude oil through dangerous waters while drunk, but both of those cases did at least involve driving the vehicle to where it was supposed to be going at the time you were supposed to be there. Sailing a barge into a major highway bridge because you weren’t paying attention, or derailing a freight train full of poison gas because you weren’t paying attention are both fairly egregious, but again, the employees responsible were at least on course, if not very conscientious. Opinions will vary, of course, but I believe the top spot has to go to a ship captain who wrecks a 1,000-foot vessel against the rocky shore of an island so that one of his crew can wave to family members who live there…

In case you missed it, MSNBC is running a story claiming that this is exactly what happened in the crash of a passenger liner off the Tuscan coast on January 13 of this year. It seems that the captain had decided to ignore the safety requirement of staying at least 500 meters (1650 feet) away from the coast of the island of Giglio, instead closing to about 150 meters so that the ship’s head waiter could wave to members of his family who live on the island. So far there are still 29 people missing in the wreck, and six bodies have already been recovered, making 35 deaths a genuine possibility. Wrongful death suits tend not to be quite as expensive in Europe as they are in the US, but this is a fairly extreme case, given that the accident was entirely caused by human error, and none of the people who perished in the crash could possibly have foreseen the danger or taken a reasonable action to avoid it…

There’s also a tremendous risk of environmental damage, as the ship went aground in the protected waters of a preserve for whales, seals and dolphins. Cleanup might not be quite as difficult as the operation following the Exxon Valdez incident, if only because the cruise ship has less oil to spill, but ocean clean-up efforts are never easy, and they only get worse in sensitive environments. This could easily destroy the entire preserve, as well as all consumer confidence in the shipping line. And we should probably acknowledge that the ship itself is worth somewhere on the order of $513 million USD all by itself, bringing the potential bill to $1 billion or more before the suing is done…

Now, I don’t mean to suggest that any of my readers (assuming I have readers) would do something as monumentally idiotic as sailing a huge passenger ship (it’s the size of Nimitz-class aircraft carrier, or about 68 feet longer than the Titanic, if you prefer) into shallow, rocky water so that a member of the crew could wave to people on the shore. I’m not even suggesting that we, as managers, should take steps to ensure that no one who could be stupid enough to do such a thing is ever given command of a major corporate asset like a $500 million passenger liner; that’s just not something you’re going to turn up on a job interview or an annual review. What I am suggesting is that we, as managers, should never assume that none of our employees could ever be arrogant, stupid or short-sighted enough to make an error this horrendous while working for us. The people who run this cruise line thought that, too…

And you know that it is only a matter of time before someone does something even worse…