All Over Again

Anyone who had Internet access in 2009 probably remembers the curious case of Dave Carroll, and how United Airlines both broke his guitar and then stonewalled him about paying for his repair bills for the better part of a year. The You Tube music video he made about the experience (“United Breaks Guitars”) got over a million hits in about four days, dropped United’s stock price by over 10% (a hit of about $180 million USD), and raised a huge amount of public awareness for Carroll and his band – and for Taylor, the company that made the guitar in question. It also answered the question – if anyone was still not clear on this – of why good customer service, public relations and loss prevention are important. You would probably expect that any company not run by people with the intelligence of squirrels would have taken a $180 million lesson to heart; however, if you’ve been reading the newspapers or this space, you would already know that this was not what happened…

About a year later, Mr. Carroll, now on a speaking tour about his experiences with United, had to fly on that airline again – whereupon they promptly lost his luggage again. It’s highly doubtful that this was a deliberate act of revenge; given the company’s original response to both the loss claim and the video (which has been viewed over 12 million times as of this writing) it seems unlikely that they could have successfully organized that sort of vendetta against a single customer, even if it wouldn’t have been idiotic of them to try. But even if United didn’t learn anything from this experience (the company says it did, but I have my doubts) you still might reasonably expect other companies within the industry to learn from someone else’s $180 million mistake – except that doesn’t appear to have happened either…

According to a story appearing on the Yahoo! News site, a musician named Dave Schneider was traveling from Buffalo to Detroit on Delta Airlines when he was told he would have to check his vintage 1965 Gibson guitar – despite the fact that he offered to buy an extra ticket for the instrument, and despite the fact that Congress passed a law last year making it possible for musicians to do just that. And, sure enough, the airline personnel managed to get the Gibson caught in a “mobile service elevator” at the gate, smashing its case and doing about $1,800 worth of damage to the instrument itself. The airline then repeated United’s second mistake as well, stonewalling the musician for months before the story turned up on line and was remarked (and mocked) by millions of scruffy bloggers world-wide…

Now, I’m not suggesting that every musical instrument checked by an airline is going to be seriously damaged; I’m not even suggesting that this is something that happens more than once every three or four years. What I am suggesting is that if I am taking responsibility for property worth in excess of $10,000 – and especially if I am doing so in defiance of Federal law, public relations, and all common sense – that I would take better care of it than if it was a $2 trinket from K-Mart. And if I ran any kind of transportation company I would have a better policy for lost, damaged and stolen luggage than “stonewall them for a year or two and hope they give up and go away…”

The truth is that world-changing business developments don’t always have thousands of jet engines, millions of viewers, or billion-dollar IPOs. Whether they meant to or not, Dave Carroll and United Airlines between them have changed the way we look at air travel, property damage, customer service, and public perception – and it’s past time everyone else who does business with the general public should have started paying attention to those changes…

So They Must Change Me…

It has been said (by people wiser than me, let me hasten to assure you) that the world’s only constant is change; that the only thing we can be sure of going forward is that we can’t be sure of anything going forward. This has certainly been true in my experience – if you had asked me, twelve months ago, to tell you what I would be doing now, preparing lesson plans and exercises for the four sections of Management 409 I am scheduled to teach at Michigan State this coming semester would have landed somewhere between walking on the moon and being elected dogcatcher. Which is to say, rather less likely than winning the Nobel Peace Prize or finding a cure for the common cold. But when I reflect back over the past year, and a few of the ones that came before that, I can’t help thinking that generation gap that results from civil, cultural, or technological change is almost as universal…

Consider, if you will, the people who persist in the belief that e-commerce is a passing fad, and that if we all stick our fingers in our ears and yell “LALALALALALA I CAN’T HEAR YOU!” loudly enough it will all go away. It may seem unique to this current time – and indeed, it would be difficult to name anything quite as dramatic as the sea change that our society has undergone over the past two decades. But if you think back (or ask your tribal elders, in the case of you younger geeks), you may recall that VCRs were another “passing fad” that turned out not to be. Recording television programs and movies and viewing them when YOU wanted to see them led directly to current technology such as DVRs, on-demand cable programming, downloadable audio and video files, file-sharing sites and even things like You Tube and Twitter – not exactly ephemeral trends…

If we go back a little further, cable television was considered a fad when it first appeared – who would pay for television when you could get it for free over the airwaves? In the 1970s (and into the 1980s) there was (briefly) a generation gap between those who loved having dozens of entertainment choices and wanted their MTV, and those who longed for the days of Masterpiece Theater and newscasters who were more widely trusted (and respected) than any government official…

I wasn’t around for the appearance of television itself, but my parents told me about the time when the first sets came onto the market, and the people who disdained the new medium sneered about how a broadcast program you could see would never live up to the imaginary landscape created in their generation’s radio dramas. My grandparents told me about a similar gap that appeared between fans of the original motion pictures and those with synchronized audio tracks – the so-called “talking pictures” or “talkies” that changed everything following World War I. And my grandfather, who was born in 1904, told me about the disdain his parents’ generation had for moving pictures, which would never live up to the power of live performance…

This is not to say that every new technology will evolve into something that changes our world forever. Digital Audio Tape (DAT) never really caught on as a mass-media format, and neither did DVX (single-use DVDs that self-destructed after you watched them). More to the point, perhaps, audio CDs are on their way out, slain by the iPod and downloadable content, and the iPod itself is showing signs of being made irrelevant by its own descendent, the iPhone. People who cling to the CD will most likely end up in the same role as those who cling to vinyl records, reel-to-reel tapes, and wax recording cylinders, what is less obvious is that people who insist on clinging to the current technologies will most likely end up in that same place…

As we move forward into the New Year, the only thing we can be sure about is that the world will change, and we will have the choice of changing with it or wondering why none of the products, services or media we want to use are still available and why everyone keeps referring to us as “Luddites.” I can’t tell you where I’m going to be on New Year’s Eve 2013, or what I’ll be doing at that time; the only thing I can more or less guarantee you is that whatever happens next won’t be anything like what we expect it to be, and that no protest we make is going to matter. In the end, it doesn’t matter if you believe in change; change believes in you…

In a few hours it’s going to be 2013. Let’s be careful out there…

Everything Old is New Again

I’m always amused to find stories that indicate that for all of the talk of tradition, learning from the past, and trying not to repeat the mistakes of previous generations, no one can actually remember anything and the same old mistakes keep right on being made. There’s a lot of that going on in the news right now, since it’s a Presidential election year in the US, and a lot of the usual empty promises are being thrown around, but there was a story in the news this week that confirmed my belief that follies of this type are not limited to Americans, let alone American politicians. Apparently, some folks in Canada are trying to revive the Avro Arrow project of 1958…

You can find the original story on the Toronto Star website if you want to, but for anyone who isn’t particularly interested in the history of aircraft, the Arrow was a supersonic interceptor designed by Avro Canada during the Cold War as a counter-measure to Soviet strike aircraft attacking over the North Pole. Similar in concept (if not entirely in design) to the Convair delta-wing interceptors of the same era (the F-102 and F-106), the Arrow was an impressive piece of technology that would have equaled or exceeded the performance of all contemporary aircraft and would not have found a worthy opponent in Soviet service until the arrival of the Tupolev Tu-22 “Backfire” bomber nearly two decades later. However, like any other piece of cutting-edge technology, building a fleet of Arrows and working the bugs out of them would have been an expensive undertaking, and the Canadians elected to purchase a fleet of McDonnell-Douglas F-101s instead…

In most respects, that choice worked out very well for the Canadian Air Force. The F-101 turned out to be ideal for Canadian defensive requirements, and its adaptability for high-speed air-to-ground and very high-speed recon missions could only have been a plus. The downside – purchasing defense equipment from a foreign source, stunting the domestic aerospace industry’s growth in defense (and particularly supersonic) programs, and outsourcing all of the jobs involved to the US – remained a source of bitter contention for some years thereafter, but the loss of the actual aircraft doesn’t seem to have harmed the country or its national defense. It was a bit surprising to find a story about reviving the program as an alternative to the F-35 Lightning II turning up on one of the news aggregation sites…

Up until now, Canada has been one of the members of a constantly-shifting group of nations who intend to purchase the F-35, originally known as the Joint Strike Fighter, along with the United States Air Force. As with the F-16, F-18, F-15, F-5, F-111, F-101, F-104, C-130, A-4 and far too many other designs to bore you with, this arrangement should make it possible for a whole range of countries friendly to the US (or at least hostile to people we don’t like) to purchase cutting-edge war planes that they could never afford to develop on their own, while at the same time helping the American companies that produce the airplane to recover the cost of their R&D efforts and make more money into the bargain. Unfortunately, the F-35 has been delayed by technical problems, plagued by cost over-runs, and has thus far failed to live up to all but the most basic claims made for it – which is making it easy for people in Canada who oppose the project to come up with alternate suggestions. It’s just that this one was loony enough to raise eyebrows in anyone who has ever studied aircraft, history, or business…

For its time, the Arrow was a remarkable piece of engineering, and could have proved useful as a counter-measure to Cold War-era long-range strikes. But reviving the program now would mean producing a machine designed before the parents of most of its pilots were born to perform a mission long since made obsolete against an enemy who no longer exists. As an appeal to nationalists, voters who don’t particularly like Americans, or the Canadian domestic aerospace industry, this stunt might make sense from a political standpoint. And there is some precedent for it – the US has revived the U-2 and SR-71 aircraft for service, if not new construction. But the Arrow was cancelled in 1958 because it didn’t make military or economic sense, and today it represents more of a point of national pride than anything anyone would actually want to take into battle…

That doesn’t mean that someone won’t try it, however…

The Ethics of Wikipedia

Anyone who works in Education at any level has probably got a few stories to tell you about students using Wikipedia as the primary source – or occasionally the only source – of information on a report or writing assignment, even though the site’s occasional issues with the truth are widely known. The editorial board does its best, but given the number of volunteers contributing to Wikipedia there will inevitably be cases where personal bias of a political, philosophical, religious, scientific or spiteful nature results in errors being accepted or retained as correct. This has resulted in some embarrassing – and potentially actionable – mistakes, and has come close to knocking the site off the Internet more than once…

Probably the most outrageous of these errors are the cases where an artist or scientist is denied permission to edit the entry about his or her own work, on the grounds that they are not a credible source on things they have created. This came up again this past week, when American author Phillip Roth was told that Wikipedia did not consider him a credible source regarding the origins of a book he had actually written. Roth responded with an open letter about this fiasco in the New Yorker, and somebody was apparently willing to accept that article as a second confirmation of story – possibly because the magazine would have hesitated to run the open letter if the allegations it contained were not verified – because the Wikipedia entry has been corrected…

Now, the point has been made several times that this policy isn’t as farcical as it sounds. Without some kind of independent fact-checking there would be nothing to keep a discredited scientist from changing the facts of a Wikipedia entry to indicate that his theory had been right all along, for example. We’ve already seen cases of political parties and candidates altering both their own entries and ones about their opponents in order to improve their chances of election, and there’d certainly be no reason to suppose that authors, filmmakers or commercial firms wouldn’t alter information about themselves in order to increase sales, regardless of the truth or falsehood involved. Unfortunately, there have also been cases where one or more Wikipedia editors have allowed their own personal biases to cloud their judgment, resulting in citations of scientific research being deleted in order to uphold a personal or political point…

Clearly, Wikipedia has a responsibility (legal and ethical) to try to present the most accurate information available, especially because despite all evidence to the contrary, people at all levels of age and education are going to take what they read on the site as absolutely correct. In cases where scientific fact is in question, or the details of an event (public or private) are in dispute, it’s hard to argue that a second (or third) source of confirmation is a bad thing. But when an artist presents his or her actual thoughts about a work, or a scientist provides his or her actual data and calculations, it’s even more difficult to say that an editor who can’t possibly have an understanding of that work that approaches that of the person who created it should have the authority to override (or delete) the opinions of the creator. This leads me to an ethical question that is not as simple as it initially appears:

Does Wikipedia (or any other online source) have an ethical responsibility to allow the creator of a specific work of art or research to have the final say on the meaning and interpretation of his or her own work? If so, how are they to prevent edits made for self-serving purposes, and particularly ones that intentionally distort the facts? If not, how are they to prevent edits that directly contradict not only the original work but also the creator’s efforts to correct the entry? In the case of any disputed fact the editors could certainly request third-party confirmation of basic facts, but this will almost certainly result in cases where the editors and their subject matter are at odds with yet another set of bias and belief. Or should the site allow all information that isn’t directly contradicted by other available sources to be entered, possibly with notations where the disputes occur, and allow visitors to the site to make their own decisions?

It’s worth thinking about…

Loser

There aren’t at lot of events that make someone like me want to make the “L” sign on our foreheads and start yelling “Loser!” at someone who has managed to create his or her own Epic Fail in a business context. Part of it, of course, is simply due to the fact that I am a mature adult with two Master’s degrees in Business and a better-than-average experience with things that can go wrong through no fault of one’s own. Some of it is because I am a student of business failures, and I’m aware of how fine a line there is between a “moderate success,” a “fail” and an “EPIC FAIL.” And some of it is just because I’m the type to view another person’s misfortunes and think “There but for the grace of God go I,” rather than “Neener Neener Neener!” None of which keeps me from wanting to call the guy who renounced his U.S. Citizenship to avoid paying taxes on the money he made on the Facebook IPO a loser – and a complete idiot with no grasp of strategy – however…

In case you missed it during the original events, you can pick up the story on the Forbes web page. A man named Eduardo Saverin bought a large amount of stock in Facebook during the initial public offering, and then moved out of the country and renounced his U.S. Citizenship in order to avoid paying the capital gains tax he was sure would arise as the stock price continued to soar. He had to pay taxes on the $2.4 billion his shares were worth on that day, but he’d be immune to any additional gains. Unfortunately, he failed to take into account what would happen if the stock didn’t continue to rise – as, in fact, it didn’t. As of this writing, Saverin’s shares of Facebook are now worth about $1.2 billion, or about half what they were on the day he renounced his citizenship. But, since he’s no longer a citizen, he can’t take advantage of the tax implications of the loss…

Yes, that’s right: his stock is now worth $1.2 billion, but he is going to have to pay taxes on $2.4 billion. Best guess, according to Forbes, is that this will cost him around $180 million – in addition to the loss of half of his stock value in the first place, of course…

Now, I don’t pretend to know much about finance or tax law, let alone karma, but it seems relatively straightforward to me that if you’re going to play games with the tax laws in order to screw the United States government out of money you owe them, you should probably at least consider what will happen to your clever stunt – and your personal fortune – if the market doesn’t do what you expected it to do. Especially in a case like this one, where nearly all of the company’s assets are intangibles – not even defined things, like patents and copyrights, but nebulous things like market position and goodwill. Because if the market does not rise, you’ve renounced your citizenship and accepted all of the issues that will come with that decision for nothing – and if it drops, you’re losing money fast…

Previously in this space I’ve noted that right or wrong, a stock price is based on what people will pay for it, not on what the security is actually worth, or even on what they think it is worth. And in the case of a company that owns no property, has no tangible or intellectual assets, and is counting on driving its stock price up based almost entirely on hype it doesn’t take much to change people’s opinions. I’m not saying that attempting these sorts of shenanigans with tax laws and citizenship will automatically make you a loser; I’m saying that just as in any other human activity, you need to plan for the possibility that you’re not quite as clever as you think you are…

Slow Learners

By now, most people in North America – if not in the Free World – have heard about United Airlines breaking guitars, outsourcing their customer service call centers to India, putting minors on the wrong airplane and similar stunts that get them mocked, flamed and reported on the evening news. Most of the errors themselves are nothing of consequence; any organization run by human is going to foul up sometimes, and even an error rate of .0001% is going to result in several dozen cases each week when the company handles several million transactions a day. And while the screw-ups have been bad for the company’s image – and therefore generally bad for business – none of them have really be catastrophic. Or at least, none of them had been until the airline lost an unaccompanied minor last month…

You can pick up the original AP story from the CBC News website if you want to, but the basic idea is that a family was sending their 10-year-old daughter from San Francisco to Traverse City, Michigan to attend summer camp. They paid the usual $99 “unaccompanied minor” fee to the airline, and in return United agreed to make sure the girl made it through the transfer at O’Hare. Unfortunately, this didn’t happen. When the girl arrived in Chicago there was no one to meet her, and no one from United seemed to know anything about the situation. She asked to use the telephone to call her parents and tell them what had happened, but the airline people told her to sit down and wait, and they would handle it. Unfortunately, none of them actually did anything…

When the child failed to turn up in Traverse City the camp called the parents, who were understandably upset by this and started trying to get some word out of United. Her mother called the company’s main customer service line, which connected her with the call center in India, where (after a twenty-minute or so wait) a representative told her that her daughter had, in fact, arrived in Traverse City. On being told this was incorrect, the call center put her on hold for another ten minutes, and then repeated the (incorrect) reply that her daughter had arrived in Traverse City as promised. Meanwhile, the girl’s father called United’s frequent flyer number (he had paid for the tickets using frequent flyer miles) and got them to connect him with a customer service representative in Chicago, who told him that the third-party company that handles unaccompanied minor services for United in Chicago had “forgotten” to pick up his daughter, and the airline had no idea where she was now…

The father asked the CSR in Chicago to go look for his daughter, but was told that the CSR was going off shift and couldn’t help. However, after appealing to the CSR as one parent to another and begging for help, the United people in Chicago were eventually able to find the missing girl and get her to Traverse City just 4 hours late. Her luggage was another matter, however; that didn’t turn up for several days. The family asked the airline to refund the unaccompanied minor fee, but could not get any response to either telephone or written enquiries until the local television station in San Francisco took an interest. Finally this week United released a statement saying they had apologized to the family and were refunding both the fee and the frequent flyer miles. There’s no word on whether a lawsuit is coming, although if there isn’t one the company and its stockholders should all give thanks to whoever looks out for transportation companies...

Now, this really wasn’t an atrocity; there is no indication that United ever actually lost the young passenger, or that she was ever in danger of anything beyond extreme boredom. It is, however, an example of business practices so bad that I can’t even think of a bad metaphor for how bad it is. I can’t imagine why anybody would use a third-party company for this service in the first place, or why the CSR in Chicago would have said they did if they don’t; I also can’t imagine why United didn’t go berserk the moment someone told them that their third-party service had “forgotten” to show up. If anything had happened to the child in our story this could have exploded into a massive lawsuit costing tens of millions to settle and even more to fight, not to mention criminal charges and a possible Federal investigation. As it stands, only the merest chance seems to have saved the company from a fatal disaster of its own making…

And I can’t speak for any of my readers (assuming I have readers), but if I own stock in this flying madhouse, I’m going to sell it before the bottom drops out…

On a Roll

 A while back I brought you the story of a new development in the cola wars: a Coca-Cola invention called a “Freestyle” machine, which can produce any of the company’s 120 or so primary beverage products for you at the touch of a button, or create new ones by mixing together existing flavors. Since most soft drinks are just small volumes of flavorings (and in some cases colorings) added to a large volume of carbonated water it’s possible for a vending machine or a restaurant to offer a customer dozens or hundreds of choices in the space were a more conventional delivery system could only offer a few. After a few years in service it turns out that these gizmos are working out surprisingly well, although there have been some reports of learning curve being a problem – some people have to experience a mixture of Vanilla Coke and iced tea for themselves in order to learn that you should NEVER mix Vanilla Coke with iced tea (or anything else; Vanilla Coke is disgusting). This does lead me to wonder what will happen when they start releasing Freestyle machines with alcoholic options, however…

A story on the Atlanta Journal-Constitution website details some of the user comments about the Freestyle machines in use, and some of the planned developments. I thought the idea of using the Freestyle in a restaurant, where patrons can enter their drink orders at the table and have a server bring it to them, was interesting, although you’d apparently need to do something about people mixing revolting combinations and sending them back because said drinks are revolting. But you can limit that by only putting drinks on the customer interface that somebody might conceivably like, and there might be something you can do with disclaimers or payment up-front as well. I’m not sure about using it to mix drinks with alcohol in them, however…

One of the long-standing problems with trying to do anything clever in a bar concept is that many people go to bars with the intention of getting drunk, and there is literally nothing that drunk people will not think of doing – witness the cases each year where people get drunk and fall off of buildings unless prevented from doing so. Unless you can enforce some policy of people having to pay for whatever weird drink they order you’re going to end up with a lot of wasted alcohol – and unlike the other components in a Freestyle machine, that won’t be cheap to replace. But that problem aside, there’s no reason you couldn’t put several different alcohol tanks into the basic system, making it possible for the machine to create not just simple things like a rum-and-Coke or a vodka-and-tonic, but any combination of liquids that are stable enough to store. Add a bartender to handle complicated drinks and pour beers, and the Freestyle could lower your labor costs and cut the time it takes to fill a drink order. It’s the unattended versions that are going to cause trouble…

With the right plumbing and wiring, you can install a Freestyle machine almost anywhere – that was a key aspect of the original design. That means that with no additional effort you can have a self-contained kiosk almost anywhere that can mix up dozens (or hundreds) of alcoholic beverages at the touch of a button – a robotic bartender, you might say. But the moment you try that – and I think we can safely assume that someone WILL try that – there should be an instant firestorm between people who like the idea of getting a nice drink wherever and whenever they want (“Civil Rights!”) and people who think unrestricted access to alcohol is a menace to society (“Won’t Anyone Think of the Children!”)…

Of course, some countries already have unattended vending machines selling beer and other adult items, and perhaps the Coca-Cola people will start looking at sending some of the prototype machines to those locations. Meanwhile, PepsiCo is already working on a competing version that will also offer coffee products and smoothies, and there’s no telling what “inappropriate” uses somebody will come up with for those…