The stupidity of short-term thinking

photo courtesy: Innaminnafly

I'm flying to Europe for six weeks in August (and I won't be blogging much during that time as I know you are all dying for a break! :-) ). And, I'm VERY VERY annoyed at the airline industry right now.

Travel is a luxury item, and with the economy struggling as it is, only crazy people (like me) who are footing their own bills or business people who have someone else footing their bills are doing the traveling. The once high-flying (pun-intended) airline industry is struggling to pay their own bills, and is consequently trying to punish anyone who is trying to help them out.

Normally, with packed flights through most days of the year, airlines keep peak season rates relatively low. But with such low demand, airlines are trying to make their profits entirely in the peak season...so poor, unfortunate idiots like myself are stuck with abnormally high rates. (I try my best to avoid peak traveling seasons in general, because I dislike crowds intensely. But this time, I had no choice.)

This is what I call stupid short-term thinking. While they make money in the short-term (really??), in the long-run, they are "shooting themselves in the foot." And here's why:

• They are losing on the majority of people sitting on the fence about traveling. I know plenty of people who suddenly have a lot of time on their hands and have been contemplating traveling, but have given it up because of the exhorbitant rates. Airlines are betting on the few who HAVE to fly, not on the potential of people who might fly if their deals were better.

• They are losing out on customer loyalty. What few airlines realize is that a lot of frequent travelers are loyal, and are powerful word-of-mouth marketers. I am loyal to Virgin Airlines for example (amazing customer service and in-flight service!!), and Southwest Airlines, and I used to be to JetBlue before their customer service started sucking. When you bully people into doing things they don't want to do or don't think is fair, they will hold it against you. In this case forcing us to pay unfair fees and putting up with awful customer service while it will get us this time, will lose us in the long run (this is why I will NEVER fly Northwest/KLM again!)
  

• Allowing poor business practices to continue, even flourish: The larger US Airlines have the absolute worst service in the world, and they have no excuse. For years, the US government notoriously protected their airline industry, allowing awful business practices to endure. When the markets finally opened and protectionism was terminated, these "institutional airlines" (US Airways, Delta, American Airlines, United, etc) struggled. Their burgeoning bureaucracy made them inefficient against innovative, nimble, emerging airlines like Southwest Airlines, JetBlue, Frontier, and others. The older airlines have only survived by capitalizing on their monopoly routes, their loyal customers, and building alliances with better airlines around the world.

Still struggling, the institutional airlines turned to stupid short-term thinking, taking their ire out on the customers. Fly one of them and you'll find yourself paying for everything. None of the institutional airlines have on-demand entertainment, a common availability amongst every first-world airline. If you want it, you pay for it. Many of these airlines are locked into lengthy and heavy contracts with labor unions; so their staff are often old, cranky, angry people who have seen a once glorious job go sour. Naturally their customer service is terrible. Further, they've cut down on seat spacing, have aging fleets, ancient in-flight entertainment, and make you pay for everything, including your water and your luggage (in addition to your already sizable airline ticket).

Its ridiculous to me that these airlines are thriving in this economy. And why?? Because the now cost-conscious consumer is forced to go with the cheapest deal, not the best airline. While hunting around today, for example, Delta Airlines was charging $1121 for a round-trip ticket to Paris; Lufthansa, a relatively superior airline, was charging $1600 (which is currently average for all non-American carriers). Normally, I would pay the extra $100 or $15o over Delta just to get better service. But this time, I can't even afford the $1121. But its my only choice, so I take it. So here we have it...the market is working against us and them.

Yes, airlines have investors and shareholders. But shareholders are reasonable people. Everyone knows that the economy is doing terribly. It would be ridiculous to expect that Delta would churn out record profits at this time...

My point is this...short-term thinking, without considering the bigger picture is very stupid and dangerous. While the ailing US institutional airlines continue to get through another year, its only a matter of time before they will have to bow out. After all, GM just did...only a matter of time with the rest...

Pixar's work culture

Ed Catmull, President of Pixar, receives a Technical Academy Award. Below he speaks about leadership and managing Pixar's work culture (photo source: zimbio.com)

Following up on yesterday's post, here's more from Pixar president, Ed Catmull. In the video shown yesterday, Ed emphasized the importance of having a good team. In this interview, he elaborates further about what he means.

In case you can't watch the video, here is the essence of what he says and what Pixar strives to inculcate:

• Cultivate an air of open and honest communication: The basic work culture at Pixar is that movie production is a team effort. Everyone is needed and important, and everyone has the right to speak and be heard. Ed says that the Pixar team works constantly on keeping communication lines open. There is also a significant emphasis put on trusting each other. This comes from attracting high quality people, and maintaining a high level of open communication.
  

• Keep it egalitarian: Artists and engineers work together; one is in no way above the other. And it is management's job to emphasize this.

• Keep your eye on the ball: At Pixar, the bottomline is making a good movie. Everything else is a means to that end.

• Maintain your quality: Get the best people you know on board, as they will not only deliver a good product, but also bring in better talent.

• Trust the artists: Ed strongly believes that the creative people need to drive the innovation, not the technical people or management. Given this high level of trust, the creative workforce works hard to include everyone else in their decisionmaking, and deliver a high quality product

If you are further interested in Catmull's take on running successful companies, I would also recommend watching this lecture that he gave at the Stanford Graduate School of Business in 2007.

The Pixar Story

photo source: solarnavigator.net

Pixar is pure magic and genius. It is the Walt Disney Company for the 21st century.

I've been reading the Pixar Touch (which I highly recommend) that gives the whole story of a group of visionaries whose visions were nearly killed several times. This lecture/panel discussion with the founders and main leaders in Pixar gives a great behind-the-scenes look at what makes the Studios tick, and what their recipe for success is (hint: people, people, people).

Why Missionaries are the Most Successful international development agency in the world!!

(photo source: http://www.understandingmormonism.org/wp-content/uploads/2008/06/mormon_missionaries.jpg)

I'm serious. I can go to any part of the world, and the best-looking hut in that area will have a missionary in it. During my work travels, I've been through numerous huts. Quite often, the people I've encountered have never seen another non-native person but for some caucasian guy with the Holy Bible (the only other thing that is equivalent is coca-cola). On one hand I get frustrated, but on the other, I'm seriously impressed. So how the heck do they do that?? And what can we learn from them??

Alanna Shaikh has done a brilliant write-up on the subject. Among her points are the following:

• Long Term Commitment: Missionaries come for the long haul. Once they come, they often stay for a long period of time creating trust and a relationship.

• Community Investment: They invest time in the community learning their customs and language. Further, they make the effort of living like them, generally eating what they eat and drinking what they drink. Again, the community honors the commitment and trusts them. Further, this level of investment guarantees that they understand the community well. Essentially they customize their initiatives to work with the psychology of the community.

• Focus and Consistency: Missionaries are darned focused on their target. Until the day they die, they keep a consistent message of converting everyone to their religious beliefs. Regardless of whether you believe in this or not, you've got to respect the level of focus and consistency that they bring to the table. There are never mixed messages. If you keep drilling the same thing over and over again, at some point, people will listen.

• Hard Work and Persistence: Missionaries are hardworking. You'll often find them on their hands and knees cleaning up with the rest of the locals. They don't act that much more different than the people they are working with.

• Good Role Models: They are good role models. Always clean, well-dressed, and polite, the missionaries present good model citizens. Its easy to want to follow them.

Essentially, if you've been with an International Development project in the developing world that isn't working, look at their leadership and compare them to the missionaries as stated above. You'll see quickly why they are failing.