Month: July 2005

More notes from Flying High:

• “You can call every day to United and get a different price (for a ticket). The reality is you get nickel-and-dimed. And more importantly, the customer thinks ‘You’re screwing me.’ So it’s better to just ask one price. You want to keep the service offerings very simple. The whole key is keeping trust in the system.“
• Three elements that ‘insure’ customers to a brand: First, flawless execution. Second, make things right with customers when things go wrong, because no matter how flawless you try to be, sometimes things will go wrong. And third, a company needs employees that are ambassadors for their brand, who are proud to belong to the organization.
• Behind the scenes, there’s a surprising amount of lean-but-progressive use of technology, such as a paperless cockpit. They own everything from their own booking system to the LiveTV, both of which they license to other airlines.
• Basic metrics: “…the airline looks at the impact on CASM (cost per available seat mile), the industry’s standard metric of efficiency. This is the expense of flying one passenger one passenger one mile. Available seat miles (ASM), a benchmark of an airline’s total capacity, is calculated by multiplying the total of all seats available on every route by the length of the routes. If you divide an airline’s total operating costs by the ASM, the result is the CASM. Airlines also pay close attention to RPM, or revenue per passenger mile. RPM is the number of seat miles for which the airline is actually filling a seat and making money. Divide the RPM by the ASM and the result is the airline’s load factor.”
• “…the marketing department’s funds come under the operations budget, reflecting a company philosophy Curtis-McIntyre strongly endorses: ‘Product and marketing should be intimately involved—in each other’s face and on the same side of the fence.’ “
• On putting mission statements into use: “If subordinate workers feel a leader is not living up to these principles, they are encouraged to ask supervisors how the conduct in question complies with the principles, thereby providing for accountability.”
• “Neeleman insists he doesn’t pay much attention to how much shares are trading for in the open market. “Herb Kelleher at Southwest Airlines said something very insightful,” Neeleman relates. “At the time it sounded shocking. He said, ‘I don’t care about my shareholders.’ ‘What do you mean you don’t care about shareholders?’ ‘Because I just take care of my employees. I know if I take care of my employees, they’ll take care of my customers, and my customers will take care of my shareholders.’ “

Also notable for the approach of culture fueling product is this quote from Gareth Jones, VP, Corporate Communications about their competition…

Song isn’t the success you might have heard it is from Delta. We’ve trounced them on any route we’ve shared. They copied the wrong things. They copied the obvious. They don’t focus on the human experience…they focused on the cosmetic. Ted is United with a different coat of paint.

Just finished James Wynbrandt’s Flying High: How JetBlue Founder and CEO David Neeleman Beats the Competition… Even in the World’s Most Turbulent Industry. I’d give it 3 stars out of 5 for being engaging enough to finish (something I rarely do anymore) and educational while a little light in critical point of view. Wynbrandt is clearly a fan, and he lays on the cheerleading a little heavy at times.

Part I of some notes:

• Moments of Truth, a 1987 book by SAS CEO Jan Carlzon, influenced Neeleman with a tale of turning around a declining carrier by transforming the operation into a customer-focused operation, radical at the time.
• A low-fare airline shouldn’t equal cheap operations: Neeleman bet on the low-maintainance of brand new planes to keep costs down.
• In deciding to base operations at Kennedy airport in New York, he went against the perception that it was crowded and hard to get to via top-down market sizing, estimating that even if only they only sold within the 5 million people who live closest to Kennedy (excluding all of Manhattan) JetBlue would still be a success.
• Learning from an early experience where his first business suddenly failed due to undercapitalization, he way overcapitalized JetBlue, raising $130 million. At the beginning all the investors and vendors were waiting for everyone else to make the first risky move, so Neeleman prodded them all into action by investing $5 million of his own money.
• When courting investors, the management team honestly said they weren’t out to make a killing, aiming for a margin of “between 15 and 20 percent, but not more than 20 percent. If our margin is higher than that, we’re either gouging customers or not paying our staff enough.“

If you’ve only seen Gordon Ramsay as the Donald Trump figure in Hell’s Kitchen, you’re missing out on what he really has to teach. In Ramsay’s Kitchen Nightmares on BBC he goes into a slumping restaurant and tries to turn it around in one week. As a manager he can see the whole system: kitchen, menu, balance sheet, product portfolio, interior design, customer service… sometimes he’ll even do wayfinding analysis. As a leader he uses a variety of approaches to teach, from jokes to insults. And while his get yer fookin’ bullocks goin’ style probably only works in the kitchen or construction sites, his sense of management is impressive. Fookin’ brilliant.

If you don’t get BBC/BBC America, I hear it might be out there on the internet somewhere (ahem).

Thanks to Scooter for pointing it out.

In all the hoo-hah about China’s economy we almost never hear of the human rights situation there anymore. The reason is not that the situation has vastly improved, in fact it’s compared to South Africa’s apartheid. I’m reminded of economic bubbles past when big money clouded our view of everything behind it.

Human Rights Watch still knows what’s up. Their backgrounder on China is disturbing, and includes…

• Widespread official corruption
• China prohibits independent domestic human rights organizations and bars entry to international human rights organizations
• The official cover-up of the SARS epidemic in Beijing
• Institutional pressures on the police to extort confessions through beatings and torture
• Chinese authorities employing increasingly sophisticated technology to limit public and private expression
• One of the largest AIDS epidemics in the world
• Employers routinely ignore minimum wage requirements and fail to implement required health and safety measures
• A government ban on independent trade unions
• Forced evictions of hundreds of thousands of residents in order to build new developments
• The crackdown on terrorism in Xinjiang has been characterized by systematic human rights violations including arbitrary arrests, closed trials, and extensive use of the death penalty
• The Chinese leadership continues to limit Tibetan religious and cultural expression and seeks to curtail the Dalai Lama’s political and religious influence in all Tibetan areas
• Chinese officials curb the growth of religious belief and its expression in practice through a series of laws and regulations
• The shortage of women and girls in rural areas has led to the kidnapping and selling of females as wives or prostitutes
• In 2004, as it had in the past, China suspended its dialogue with the U.S. in retaliation for the American sponsorship of a resolution condemning its human rights record

Most of the companies I’ve worked for have refused to work for one company or another, citing objections to the harm done by, for example, tobacco, alchohol or the defense industry. So I have to ask, if China was a company, would you work for it?