Leadership & Business

Sometimes you just have to break the rules...

I don’t need tell you about the horrors people faced last week—stuck on planes for hours, and hours, and hours, because airlines couldn’t figure out how to offload them.

I understand that extreme weather sometimes causes extreme problems—but this  also calls for extreme solutions. And quite honestly, the potential solutions I heard articulated by talkers on the news were simply not that extreme.

I was listening to a spokesperson for the Port Authority of NY explain that they couldn’t send a bus to take people off a Cathay Pacific flight (that had been sitting on the tarmac at JFK for 12 hours) because they had nowhere to put them and no way to process them through customs and immigration.  Really?  Are there NO exceptions?  Let’s think about it just a little:

1. The people on that plane had every expectation of getting processed through customs and immigration when they boarded the plane.  What are the odds one of them was trying to get away with something?  I stroll into countries all the time and just head for the green line—no customs check required.
2. The plane was already on the ground. What are we afraid they’re smuggling? Drugs—like we can’t handle just a little more (however improbable).  A gun?  They can buy that here more easily than smuggling it into the country.  A bomb? The plane had already landed.
3. Could the bus not take them to the customs and immigration door?
4. Could we take a chance and forget the immigration line in an extreme situation? What are the odds—of all the ways to sneak into this country—that terrorists choose an airplane in the first place, and that they’re on THIS plane?  Don’t we take chances all the time in this country to protect people’s rights and dignity? Was this not an appropriate time to honor and respect people and holiday travelers in general?

This is a perfect example of typical government thinking. It’s not that the processes we have in government are any worse than in the private sector. It’s that we have so many rules, and so few people empowered to decide when to bend them, that we become dysfunctional. The most successful businesses are the ones that know when and how to break the rules. Maybe we’d be better off with a government that knew when to break them, too.

Simple Math Gives a Clue to the Future

Wired Magazine recently cited “statistical literacy” as one of the 7 Essential Skills we’ll all need to navigate the future.  And while I agree, sometimes all we need is a little basic math to get the picture.

Take today’s headlines citing a more than €100 billion (US $137 billion) bailout for the Irish banking system that’s about to come from the EU and World Bank.  Not so bad, right?  After all, The US bank bailout (TARP) was $787 billion.  But a little perspective (or math) is needed.

Ireland has a population 4.5 million.  The US has a population of 300 million.  Do the math and you quickly find that in US terms, the Irish bailout is the equivalent of over $9 trillion. 

That’s more than ten times the size of the US bank bailout on a per capita basis.  How will Ireland ever repay something like that? Answer—it won’t. It can’t.

Statistics may be intimidating, but math can certainly be a little scary!

What’s good is a value proposition, anyway?

I don’t like the generic, “value proposition,” that many companies craft.  “We help you reduce costs.”  “Increase shareholder value.”  “Increase visitors to your website.” 

A big part of the reason I don’t like such statements is that all too often, I don’t feel like the things companies cite as value propositions, or differentiators, are generally very differentiating. That’s because for something to truly be differentiating, there’s another word that must be embodied in it:  scarcity (value that can’t be delivered by others).  Take my company, for example.  If we tell you we can save you $100 million and it will only cost you $10 million to get it, that’s value. Sure, it’s a 10 to 1 return on investment. Who wouldn’t want that?

But that’s the wrong question to ask. The right question is whether it’s the best value.  And it’s not if someone else can provide the same $100 million return for $5 million. So if you consider a pyramid, with 100 firms that can do it for $50 million at the bottom (wide part), 10 firms that can do it in for $10 million in the middle of the pyramid, and only one can do it for $1 million, the one at the bottom not only provides exceptional value, it also provides scarcity, because you can’t get it somewhere else for that price.

However price is not the way you want to create scarcity.  There are better ways, like being able to solve the problem faster.  Being able to solve it with less pain.  Being able to create a more sustainable solution. And of course, when you are the only one that can solve the problem in the first place, you’ve achieved the ultimate in scarcity.

The point is that differentiation is only a means to an end. What ultimately determines your profitability is scarcity of something needed by customers.  True differentiation creates scarcity.

Relationships…

Relationship, relationship, relationship…it’s all about the relationship.  Every time I’ve introduced the concept of “process” to sales people, I get a speech about why sales is all about relationships, not processes. There are just two problems with that. First, it’s not true and second, very often people don’t actually understand when someone wants a relationship with them, and when they don’t.

Ever get a call from the local auto dealer after having your car in for some routine service. They call you to ask how it went.  A $24.95 oil change and they want your feedback???

The other day I checked into a hotel at 4:00 in the afternoon. At 5 I got a call from the front desk asking me if everything was ok. I was with about 50 people the next morning, all staying at the same hotel, and I asked how many had also received a call. Fifteen or so hands went up. Then I asked how many appreciated the call. Zero hands.

It’s highly probable (guaranteed, really) that someone TOLD the auto dealership to call and someone told the front desk to call.  After all, it’s about customer feedback and relationship building, right? But is that want we customers really want?  No, what most of us really want to be left alone.  Now, there may be some out there who appreciate the call, but a study by McKinsey and company actually found that 97% of customers say they get called too often. Only 3% say not enough.

Think about your favorite movie theatre. Do you go there because they have nice stadium seating, it’s clean, and there are good restaurants nearby. Or do you go because you have a relationship with the manager or the kid serving popcorn?  Not every business is about great “relationships.” Sometimes they’re just about great service.  Knowing what matters to YOUR customers—now that takes a process.