Telling It Like It Is

THE ENTERPRISE--Is This Any Way to Run an Airline?

THE ENTERPRISE

Often I write about "what went wrong" and what can be learned from it.  Here's a good experience story, with a lesson, to end 2006.  Next week's edition will be an expanded one, covering a diverse range of topics bridging both 2006 and 2007.  Have a safe and Happy New Year.

Is This Any Way to Run an Airline?
I chose Southwest Airlines for my Christmas trip from Ohio to Florida--mostly based on price and good value.  The trip back home revealed to me the many things an airline and its employees can do right, to make travel more enjoyable and less stressful--regardless of the price.  The trip began Dec. 26, mid-afternoon.   Weather had delayed flights in the Northeast, and traffic delays were rippling through the air traffic system.  Southwest.com posted our 5 PM Fort Myers to Orlando flight as 50 minutes late departing, and our connection at Orlando was only 55 minutes.   The Orlando flight was posted as 15 minutes late departing, leaving us just 20 minutes connection--tight, but still make-able.

Upon arrival at the airport, over an hour before our original departure time, we rechecked the connection.  The Southwest agent informed us that we were probably going to be OK and that the Orlando flight would likely be delayed more.  After waiting in the gate area about 30 minutes, I walked over to the counter to inquire again.  Before I got to the counter, the agent was on the intercom, telling us which connections were still OK and which might require changes.  For most of us, it was good news.  While the Orlando flight was delayed further, the extra delay meant we'd make the connection, even though our Fort Myers flight was running later than expected.

At Fort Myers, the agents announced when the flight was “in range” and the posted departure time was now just over an hour late--but no problem--plenty of connecting time in Orlando still remained.  The agent also told us that they'd be trying to “turn around” (e.g., unload and reload) the plane in twenty minutes, so they'd need to “hustle.”  The flight crew walked down the jet way shortly thereafter and waited for the plane to pull up, 10 minutes later.  The wheelchair attendant staged the two people in wheelchairs while everyone else lined up in the Pre-board, A, B, and C boarding areas.  Some people sat quietly on the floor reading or playing cards while they waited.

The plane landed and it took only 7-1/2 minutes for all of the passengers to get off-including two elderly people in wheelchairs.  Almost immediately thereafter, boarding started.   Since the flight wasn't full, we were encouraged to find seats quickly, and we did.  The total turnaround took less than a half-hour.  During the short flight of 20 minutes in the air, the flight attendants served us beverages (something other airlines don't even try on such short flights) and collected the containers (and even apologized for rushing some people).

Upon landing and pulling up to the gate in Orlando, as the seat belt sign went off with a ding, everyone rose and began opening overheads.  The flight attendant came on the intercom and asked if everyone would please return to--or just stay in--their seats.   He then called (in order) three different destinations with the tight connections so those passengers could disembark (one destination at a time) and let them know their connecting flights were waiting for them at nearby gates.  Only then, did he tell the rest of us we could collect our bags and leave--and our connections should all be OK.

We did, and the connections were OK.  Our Orlando departure was posted for the same time we had been told 3-1/2 hours earlier in Fort Myers, and the agent was apologetic when announcing that it would actually be 10-15 minutes later due to air traffic delays.  We were assured more than once that Southwest was going to try to get “everyone home tonight.”  In our case, the flight boarded and left Orlando almost two hours late, but we didn't care. Finally, the female flight attendant sang a lullaby (after all the safety announcements and as the cabin lights were dimmed), for those who wished to nap on the 9 PM to 11 PM flight.   What a nice touch.   And my cocktail was "on the house" because they were so late.

The courtesy, information sharing, considerate treatment, realistic scheduling and management of connecting flights by Southwest and its people had taken away the anxiety and stress of what could have been a very difficult ride home. 

As it was, we got home more than 2 hours late, but the intervening time was spent having leisurely drinks, snacks and knowing that someone was telling us the truth and keeping us informed at each step of the way.  Perhaps part of this is due to Southwest's point-to-point (vs. hub & spoke) traffic system.  Certainly part of it is due to its simplified processes, from beverage order-taking and service, to group boarding without assigned seats, and a single aircraft type. Most of it is due to Southwest's people.  Our thanks to them!

Is this any way to run an airline?  You bet it is.  Congratulations to Southwest and its people.  I'll be flying with them every chance I get.

HAPPY NEW YEAR TO ALL, John

PS:  There is nothing like courtesy, information sharing and open communications to reduce anxiety and improve morale--whether it is customers, associates, suppliers, or other "personal partners"--it works!

THE ENTERPRISE--What to Believe

THE ENTERPRISE

LIES, DAMNED LIES & STATISTICS
According to British ex-Prime Minister Benjamin Disraeli (repeated by Mark Twain), these are three common untruths we encounter in our daily life--and business.  Our government lies to us, both intentionally and unintentionally.  We suspect their misdeeds when their motives are in question.  The worst part is when the government's obsolete metrics create and publish statistics that are profoundly misleading.  As Will Rogers once said, "It ain't what you don't know that gets you; it's what you think you know that ain't so."

MONETARY POLICY, LOW GDP GROWTH, NO SAVINGS, GOVERNMENT'S TERRIBLE DEBT LOAD
Lie, lie, lie and lie.  Monetary policy, once believed to be the primary determinant of how our economy was driven has less and less effect than ever--and globalization is reducing the effect further every day.  GDP growth is distorted by the failure to measure the value of intellectual property, and even then the so called "bubble" of the 1990's was a lower growth period than the 1960's and 1980's spurts.   GDP growth measures are woefully out of touch with today's knowledge era.   Americans don't save--at least not the way the government statistics measure savings, but the wealth of Americans as a whole keeps growing.  How?  The savings comes in different means of building wealth.   Debt is bad--or so we are told.  The terrible national debt is a curse we are going to pass on to our grandchildren.  The debt now is less as a percentage of GDP than at many times in the past--including most of the 1980's and 1990's.  And for those who understand that some public debt is actually a stimulus to our economy--it may actually be too low, instead of too high.  Four in a row--all wrong.

BLOWS YOUR MIND, DOESN'T IT?
While you are shaking your head side to side about the preceding paragraph, you can check this out: http://online.wsj.com/article/SB116579723019846033-search.html?KEYWORDS=Five+macroeconomic+myths&COLLECTION=wsjie/6month).
Here is another one.  The so called "ever-widening divide" between the rich and the poor in the US is another lie--or at least a distortion caused by faulty analyses that reach a conclusion and then repeat that conclusion so many times it "becomes the truth."  The study that showed a huge divide and the growth in the percentage of wealth held by the top 1% of Americans is badly flawed.  In fact, the true analysis shows that nothing of the sort has happened.  The reporting and the reports included in the calculation were flawed. Other than business income (shifted there for tax reporting purposes) the top 1% of the US population had the same share of personal income (7.2%) in 2002, 2004, and 1988!  Read the analysis for yourself and see: http://online.wsj.com/article/SB116607104815649971-search.html?KEYWORDS=Alan+Reynolds&COLLECTION=wsjie/6month

SO WHAT SHOULD WE BELIEVE?
Maybe we should believe something that isn't subject to revision next month, next quarter, or by the next group of analysts.  Here's a great list, from columnist James B. Stewart (who writes for Smart Money).  He attributes them to his Dad, who recently died, at the age of 80, and he was on his way to work--doing something he loved. 
1)  Enjoy what you do.  2)  Play to win.  3)  Be an optimist.  4)  Learn from your mistakes.  5)  Cultivate a sense of humor.  6)  Don't follow the herd.  Now there is a list to believe in.

This sort of reminds me of Lou Holtz's comment: "A person really only needs 4 thing in life:  Something to do; someone to love; something to hope for; and someone to look up to."

These kinds of timeless truths transcend the statistics and analysis of the government statisticians and the political /financial analysts.  Sometimes we need to believe in things that are worthy of believing in.

BELIEVE IN THE USA & THE BRAVE FOLKS WHO PROTECT OUR FREEDOMS & PRAY FOR THEM
This holiday season, we should take a moment and think of those who sacrifice so we can enjoy the good life.   Below IS a web address (and for those receiving this via email, an attachment showing a  special Anheuser-Busch commercial.  The themes are similar.  Please watch them--and feel moved and proud.  I sure did.

Happy Holidays
John

(THE ENTERPRISE WILL TAKE A COUPLE WEEKS OFF FOR THE HOLIDAYS--MERRY CHRISTMAS AND HAPPY NEW YEAR TO ALL.)

Turn the volume up on this one.
http://www.iwo.com/heroes.htm

THE ENTERPRISE-Learning the Right Way

THE ENTERPRISE

TELLING IT LIKE IT IS--LEARNING THE RIGHT WAY
Last week I saw a brief interview with the North Carolina soccer coach who had just won another one of many National Championships.  He was asked what he did to achieve such dominant success.  His answer was so simple and accurate that it bears repeating:  "I start by recruiting the absolute best talent.  The rest is a lot easier after that."  Amen.  The same works in business too.  If you can sit opposite your colleagues and be pretty confident s/he is better than your competitor's person in a similar spot, there is a very good chance your company will prevail in any competitive situation.

US AIR GOT IT RIGHT   
I am not a big fan of US Airways since they haven't always provided me very good service.   BUT, they got it right on taking the "chanting Imams" off their flight.  If you don't believe me, go to the boarding area of a major airport and create a disturbance with any overtones of either terrorism, violence or illegal behavior. You'll get detained; taken off your flight; and perhaps spend some time in jail.  That is the law.  Why does this group of Imams think they can come here, violate the law and then protest when they are subjected to the same treatment as any other offender?  (They knew exactly what they were doing--creating propaganda material.)

PROFILING MAKES A LOT OF SENSE
In business, we used to have a saying, "it's easier to sell someone who wants to buy, so let's look for them."  In airline security, it's easier to pick out probably terrorists by narrowing the field to the demographic and cultural groups that have produced virtually all of the air travel related terrorists in recent years.  That's not discrimination--it's just good common sense.  The problem is that common sense isn't very common these days. 

TROY SMITH--(HEISMAN) WINNER
A little more on football. On Saturday night I watched a couple of classy young men at the Heisman Award ceremony.  Brady Quinn literally (and figuratively) stood tall and acquitted himself very well.  He is an impressive young man/leader.  But even as tall and positive as he stood, Troy Smith stood taller (figuratively).  Smith's story is a touching commentary on what a young man can do with his life when he has the right influences in it.  Like the principle in the opening paragraph, the lessons of sports carry over into the world of business.  Influences like Ted Ginn, Sr., Smith's hjigh school coach (and father figure) and Jim Tressel, the fine coach of The Ohio State University have provided that for Troy, as did his mother and sister.   So do good business mentors provide that positive influence.

ARE WE CREATING A GENERATION OF SEMI-LITERATE YOUTH?
I am concerned about our literacy and mental acuity, especially that of our youth.  Who bothers to remember phone numbers these days? Just put it in speed-dial on the cell phone.  I'm as guilty as anyone.  But I'm not sure that's good--in fact, I'm pretty sure it isn't good.  Don't bother to get directions or learn the way; either use GPS or Mapquest it.  Don't bother to read a newspaper or book.  Just go see the movie, or catch the TV news (on the cell phone's streaming video), or check it out on a pod-cast, YouTube, or Wiki-pedia (the world's largest unreliable reference).   So many of the tasks that create mental sharpness, the ability to recall and communication skills are being usurped by technological shortcuts.

COMMUNICATION IS A CRITICAL SKILL
I wonder how well this generation will be able to communicate via the written word: spelling words correctly (without a spell-checker), or even reading (and understanding) some of  the less common words in the English language.  Will the convergence of computers and communications with entertainment technology help or hurt them?  How well will they be able to speak in complete sentences--without using that all-purpose four-letter F-profanity as an adverb, adjective, noun and/or verb?  I recall some of my training as a young engineer (a long time ago).  I was told by a wise teacher (with industry experience) that I needed to learn to write coherent reports and make convincing verbal presentations on the projects I was assigned.   What great advice that was.

GIVE THEM A DICTIONARY AND GET THEM TO USE IT
Fortunately, my mother had encouraged me to read a lot and made me use a dictionary whenever I didn't know what a word meant (or even exactly how to spell it).  Maybe part of interview processes should be a test of those critical skills of reading, writing and speaking coherently.  Or perhaps, even knowing how to use a dictionary!  Agreed, 70% of communication is non-verbal, but if the 30% that is verbal is incoherent, the rest doesn't matter.  Let's make sure that anybody we can influence learns these basic skills--they are a lifetime gift--and a necessity, with our without computers.

Best,
John

PS:  Both Brady Quinn and Troy Smith have learned how to be leaders--where communication is a key skill--and tonight they proved they could speak coherently in a very high pressure, public situation.  (Young Darren McFadden gets a "bye" since he is only a sophomore, from a small town in Arkansas, and he'll be back for another chance to be more articulate--if he stays healthy).

THE ENTERPRISE--Globalization & The Economy

THE ENTERPRISE

THE US ECONOMY IS NO LONGER THE ONLY BIG FACTOR
A lead article by Michael Mandel in Business Week's Nov. 20, 2006 issue makes many interesting points about how the US economy once was THE dominant world economy.  Those days are waning fast.  It used to be that our government's actions totally influenced the world's economy.  Now we are just one of several large factors, and the day is coming (we'll struggle with realizing this) that we are not the dominant factor any more.  Or at least so Mandel contends.

CONSIDER THESE POINTS ABOUT GLOBALIZATION       
Since 1995 US imports have risen from 12% of GDP to 17%.  Foreign investment now finances 32% of US durable investment, up from 7% in 1995.  This means that the US economy is both more open to, and more influenced by our neighbors in the World.  Further, the proof is questionable whether US investment in research is going to benefit US workers.   It may not.  It will, if successful, generate growth.  But this growth may result in jobs elsewhere in the world.  Currently real wages for a young American with a bachelor's degree have declined by 8% over the past 3 years.  Nobody knows why with any certainty, but at least one factor has to be the flood of cheap, degreed workers in India, China, etc. competing for the work.  India and China are increasingly attractive places to do research, and technology makes it easier than ever.

HEALTH CARE EXPENDITURES--BANE OR BOON?
All we've heard for years is how much our health care costs are climbing, how they are undermining our economy and killing companies.  Maybe.   And maybe not nearly as much as we thought.  All of the US net job growth over the past 5 years has been concentrated in two industries:  housing (which is now sagging badly) and health care--and the vast majority of jobs were created in health care.  It is also a current, and prospectively a growing source of technology innovation.  Perhaps spending on the ability to live longer and healthier lives is not such a bad investment.  Maybe it just needs some "fine-tuning."

FINALLY--SOMEONE IS STEPPING UP--ELECTRONIC HEALTH CARE RECORDS
I felt like cheering out loud as I read the article on page B1 of Wednesday's Wall Street Journal.  In case you missed it three large employers are collaborating on a plan to provide digital health records to their employees.  British Petroleum, Intel and Wal-Mart (yes, the same one so many people love to hate) announced an initiative to create what Craig Barrett, Chairman of Intel called "the building block to modify the US health industry" into a more responsive and more cost-conscious system.  Later, ten more employers are expected to fund $1.5 million each to construct a massive data warehouse to store the records.

WHY IS THIS GOOD?
Simply eliminating duplicate tests and erroneous or lost information would dramatically lower administrative overhead.  Can you imagine not having to fill out that paper form over and over, and then realize that each time you do, several people downstream have to enter that data into some kind of system--WHEN IT IS ALREADY THERE!  More important, this can save lives.  it is estimated that just the electronic prescription part of the system will help prevent many of the 98,000 serious illnesses or deaths that come from prescription and drug interaction errors.  There are no "reliable" estimates of unnecessary deaths  due to medical records and medication errors, because no one wants to be exposed to the liability associated with the number, but I've read estimates of 40,000 annually!

WILL SOMEONE PLEASE TALK SOME SENSE INTO THE "WATCHDOG" GROUPS?
Of course, whenever someone wants to do something positive, there is a special interest group to oppose it,  This time it's the Patient Privacy Rights Foundation that is worried about your medical record privacy.  I wonder if they worry when people suffer and die because there is no database to consult.  Next, some group will accuse these leading companies of some sinister motive--like trying to reduce the amount of money they spend on health care.  Of course they are.  They should be.  The goal is (or at least should be) to provide the best possible health care for the least amount of money spent--isn't it?  The neat part of this initiative is that these companies know how to get things done, and this kind of system puts the health care control back in the hands where it belongs--the individual whose health is involved--with information at his/her fingertips.

GOOD NEWS AND (maybe) BAD NEWS ON THE FUTURE OF THE ECONOMY
Some forecasters think the housing "collapse" is nearly over.  Some think the overhang of housing inventory will make it last lots longer.  Many are happy that the stock market is up and inflation is tame.  Oil prices has settled down (for now anyway).  But we are not out of the woods yet.  Wal-Mart's lackluster comp store sales (slightly down for the first time ever) is just one warning.  The Fed is not going to reduce interest rates anytime soon, either.  Christmas sales will be OK, but not exciting.  As usual for the past year or two, they'll be spotty and uneven. 

A NERVOUS EARLY/MID-2007
I am still sticking with a nervous prediction about a 2Q-3Q slump in '07.  Not a deep one, but too close for comfort to what could be technically called a "recession."   Watch January reports--Christmas sales especially.  Then watch the earnings reports for the year that start coming out in Feb. (or more appropriately, warnings of shortfalls ahead of earnings releases).  Maybe the US economy can skate through.  Neither Congress nor the White House can do much to help this close-in time frame.  The announcement of some kind of withdrawal from Iraq might help the nation's psyche--if it is done with the utmost care.  Until then, follow the motto--"expect the worst, plan to deal with it, be prepared to capitalize on the best, and hope to be pleasantly surprised."

Stay tuned...

Best, John