subscribe: Posts | Comments | Email

Two Interrelated Events: United Airlines and Jeff Bezos Tenet’s of Business

Comments Off on Two Interrelated Events: United Airlines and Jeff Bezos Tenet’s of Business

This week, general media headlines and social media commentary was totally dominated by the images of the United Airlines incident of a passenger being forcibly removed from an aircraft because of an overbooking situation. The experience had to be frightening for all involved and the video is very painful to watch.

Also, this week, business and social media has been echoing the latest Amazon shareholder letter authored by Jeff Bezos.

Whether by design or by chance, the two events are very much linked and serve as timely reminders, but in different degrees.

Most all of us are quite familiar with Amazon, both as online shoppers and as a collective supply chain community.  As customers, it seems that almost all of this online retailer’s persona centers on finding ways to constantly delight customers in the most hassle-free way, whether in searching products, ordering, or returning products, or consistently making good of any screw-ups, regardless of fault.  Loyal Amazon customers consistently return because of these demonstrated business traits.

This week, social media has been echoing the latest Amazon shareholder letter authored by Jeff Bezos. In that letter, Bezos states that making quick decisions and obsessing on customer outcomes are key to avoiding stasis within companies. If the term “stasis” is unfamiliar, do not be alarmed. Our Cortona inquiry indicates the term was derived from modern Latin and Greek meaning “to stand” a state of inactivity or equilibrium.

Bezos goes on to describe “Day 1” companies that are at the beginning of their potential with that of what he describes as “Day 2” companies, which he essentially describes as stasis, followed by irrelevance, followed by excruciating painful decline.

It is an insightful commentary from a noted visionary business leader who from the beginnings of Amazon, set a direction and focus for long-term growth and market penetration over short-term financial rewards for investors. Amazon suffered much initial abuse from Wall Street regarding its longer-term view and its obsessions for investment in the customer experience.

In the context of a business mission, Bezos observes that mission and focus can be competitor, product or technology focused. His charge for Amazon has always been an obsessive customer focus.

The above statement alone is a very important takeaway for supply chain leaders and practitioners and could have been the entire focus on this Supply Chain Matters blog commentary.

Instead, let’s dwell on today’s airline industry.

Many of us who fly frequently, which likely includes many of our blog readers under the broad supply chain umbrella have witnessed first-hand, the deterioration of customer service. It is fairly clear that the business focus changed from a customer focus to a bottom-line focus. Business decisions are now driven by relentless needs to improve profits, either by charging all forms of supplemental fees to driving all forms of efficiencies that could be garnered by either employees, operating equipment, or technology. Today as airline travelers, we are forced to endure the byproducts of strategies that have taken-on too much dominance. We pay extra fees for services that were once included as a given in airline travel to a point where most of the industry is now obsessed with charging added fees. There have been frequent incidents of airline IT systems failures, driven perhaps by too many changes applied to aged technology or developers rushed for time to make needed software fixes. We could go on to mention aircraft that is over-scheduled, not allowing proper response times for unplanned weather or other schedule disruptions, let alone required preventative maintenance.

The latest absurdity are so-termed basic fares that do not include the privilege of either a carry-on bag, checked luggage, and absent any reserved seat. Just show-up, pay, and will try to figure it out.

However, this week’s United Airlines incident was a far starker reminder of a business and industry environment that has now completely lost its customer focus.

In his letter, Bezos describes a state of customer obsession:

There are many advantages to a customer-centric approach, but here’s the big one: customers are always beautifully, wonderfully dissatisfied, even when they report being happy and business is great. Even when they don’t yet know it, customers want something better, and your desire to delight customers will drive you to invent on their behalf.

He then observes the tendencies for Day 2 companies to fall back on managing proxies, particularly those related to the process:

Good process serves you so you can serve customers. But if you’re not watchful, the process can become the thing. This can happen very easily in large organizations. The process becomes the proxy for the result you want. You stop looking at outcomes and just make sure you’re doing the process right. Gulp. It’s not that rare to hear a junior leader defend a bad outcome with something like, “Well, we followed the process.

That, by our lens, is the depiction of this week’s incident- United employees following the process without the context of the outcome, which was incurring needless physical harm to a paying customer and a public relation beating that will do damage to an already battered brand.

The initial response from United Airlines when the video went viral was that the airline followed the process for bumped passengers, after all, it’s all written in our customer contract.  It was not the second response from the CEO, which was do anything to make the situation right.

Not all airlines have deteriorated to such a state. But for the many that have, the context is no way that of Day 1, perhaps not that of Day 2, but very much akin to excruciating painful decline, at least for airline passengers.

And yes, there is a broader takeaway for the supply chain community.

Do not let your organization lose its focus on decisions that achieve positive customer or partner outcomes. As this blog has noted in prior commentaries, activist investors focused on near-term vs. longer-term financial results tend to force a changed context, one that is financial outcome driven. Much of that context eventually impacts supply chain resources and capabilities, including process and decision-making.

Keep a copy of the Jeff Bezos 2017 letter to shareholders prominently displayed and electronically accessible as a continual reminder of the differences in what customer ethos and stasis really mean.

Bob Ferrari

© Copyright 2017. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.

Be Sociable, Share!
  • more Two Interrelated Events: United Airlines and Jeff Bezos Tenets of Business

Comments are closed.