Business Strategy

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The march to Imperial Class

Continues unabated: “Etihad’s New Three-Room Suite, for When First Class Just Doesn’t Cut It” in BusinessWeek.

The space, which costs about $43,000 for some flights, is priced to include two travelers and comes with a butler, chef, and shower.

For the background on Imperial Class, here’s the original press release, and here’s an update.

I’m not criticizing Etihad, by the way. If they feel there’s a market for this service and they can make a dirham or two, more power to them. That’s what business is all about.

It’s sometimes said that services like this indicate a bifurcation — the superrich and everybody else. That’s sort of what I was driving at in the original news release. But that’s not quite right.  This service is a consolation prize for those who are rolling in dough but can’t afford a Gulfstream. The real superrich will fly their own G650s or similar, leaving a service like Etihad’s for the merely very wealthy. It’s the distinction between the 1% and the .01%, a distinction that is, I’m sure, important to those concerned.

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The Smartest Guys on the Tarmac?

As I recently reported, Delta has made systemic changes that are improving many measures of quality simultaneously.  Their financials are also improving, with the airline reporting a net income of $2.7 Bn last year. Put these two together and you have a strong indication that they are successfully applying lean principles to the airline industry.

This is great, and as a long-time Delta flyer (and million miler), I wish them well. But a recent write up by Jens Flottau  in the industry standard Aviation Week does raise a red flag.

You see, the real key to lean is orientation, and a great rule for orientation is to stay paranoid. No matter how good you are, there is somebody out there who will learn from your experience and who, because they aren’t the industry leader, is hungrier. More motivated. Leaner. Dangerous. Continue reading →

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Plausible deniability?

That seems to be what many CEOs nowadays are going for: “Chiefs at Big Firms Often the Last to Know” (paywall), in yesterday’s Wall St. J. The argument goes

Bosses need to know what’s going on to make informed decisions, but that knowledge is dependent on what direct reports choose to tell them.

So you have lots of levels and filtering going on at every level. Pity the poor CEOs at the end of the chain.

To which I reply, “Only if they’re stupid.” Or their idea of management is to sit in their corner offices, ponder their enormous salaries, and receive the ministrations of minions. Continue reading →

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CEO to beancounters: Sit down!

On the one hand, it’s always to good to see sanity prevail:

Delta Chief Executive Richard Anderson studies daily cancellation reports and overruled arguments inside the airline that there weren’t enough cancellations to justify the cost.

As Wall St. J. airline columnist Scott McCartney writes (paywall), attitudes such as this help explain why Delta has the lowest cancellation rate in the industry, a whopping 50% below that of the next best airlines (Southwest and Alaska) and nearly 1/6 of the airline industry average of 1.7%. Continue reading →

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Maneuver retail — 2

Another in our series on improving the performance of retail operations and improving the quality of life for people in it. Last post, we looked at Nordstrom; today it’s Chipotle. Yesterday, the online magazine Quartz ran a feature on their management approach.

To start off, you have to give them credit for having a unifying vision:

“The foundation of our people culture, on which everything else stands, is the concept is that each person at Chipotle will be rewarded based on their ability to make the people around them better,” [Co-CEO Monty] Moran told Quartz. Continue reading →

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Don’t fence me in

Nordstrom, as management consultant Michael Solomon pointed out in a recent LinkedIn column, has only one statement in its employee handbook: “Use your best judgment in all situations. There will be no additional rules.” This is not, as he goes on to observe, quite true:

There is, however, a second element of nearly equal importance at Nordstrom and at every other great organization: standards.  Additional guidelines and internal, codified knowledge that support these employees and multiply the power of their “best judgment.” Continue reading →

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Boyd for Business & Innovation — Final Report

Chuck Spinney explaining some obtuse point about the OODA loop

Chuck Spinney explaining some obtuse point about the OODA loop

After my presentation, retired Marine Colonel Mike Wyly joined us from Maine via Skype to relate how the Marine Corps adopted the doctrine of maneuver warfare. Mike gave us a blow-by-blow description of a process in which he played a major role. Successful doctrinal changes by large organizations are rare: If you are the CEO of an organization considering such a change, you could do a lot worse than spending some time with Mike. His paper, “Thinking Like Marines,” is conveniently available on the Articles page. Following Mike, Sean Bone, co-founder of Adaptive Leader, demonstrated tactical decision games (TDGs) they use for training leaders in mental agility and timely decision-making under conditions of stress and uncertainty. This is real-world, practical stuff that I’m sure will be a great help to many of the participants.

Finally, for a successful implementation of Boyd’s ideas in business, Dean Lenane, then-CEO of CRH North America, described how he and his small team built CRH from no presence in the US market to a major player in their industry, explicitly using the principles of Boyd’s Discourse. Absolutely fascinating. Dean has written a thinly disguised novelization of one episode in this adventure, The Turnaround, which you can (and should!) also download from the Articles page. Continue reading →

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Boyd for Business & Innovation — 2

Before I forget, Chuck Spinney made a point about the OODA loop that bears repeating: Boyd did not want to draw the thing! In fact, he didn’t, until the penultimate chart in his very last briefing, less than a couple of years before he died.

Why not? Probably because he was afraid any “loop” he drew would become dogma, a reasonable assumption. Chuck finally persuaded him by using the logic that if he didn’t, others would. Most likely the circular O – O – D – A loop would become fixed in people’s minds. So Boyd agreed, but he insisted on calling it an OODA loop “sketch,” and putting “Loop” in quotes.

If you look at that briefing, the purpose of “OODA loops” (not “the OODA loop”) is simply to represent the process of evolving new implicit repertoire. Now, that’s a big purpose because our ability to survive on our own terms and increase our capacity for independent action rests solidly upon it. But it also suggests that people can create other OODA loops that serve their purpose better than Boyd’s sketch, at least in specific instances. All I ask is don’t make them more complicated than what we already have.

I have uploaded my presentation, slightly edited, to the Articles page. It’s a 3.1 MB PDF, and each element of each animation is saved as a separate slide, so don’t let the number of slides put you off. You can also download all of Boyd’s briefings, including the one we were just discussing, The Essence of Winning and Losing, from that page.

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Boyd for Business and Innovation — 1

Got back on time from San Diego last night, which is saying a lot, considering what’s happening on the East Coast.  On the other hand, fifty-five degrees and horizontal rain isn’t something you generally associate with San Diego, but it’s still one of my wife’s and my favorite cities. [As I’m typing this, we’re starting to get heavy rain here. It’s followed me home.]

The conference was great. Hans Norden along with the staff at the Rady School of Management at UCSD did a fantastic job of pulling it together. If you didn’t make this year’s event, I think they’re planning for another to coincide with monsoon season next year.

Personally, it was a hoot meeting several folks that I only know through this blog. Thanks to all of you for coming and for your enthusiastic participation.

I’ll be posting more over the next several days. In the meantime, Chuck Spinney has given me his presentation, Evolutionary Epistemology, for posting, and it’s up on our Articles page now.  I’ve been watching this pitch evolve, if you’ll pardon the expression, since about the time Chuck first gave it. It just keeps getting better and better.

More stuff and impressions over the next few days.

 

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Competition Rules

A little double entendre to start your Thursday.

First, an op-ed by Jacques Gansler in the NYT, “To Save on Defense, Hire Rivals.”

If monopolies are created in a quest for short-term savings, taxpayers eventually pay more and our country is less safe.

This is a favorite theme of mine, expressed as “If you can’t afford two suppliers, you certainly can’t afford one.” The question would be, “Who really wants to save on defense?”

And then there’s a short piece on LinkedIn by David Edelman on a favorite theme of Boyd’s, “Don’t be ruled by rules.”

And in a world of rule-based contacts, there is still important space that needs to be made for two people just being allowed to discuss a customer’s need and develop a solution. No one likes to sit through a canned set of questions when they agree to enter a chat window on a site or when they call a representative. We want a human, free-flow interaction. Many clients of ours have actually found that they resolve issues faster on the first round, cut call times, and have happier customers when they loosen the rules and give smart reps more leeway.

Slavishly following rules makes you predictable. This can be fatal in a conflict, and boring, and hence also fatal, in sales & marketing. It’s worth noting that a lot of this argument goes away if you replace most of your rules with an EBFAS-type culture.

I’m off to the Boyd conference in San Diego. More on that as it happens.