In 2008, I was honored to be at the Univ of Chicago Booth School Distinguished Alumni Media Panel. One question from the mostly soon-to-be-MBA-grad audience was about how to stop Facebook posts from preventing you from being hired. How can Facebook be a personal sharing service if personal history becomes available to everyone?
There was a long discussion about the usual advice to not post embarrassing and controversial content, not making your profile public, etc. Several panelists admitted looking at Facebook before making a hiring decision to confirm the advice to keep your Facebook clean.
I had listened without participating because the conversation seemed weird. At the time I worked at HP and HP had an extremely good HR department with a clearly conservative view on such matters. And all of us at HP had been taught well to select workers objectively, based on the candidates' ability to perform the job regardless of all non-work related characteristics (it has been awhile, so I don't recall exactly the right language.)
Getting back to the panel, it seemed like a weird discussion because all Facebook content is personal, not related to ones abilities to perform the job and so it shouldn't matter what content you post. One should never be rejected for a job because of Facebook.
Finally, I injected this point of view into the discussion. I remember predicting there will be an entire new legal expertise about the 'Facebook' separation once the first lawsuit is won by a rejected candidate. Of course, difficult to prove, but not that difficult. The discussion switched to a discussion of, even if Paul's perspective is true, can you take the risk? After a few rebuttals, the discussion wound down and the session closed.
Since that Panel, I have tracked the public discourse for any hints that the Facebook separation had been probed and defined legally. Until now, I haven't seen much about the topic (admittedly not looking that hard). I guess Facebook has become such a normal part of life that everyone knows the rules of engagement (and how to untag and delete questionable content). Moreover, all these years later, Facebook has become mostly a 'highlight reel' of our lives, not a journal of the good, the bad and the ugly.
The Fast Company article below makes clear that Facebook is mostly off limits with potentially high legal consequences. The article is located here:
http://www.fastcompany.com/1843142/what-you-should-know-about-screening-your-potential-hires
For me, there finally is closure to the advice I gave many years ago. To all those students-who-are-now-successful-employees, I hope Facebook can be fun again for you. My only question is, what took so long?
Friday, July 20, 2012
Sunday, June 6, 2010
Ethics Question: Facing $500,000/day in penalties, would you cut corners?
It is easy to get angry at BP and its contractors for the Deepwater Horizon debacle. And we are. What is the good that comes from looking at the situation more closely? We can learn a great lesson about a common ethics question facing leaders everywhere: Financial consequences of operations failures inevitably produce bad decisions unless ethics policies are woven into the organizational fabric at every level.
In a brilliant article by Ian Urbina, the NY Times reported the many shortcuts taken by BP and its contractors to finish drilling the Deepwater Horizon well to begin collecting oil and gas riches from this generous reservoir. Urbina points out that BP was 43 days late finishing the well. BP's contractor, TransOcean, who drilled the well, charged $500,000 per day for its services. At the time of the explosion, BP already owed over $21 million in extra fees! This is enough money to make most decision makers freeze up and BP was no exception. In an effort to find the lesson, let’s look more closely at critical policy failures that contributed to BP’s disaster:
- Did the BP executive in charge have the experience and training to manage the tension created from financial pressure vs. the imminent dangers to lives and the environment? How many $21 million decisions had they made previously? Or $500,000/day decisions?
- Did the BP engineers on the well site have instructions and communication lines to make good decisions on the spot?
- Did BP's Standards of Business Conduct training address safety and environmental management and disaster avoidance?
- Did BP clearly tell executives, managers and employees how to manage financial dilemmas like Deepwater Horizon, trading off short-term financial losses to avoid long-term financial disasters?
Answers to these questions will reveal insights about how BP mismanaged the well operations, and will inform the rest of us how to manage our own operations with the right ethics and financial objectives. I suspect that as the criminal investigations continue, we will learn answers to these and many related questions.
The penalty fees of $500,000 per day is insignificant compared to the costs BP now faces: a $75 billion decline in market value, loss of life from well operators who died in the explosion, the worst environmental disaster in US history that will cost millions if not billions to clean up, and a black mark on BP’s reputation so large it may never recover. How could BP’s leadership not understand that short-term penalties could never be more severe than these potential costs? Despite the overwhelming financial incentives to not take shortcuts, why were they taken anyway?
I believe three factors swayed BP decision makers in the wrong direction, providing clear lessons for leaders everywhere:
1. Rarity: The last time a deepwater well blowout occurred was over 30 years ago. Faced with such an unlikely event, BP decision makers discounted the risks. Rarity tricks leaders to make wrong conclusions that nothing bad will happen because the odds are in their favor. This same belief that rarity “means never” led to the US real estate bubble, where investors came to believe that housing prices would always go up.
2. Inexperience: BP decision makers lacked experience and/or training to grasp the ramifications of their decisions or the magnitude of the potential disaster. Lines of communication were ineffective. Authority was dispersed between BP, its contractors and the US government, so no one was running the ship. Moreover, BP should have asked if anyone in the chain of command had previously made a $1B environmental disaster decision. Or had they previously made a $500,000 per day decision?
3. Insufficient Assessment Tools: As most innovation executives thoroughly understand, a project that is significantly and repeatedly behind schedule frequently hides fundamental flaws that require major rework by the leadership team. For example, a product that can't be manufactured in volume might have a design flaw that must be reworked by engineering. BP decision makers ignored the warning signs, failing to halt drilling and re-assess the entire project design until it was too late.
The Five Lessons for executives and leaders everywhere become clear in light of this disaster:
1. Balance operational performance incentives and penalties so decisions meet both long-term and short-term objectives.
2. Clarify lines of communication and authority so that all team members know the name of the person accountable for the project and know how to reach them.
3. Manage innovative projects closely and heed warning signs that they might be flawed in fundamental ways.
4. Challenge teams to strive for intellectual honesty in risk assessment. Don't accept easy answers like the 'rarity' argument.
5. Funnel decisions to managers and executives who possess sufficient experience and training to make the right decisions, in spite of fierce and unimaginable pressures. Ask your leaders about their experience to predict how they would manage their teams in the face of fierce adversity.
Let's hope a disaster like the one in the Gulf never occurs again. By understanding BP’s missteps, leaders everywhere can implement changes in their organizations that drive leaders to take control back from compelling financial pressures -- $500,000 a day, as serious as that is, should never force an unethical decision.
In a brilliant article by Ian Urbina, the NY Times reported the many shortcuts taken by BP and its contractors to finish drilling the Deepwater Horizon well to begin collecting oil and gas riches from this generous reservoir. Urbina points out that BP was 43 days late finishing the well. BP's contractor, TransOcean, who drilled the well, charged $500,000 per day for its services. At the time of the explosion, BP already owed over $21 million in extra fees! This is enough money to make most decision makers freeze up and BP was no exception. In an effort to find the lesson, let’s look more closely at critical policy failures that contributed to BP’s disaster:
- Did the BP executive in charge have the experience and training to manage the tension created from financial pressure vs. the imminent dangers to lives and the environment? How many $21 million decisions had they made previously? Or $500,000/day decisions?
- Did the BP engineers on the well site have instructions and communication lines to make good decisions on the spot?
- Did BP's Standards of Business Conduct training address safety and environmental management and disaster avoidance?
- Did BP clearly tell executives, managers and employees how to manage financial dilemmas like Deepwater Horizon, trading off short-term financial losses to avoid long-term financial disasters?
Answers to these questions will reveal insights about how BP mismanaged the well operations, and will inform the rest of us how to manage our own operations with the right ethics and financial objectives. I suspect that as the criminal investigations continue, we will learn answers to these and many related questions.
The penalty fees of $500,000 per day is insignificant compared to the costs BP now faces: a $75 billion decline in market value, loss of life from well operators who died in the explosion, the worst environmental disaster in US history that will cost millions if not billions to clean up, and a black mark on BP’s reputation so large it may never recover. How could BP’s leadership not understand that short-term penalties could never be more severe than these potential costs? Despite the overwhelming financial incentives to not take shortcuts, why were they taken anyway?
I believe three factors swayed BP decision makers in the wrong direction, providing clear lessons for leaders everywhere:
1. Rarity: The last time a deepwater well blowout occurred was over 30 years ago. Faced with such an unlikely event, BP decision makers discounted the risks. Rarity tricks leaders to make wrong conclusions that nothing bad will happen because the odds are in their favor. This same belief that rarity “means never” led to the US real estate bubble, where investors came to believe that housing prices would always go up.
2. Inexperience: BP decision makers lacked experience and/or training to grasp the ramifications of their decisions or the magnitude of the potential disaster. Lines of communication were ineffective. Authority was dispersed between BP, its contractors and the US government, so no one was running the ship. Moreover, BP should have asked if anyone in the chain of command had previously made a $1B environmental disaster decision. Or had they previously made a $500,000 per day decision?
3. Insufficient Assessment Tools: As most innovation executives thoroughly understand, a project that is significantly and repeatedly behind schedule frequently hides fundamental flaws that require major rework by the leadership team. For example, a product that can't be manufactured in volume might have a design flaw that must be reworked by engineering. BP decision makers ignored the warning signs, failing to halt drilling and re-assess the entire project design until it was too late.
The Five Lessons for executives and leaders everywhere become clear in light of this disaster:
1. Balance operational performance incentives and penalties so decisions meet both long-term and short-term objectives.
2. Clarify lines of communication and authority so that all team members know the name of the person accountable for the project and know how to reach them.
3. Manage innovative projects closely and heed warning signs that they might be flawed in fundamental ways.
4. Challenge teams to strive for intellectual honesty in risk assessment. Don't accept easy answers like the 'rarity' argument.
5. Funnel decisions to managers and executives who possess sufficient experience and training to make the right decisions, in spite of fierce and unimaginable pressures. Ask your leaders about their experience to predict how they would manage their teams in the face of fierce adversity.
Let's hope a disaster like the one in the Gulf never occurs again. By understanding BP’s missteps, leaders everywhere can implement changes in their organizations that drive leaders to take control back from compelling financial pressures -- $500,000 a day, as serious as that is, should never force an unethical decision.
Saturday, June 5, 2010
Twelve Months in the Garage
Thinking back on my corporate entrepreneurial experience inside HP, each start-up had its share of peaks and valleys -- personally, professionally, and emotionally. In every case, the most exhilarating period was spent 'in the garage', learning, experimenting, creating. During this insane period there are few real pressures, when a small team bonds in marvelous ways to build lasting friendships, and when each new discovery creates such excitement that it generates both a physical and emotional response -- what I call a 'goose bump moment'.
Every leader of a new business venture needs to understand the critical nature of the 'garage period'. The 'garage period' is defined as the initial project phase when a dedicated and highly-motivated team focuses on a loosely-defined opportunity, officially sanctioned or not. In the garage period, three critical roles emerge:
1) Technologists and marketers assess company assets and technology against the target opportunity, and invent solutions.
2) Marketers study end-to-end business requirements and engage potential customers to perfect the company's portfolio.
3) Business leaders assess employee 'fit' and investor expectations.
A couple of important company dynamics take place in the garage. The first dynamic that forms in the garage is the foundation of the company culture. Successful executives actively manage company culture for rewarding risk-taking, failures and successes; for defining attitudes about diversity of people and ideas; and for defining lasting core values. The second dynamic that forms is management practices; however, management practices can change significantly once the company emerges from the garage door. While still in the garage, each member chooses to join the team, enjoying the intensity, excitement and camaraderie. It is one of the best development opportunities an employee experiences in any company, large or small. No team member wants to waste such a once-in-a-lifetime opportunity. However, as the company grows, the need for more traditional and formal management policies is required as new members join the team.
I often get questions during my lectures at Berkeley’s Haas School of Business about the concept of ‘leaving the garage’. Why leave the garage if it’s so rewarding and successful? When companies leave the garage, isn’t that when they lose their way? For most successful companies, there is a small team that never leaves the garage, continuing to innovate great things for the company. However, garage metaphor captures the focus of the senior leadership team which changes from creating the business ‘inside the garage’ to operationalizing the strategy and scaling the business ‘outside the garage’ to deliver the financial results expected from investors. Google represents a great example of leadership transition from inside to outside the garage. Google spent its first years inside the garage developing its brilliant search algorithms. However, as it neared the point of exiting the garage (defined as its IPO), Sergey Brin and Larry Page, Google’s co-founders hired Eric Schmidt, an experienced technology executive, to provide critical leadership outside the garage. For every successful start-up, the garage door always stays open to help the leadership team innovate to adapt quickly to its dynamic business environment.
When I decided to leave HP twelve months ago to start up Borei Corporation, an entertainment technology firm, one question I had was, how would this cycle play out without the support network provided by friends, technologists, mentors, and support staff from HP? In other words, would our time in the garage be as rewarding?
My new venture is indeed generating the thrilling peak-and-valley cycle -- just as within HP. We spent the past twelve months in the garage, building technology for the entertainment industry, inventing technology for toys and games that will change toys forever. Along the way, we had were numerous 'goose bump' moments that turned into brilliant solutions that toy makers are snatching up as quickly as we can invent them.
After twelve months, the Borei team is about to emerge from the garage without knowing exactly what lies ahead. Even without knowing, each team member has a sense of accomplishment that will last a lifetime.
Every leader of a new business venture needs to understand the critical nature of the 'garage period'. The 'garage period' is defined as the initial project phase when a dedicated and highly-motivated team focuses on a loosely-defined opportunity, officially sanctioned or not. In the garage period, three critical roles emerge:
1) Technologists and marketers assess company assets and technology against the target opportunity, and invent solutions.
2) Marketers study end-to-end business requirements and engage potential customers to perfect the company's portfolio.
3) Business leaders assess employee 'fit' and investor expectations.
A couple of important company dynamics take place in the garage. The first dynamic that forms in the garage is the foundation of the company culture. Successful executives actively manage company culture for rewarding risk-taking, failures and successes; for defining attitudes about diversity of people and ideas; and for defining lasting core values. The second dynamic that forms is management practices; however, management practices can change significantly once the company emerges from the garage door. While still in the garage, each member chooses to join the team, enjoying the intensity, excitement and camaraderie. It is one of the best development opportunities an employee experiences in any company, large or small. No team member wants to waste such a once-in-a-lifetime opportunity. However, as the company grows, the need for more traditional and formal management policies is required as new members join the team.
I often get questions during my lectures at Berkeley’s Haas School of Business about the concept of ‘leaving the garage’. Why leave the garage if it’s so rewarding and successful? When companies leave the garage, isn’t that when they lose their way? For most successful companies, there is a small team that never leaves the garage, continuing to innovate great things for the company. However, garage metaphor captures the focus of the senior leadership team which changes from creating the business ‘inside the garage’ to operationalizing the strategy and scaling the business ‘outside the garage’ to deliver the financial results expected from investors. Google represents a great example of leadership transition from inside to outside the garage. Google spent its first years inside the garage developing its brilliant search algorithms. However, as it neared the point of exiting the garage (defined as its IPO), Sergey Brin and Larry Page, Google’s co-founders hired Eric Schmidt, an experienced technology executive, to provide critical leadership outside the garage. For every successful start-up, the garage door always stays open to help the leadership team innovate to adapt quickly to its dynamic business environment.
When I decided to leave HP twelve months ago to start up Borei Corporation, an entertainment technology firm, one question I had was, how would this cycle play out without the support network provided by friends, technologists, mentors, and support staff from HP? In other words, would our time in the garage be as rewarding?
My new venture is indeed generating the thrilling peak-and-valley cycle -- just as within HP. We spent the past twelve months in the garage, building technology for the entertainment industry, inventing technology for toys and games that will change toys forever. Along the way, we had were numerous 'goose bump' moments that turned into brilliant solutions that toy makers are snatching up as quickly as we can invent them.
After twelve months, the Borei team is about to emerge from the garage without knowing exactly what lies ahead. Even without knowing, each team member has a sense of accomplishment that will last a lifetime.
Sunday, August 23, 2009
Does economic hardship create innovation
NYTimes: Over 50% of the Fortune 500 were founded during a recession or bear market....
I'm not sure what this tells us. I mean, the company at #500 on the list is a $4.6B business, Legg Mason, a company founded in 1899, just a few years after the 1893-1896 recession. It's likely that Legg Mason was 'founded' during the recession or bear market, but that's probably a function of the length of the recession which lasted 3 years. Recessions lasted longer back then (3, 6, 9 years). In contrast, the longest recession after 1939 lasted a mere 22 months (in 1981-2). And the '91-'82 recession was fairly painful. Imagine how painful a 6-year recession would be. And how much innovation that would create, right?
The point of the article is to encourage people to start up new businesses now. Now could be the best time to do it. However, it's not clear what the cause-effect relationship is. Even if you accept the implication that recessions yield the right environment to create new businesses at a disproportionate level, it's not clear that short recessions today will generate the same number of start-ups that grow large enough to make the Fortune 500.
I agree that now is a great time to start up a business, but not for the reason cited by the NYTimes. I would say with certainty that the time is always right to launch a start-up for a good idea and solid business plan, regardless of economic conditions. Entrepreneurs and Intrapreneurs are always looking for opportunities to launch new businesses, again, regardless of the economy.
Many times during my years at HP where I launched 5 businesses that generated nearly $1B in revenue, there was an investment pullback that was followed a few quarters later by a new growth strategy. For example, after HP and Compaq came out of the 2002 merger process, there was a clear shift of the pendulum in 2003 from cost reduction efforts to revenue growth. Fortunately, I anticipated the pendulum swing and worked on new business ideas during the slow down. This meant I had a well-developed business plan for a new venture ready when there was funding available in 2003.
I believe that recessions create the environment to launch new businesses at a higher rate than during good times for the following reasons:
- corporations reduce internal investment, making room for start-ups to pursue opportunities the big companies rejected
- top talent leaves large companies and joins or launches start ups, thus giving them valuable experience that increases the odds of success for the start up
- investors aggressively seek higher returns than established companies generate during downturns
- systemic problems become apparent during downturns, encouraging innovation with this new-found insight(this is the 'Monday morning quarterback syndrome')
For these reasons, this is as good of a time as any to launch a new business or join a start-up -- probably with higher odds of success than any time in history.
I'm not sure what this tells us. I mean, the company at #500 on the list is a $4.6B business, Legg Mason, a company founded in 1899, just a few years after the 1893-1896 recession. It's likely that Legg Mason was 'founded' during the recession or bear market, but that's probably a function of the length of the recession which lasted 3 years. Recessions lasted longer back then (3, 6, 9 years). In contrast, the longest recession after 1939 lasted a mere 22 months (in 1981-2). And the '91-'82 recession was fairly painful. Imagine how painful a 6-year recession would be. And how much innovation that would create, right?
The point of the article is to encourage people to start up new businesses now. Now could be the best time to do it. However, it's not clear what the cause-effect relationship is. Even if you accept the implication that recessions yield the right environment to create new businesses at a disproportionate level, it's not clear that short recessions today will generate the same number of start-ups that grow large enough to make the Fortune 500.
I agree that now is a great time to start up a business, but not for the reason cited by the NYTimes. I would say with certainty that the time is always right to launch a start-up for a good idea and solid business plan, regardless of economic conditions. Entrepreneurs and Intrapreneurs are always looking for opportunities to launch new businesses, again, regardless of the economy.
Many times during my years at HP where I launched 5 businesses that generated nearly $1B in revenue, there was an investment pullback that was followed a few quarters later by a new growth strategy. For example, after HP and Compaq came out of the 2002 merger process, there was a clear shift of the pendulum in 2003 from cost reduction efforts to revenue growth. Fortunately, I anticipated the pendulum swing and worked on new business ideas during the slow down. This meant I had a well-developed business plan for a new venture ready when there was funding available in 2003.
I believe that recessions create the environment to launch new businesses at a higher rate than during good times for the following reasons:
- corporations reduce internal investment, making room for start-ups to pursue opportunities the big companies rejected
- top talent leaves large companies and joins or launches start ups, thus giving them valuable experience that increases the odds of success for the start up
- investors aggressively seek higher returns than established companies generate during downturns
- systemic problems become apparent during downturns, encouraging innovation with this new-found insight(this is the 'Monday morning quarterback syndrome')
For these reasons, this is as good of a time as any to launch a new business or join a start-up -- probably with higher odds of success than any time in history.
Saturday, August 22, 2009
Good Flight Plan
Many articles have been written about Southwest Airlines’ secrets to successfully building a low-cost business model in a capital-intensive service industry. Southwest disrupted the airline industry many years ago and continues to do so today even though copycats have tried to beat them at their own game without success.
In spite of all that’s been written, I was still impressed during recent trips by Southwest operational practices that provide lessons for anyone striving to balance cost-cutting in today’s difficult economic environment with delivering competitive customer service. Let me mention several things that stood out on my recent trip from Midway Airport in Chicago to San Jose, CA, with a stop in Phoenix:
1. Skipped to the front of the line: Our departure from Midway was delayed about 30 minutes because the plane arrived late due to bad weather on the east coast. We boarded quickly and left the gate. Then, an amazing thing happened that I’ve never seen before. Our plane raced away from the gate at a faster-than-normal taxi speed, took a shortcut, and skipped ahead of another Southwest plane that had taken the normal route to the head of the runway so we could depart early. How did this happen? I imagined our pilot calling his friend in the other Southwest plane, saying, ‘hey Bob, I’m 30 minutes late, do you mind if I go first?’ And Bob, knowing how important it is for the company to get all passengers to their destination on time, said ‘ok’ and pulled over. The two pilots are on the same team with the same goals, resulting in our plane making up a 5-10 minutes of valuable passenger time.
2. Cleaning crew: When the plane pulled into the gate in Phoenix, I noticed they didn’t bring in a cleaning crew; the flight attendants cleaned the plane. Hmm, I wonder what the Flight Attendant Union rules at the older airlines say about that. But at Southwest, the Flight Attendants don gloves and quickly clean up the visible garbage. The impact of owning this task has a clear impact on Flight Attendant behavior. Because they know they have to clean the plane when it lands, they do a very thorough job of picking up garbage during the flight. And why not? If I was a flight attendant and knew that I had to clean the plane, I would figure out how to ‘clean up’ process to make it as painless as possible. As a matter of fact, I would enlist every passenger to clean up his own trash – he knows where he put his trash. As they say in back country hiking, pack it in, pack it out. Instead of defining jobs narrowly and discouraging innovation with formal union contracts like other airlines, Southwest assigns job responsibilities to the employees who have the ability to innovate new approaches to delivering efficient and effective results.
3. Quick turns: I clocked the amount of time the plane spent on the ground in Phoenix during the late trip from Chicago: 26 minutes. That’s incredible! They did everything in 26 minutes: emptied 100+ passengers, cleaned the visible garbage, refueled, boarded 100+ sunburned passengers from the 108 degree Phoenix sun, completed cockpit tasks (whatever that entails) and departed. Not only did this help us make up valuable time, but it also showed that Southwest has learned how to turn planes around quickly, thus maximizing utilization of its resources in this capital-intensive industry.
4. Snacks: With all this focus on cost-cutting, how could they possibly deliver competitive service levels? Let me say, they certainly over-delivered with the snack service. During the flight, Southwest serves snacks from a large Nabisco-branded box that includes cheese/crackers, peanuts, Oreo cookie thins, and animal crackers -- a choice of 4 snacks and – get this -- they let you take as many as you want! This is brilliant! No one can complain about getting one little bag of peanuts when flying on Southwest. Besides, this is a significant differentiator from other airlines which recently decided to charge for all food served during flights except for a bag of peanuts. However, this is counter-intuitive to Southwest’s low-cost approach. How do they do it? I couldn’t help but notice the large Nabisco label on the cleverly-designed box in which the snacks are served. I’m sure Nabisco ‘chips’ in some marketing funds to have the right to the great marketing exposure that comes with delivering exceptional customer service. It’s must be a great value for Nabisco to be seen as the solution to a major source of irritation while flying.
5. Room to work: 4 out of 5 flights were 100% full. In spite of this, there was room for my luggage above me, plenty of leg room, and plenty of room to open my notebook to write (I’m writing this blog post from my Flight 3792, seat 5B, middle seat, without incident). On other airlines, there never seems to be enough room in Economy class. You need to sit in Business Class or Economy-Plus seats -- which are reserved for loyal customers – to have enough room to work on a full flight. Southwest has learned how to be efficient without sacrificing one of the most important traveler requirements.
6. On-time arrival: The most important area where Southwest excelled was in on-time arrival. We departed 30 minutes late from Midway but because of the things I mentioned earlier, we arrived 4 minutes early in San Jose. That’s a guaranteed way to keep me as a customer.
Efficiency, combined with a clever approach to customer service: good flight plan.
In spite of all that’s been written, I was still impressed during recent trips by Southwest operational practices that provide lessons for anyone striving to balance cost-cutting in today’s difficult economic environment with delivering competitive customer service. Let me mention several things that stood out on my recent trip from Midway Airport in Chicago to San Jose, CA, with a stop in Phoenix:
1. Skipped to the front of the line: Our departure from Midway was delayed about 30 minutes because the plane arrived late due to bad weather on the east coast. We boarded quickly and left the gate. Then, an amazing thing happened that I’ve never seen before. Our plane raced away from the gate at a faster-than-normal taxi speed, took a shortcut, and skipped ahead of another Southwest plane that had taken the normal route to the head of the runway so we could depart early. How did this happen? I imagined our pilot calling his friend in the other Southwest plane, saying, ‘hey Bob, I’m 30 minutes late, do you mind if I go first?’ And Bob, knowing how important it is for the company to get all passengers to their destination on time, said ‘ok’ and pulled over. The two pilots are on the same team with the same goals, resulting in our plane making up a 5-10 minutes of valuable passenger time.
2. Cleaning crew: When the plane pulled into the gate in Phoenix, I noticed they didn’t bring in a cleaning crew; the flight attendants cleaned the plane. Hmm, I wonder what the Flight Attendant Union rules at the older airlines say about that. But at Southwest, the Flight Attendants don gloves and quickly clean up the visible garbage. The impact of owning this task has a clear impact on Flight Attendant behavior. Because they know they have to clean the plane when it lands, they do a very thorough job of picking up garbage during the flight. And why not? If I was a flight attendant and knew that I had to clean the plane, I would figure out how to ‘clean up’ process to make it as painless as possible. As a matter of fact, I would enlist every passenger to clean up his own trash – he knows where he put his trash. As they say in back country hiking, pack it in, pack it out. Instead of defining jobs narrowly and discouraging innovation with formal union contracts like other airlines, Southwest assigns job responsibilities to the employees who have the ability to innovate new approaches to delivering efficient and effective results.
3. Quick turns: I clocked the amount of time the plane spent on the ground in Phoenix during the late trip from Chicago: 26 minutes. That’s incredible! They did everything in 26 minutes: emptied 100+ passengers, cleaned the visible garbage, refueled, boarded 100+ sunburned passengers from the 108 degree Phoenix sun, completed cockpit tasks (whatever that entails) and departed. Not only did this help us make up valuable time, but it also showed that Southwest has learned how to turn planes around quickly, thus maximizing utilization of its resources in this capital-intensive industry.
4. Snacks: With all this focus on cost-cutting, how could they possibly deliver competitive service levels? Let me say, they certainly over-delivered with the snack service. During the flight, Southwest serves snacks from a large Nabisco-branded box that includes cheese/crackers, peanuts, Oreo cookie thins, and animal crackers -- a choice of 4 snacks and – get this -- they let you take as many as you want! This is brilliant! No one can complain about getting one little bag of peanuts when flying on Southwest. Besides, this is a significant differentiator from other airlines which recently decided to charge for all food served during flights except for a bag of peanuts. However, this is counter-intuitive to Southwest’s low-cost approach. How do they do it? I couldn’t help but notice the large Nabisco label on the cleverly-designed box in which the snacks are served. I’m sure Nabisco ‘chips’ in some marketing funds to have the right to the great marketing exposure that comes with delivering exceptional customer service. It’s must be a great value for Nabisco to be seen as the solution to a major source of irritation while flying.
5. Room to work: 4 out of 5 flights were 100% full. In spite of this, there was room for my luggage above me, plenty of leg room, and plenty of room to open my notebook to write (I’m writing this blog post from my Flight 3792, seat 5B, middle seat, without incident). On other airlines, there never seems to be enough room in Economy class. You need to sit in Business Class or Economy-Plus seats -- which are reserved for loyal customers – to have enough room to work on a full flight. Southwest has learned how to be efficient without sacrificing one of the most important traveler requirements.
6. On-time arrival: The most important area where Southwest excelled was in on-time arrival. We departed 30 minutes late from Midway but because of the things I mentioned earlier, we arrived 4 minutes early in San Jose. That’s a guaranteed way to keep me as a customer.
Efficiency, combined with a clever approach to customer service: good flight plan.
Sunday, May 31, 2009
Innovation Lessons from Non-Profits
Good article in the SJ Merc today by Chris O'Brien:
The 3 Lesssons are:
1. Lack of resources can be a source of innovation
1. Lack of resources can be a source of innovation
2. Innovation isn't just about technology
3. Innovation begins with understanding your audience
Lesson #3 is consistent with most innovator's models for success, but it's a fair reminder. It's the first step in my model, I call it Immersion:
Immersion is the first step in any innovation process: getting inside the target customers' world, understanding it more than anyone else, and then assessing your company's assets in light of your new understanding and insights.
I'll share more about this later when I begin to share my innovation model, IDIE, which stands for Immersion-Deconstruction-Innovation-Execution.
Paul
Intrapreneurship Model for New Business Creation
The typical corporate process for new business innovation is linear, slow and inefficient. There is a better way. Stay tuned for ideas and information.
Paul
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