The Power of Focus … Part 9

I’ve published several posts on the power of focus. (Heck there’s a whole category in the blog history on it). Bottom line, companies improve their performance by narrowing their focus. Diversification usually makes the bottom-line worse, even if it improves the top line.

Today’s example is Gibson Guitar. Probably the most famous guitar brand in the U.S., they filed for bankruptcy last week. Well, the current incarnation of the company, Gibson did. You see while they still make the iconic guitar, back in 2010 when they were doing “only” $300MM in revenue and 12.9% profit, their CEO decided to “diversify.” Five years later they were doing $2.1B in revenue with a 4.1% profit margin. Skill and excellent management strikes again.

The guitar business is still growing. They have a 20% market share in electric guitars and over 40% market share in guitars costing over $2K.ng. It’s the rest that’s a mess, along with huge debt that came from the acquisitions for diversification.

What went wrong? A lack of focus, driven by a strategy to take Gibson from a guitar brand to a “lifestyle brand.” Seriously? Did the CEO think that up all by himself or did he pay somebody to help him? The lifestyle focus took them into headphones, speakers and turntables including the Phillips and Onkyo brands among others.

They are restructuring to cut other than the guitar business it would seem. The CEO owns 36% of the company, which he undoubtedly will lose most of in the restructuring. At least it is not just public shareholders being hosed by this failed strategy.

Unfortunately, many companies believe that once they go public they must keep growing the top line to drive an ever-increasing stock price. This may be true, but an ever-increasing bottom-line is what really matters; and that comes from focus.

Mitch

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If You Can’t Fix It, Feature It: Part 5

Those words said to me several years ago by Roy Fields have been golden. This is the fifth post on this specific topic, and you can find the others with a quick search of the key phrase.

I saw the sign in the image at a restaurant I frequent. I thought it a brilliant way to explain outages of particular food items while gently slamming the “competition.”

What do you think?

Mitch

What’s the Purpose of Data, if it Doesn’t Lead to Insights?

Let me start by noting that I rent a lot of cars each year for business. It is unlikely anyone rents many more cars than I do. Thus one would expect that I am a valuable customer to the rental car company I use most. That was Hertz. The operative word is … was.

For the second time in 20 years I have stopped renting any cars from Hertz, except to use up my points where I get the car effectively free. Several years ago I stopped the first time, for reasons that don’t matter for this post. Hertz never seemed to notice. Eventually a Hertz exec in an audience I was speaking to heard me tell the unbelievable customer service story that caused me to stop, and he came up to ask how he could make it right. That fixed things, until about 6 months ago when I stopped again. For a different reason, that again doesn’t matter for this post.

I continue to get a few e-mails a week from Hertz telling me about all the great promotions they have going on etc. However, I have yet to get an email asking me why I went from several rental car days a week to ZERO. You know Hertz has a mountain of data on rental frequency, locations, preferences etc. And yet, despite the fact that I am one of their better customers, they don’t seem to know, or care that I have left them.

What good is data on “loyal” customers if you don’t use it to get insights about changes in their behavior that might reflect needs on their part? Data collection may just be an exercise in math not for insights. At least at Hertz.

Mitch

What’s Really Wrong With United Airlines?

Over the last 15 months or so United Airlines has received a lot of well deserved negative publicity. Here is a partial list:

• In January of 2017 they were blamed for killing a passenger’s Golden Retriever dog because it didn’t fit on a flight the passenger was told it would fit on, and then had to stay in containment for 20 hours.
• In April of 2017 United famously, physically removed a passenger from a flight after the passenger refused to give up his seat for the benefit of a crew member.
• Also, in April, Simon the rabbit died on a United flight and the post-mortem handling was a circus (which is an insult to circuses).
• And again, in April (clearly not a good month) A French-speaking passenger was put on a flight to San Francisco while actually holding a ticket to fly to Paris, which was her intention. (Seems a security issue that allows an un-ticketed passenger on a flight)
• In June, a 2-year old’s seat was given to a stand-by passenger and her mom was afraid to complain based on United’s history, so the child flew in her lap instead.
• And then this week we find out that United killed a passenger’s dog by forcing it to fly in the overhead bin. (Seriously, who is that stupid?)
• United had the most animal deaths in 2017, 18 in total.

While each of these events has created a firestorm for United, my question is: What is the root cause of this and other behaviors that seem to defy logic or common sense?

I submit it is the CEO, Oscar Munoz, who has allowed or created a culture of passengers being an inconvenience to the efficient movement of airplanes. Mr. Munoz has been a Board member of United and Continental (before its merger with United) for many years.

He was named Communicator of the Year (why is unclear) in March of 2017 by what is either an inept publication, or one that gives awards based on money. Note that in April (one month later) their PR nightmares, including dragging a passenger off the plane, began and United’s responses were bad, to put it politely.

Why is Mr. Munoz still CEO of United? (To be fair the Board stopped their plan to make him Chairman as well.) Who has been fired for these fiascos? What is wrong with the culture of an airline that can create and allow this pattern of behavior? When Jan Carlzon became CEO of the world’s worst airline (at that time), SAS, in 1981, he turned it around by creating a “moments of truth” culture and enforcing it. Has Mr. Munoz either exacerbated a dysfunctional culture or created one that is not customer-centric or even remotely interested in the customer?

Mr. Munoz has either fostered, encouraged or allowed a culture where “using your good judgement at all times” (the primary policy of Nordstrom’s which drove it to greatness) is clearly not the plan. Or hiring people based on their bad judgement tendencies is the plan.

In reality, I blame the Board of Directors for not having replaced Mr. Munoz already. And maybe the shareholders for not replacing the Board. Fortunately (for United), the airline industry is strong and the number of airlines is limited so United can probably get away with this behavior without going bankrupt … again. But then who would really want to work at such a place?

This won’t stop until Munoz is gone, and he won’t be gone until the Board acts. And the Board, like many, doesn’t seem to be focused on the longer-term issues that face their company. That’s what’s really wrong with United Airlines, in my opinion.

Mitch

What Is Marketing … Really?

Thrilled to note that Vistage Florida posted my thoughts on this topic.

Mitch

The Danger of Automated Processes

In an effort to increase efficiency, many companies are automating customer experience processes; resulting in unintended problems with effectiveness. I experienced this first hand recently with the Ford Motor Company.

I’ve been a fan of Ford since they didn’t take Government money during the so-called, Great Recession. I’ve also found their products to be above average. Unfortunately, I recently learned they seem to have a policy to not stock parts for cars more than five years old. This can make service for “older” cars problematic. Without the need to go into details, it recently took seven weeks for one of our cars to be repaired all due to waiting for parts.

This process caused me to get to know, all too well, most of the people in parts and service at my local Ford dealer. While much of the problem in getting the car fixed was due to process point hand-offs (not unusual in larger companies), it was a recognized “circus” by all involved. The car was finally repaired and appears to run fine. The service advisor apologized many times during the process.

However, about a week after we got the car back, the dealer and/or Ford sent me what I assume were automated emails. The first was from Ford Shoptalk soliciting my feedback on the service I received. The second question in the survey forced me to classify myself as a repair shop or a fleet owner. I am neither, so I stopped filling it out as “none of the above” was not an accepted answer.

The second came from either the dealer or Ford on behalf of my service advisor. It was clearly a pre-written email thanking me for being a customer. Given the disaster of a time we had with the dealer and the service, it was not only inappropriate, it was annoying as it demonstrated that nobody cares, it was just sent. This is an example of an automated process that actually had the opposite effect as the one desired.

What automated processes are you using that make you “efficient” but show your customer that you don’t really care? How efficient do you want to be at alienating your customers?

Mitch

Go Green

I recently checked into the Marriott Madison East and was staying for two nights. At check-in the front desk clerk asked me if I’d like to “go green?” I said I didn’t know what that was. She took many words to explain it meant that my room would not be cleaned while I was at the hotel. The idea being that sheets and towels would not be changed-out thus saving the environment. They implemented it by simply not sending housekeeping to your room.

I would have been happy to reuse the towels and sheets, but wanted the room straightened up and the bed made, so I said no thank you.

I was struck by the fact that the program was called “go green” to leverage the idea that you can save the environment. Good name, bad implementation in my view; unless the goal is to cut the cost of housekeeping without offering a discount.

Mitch