Executive Times
Volume 2, Issue 3	March, 2000
ã 2000 Hopkins and Company, LLC Note re: links---certain hyperlinks assume that you are registered as a subscriber to the site. If you are not a subscriber to certain sites, the links will fail. If you register, the links should work. Also, certain hyperlinks expire and may not be available when you try to go to the site. Denial of Service Vandals attacked several busy Internet sites in recent weeks by presenting millions of bogus requests for service, causing the sites to slow down or close because of capacity problems. Some companies implemented back-up plans and moved to alternate sites, sending e-mail to their “real” customers with the new location. The phrase “denial of service” became well-known, and caused us to reflect on the ways in which many executives, in both clicks and bricks locations, decide what level of service to offer which customers. Some perks become visible to all, and increase demand for equal service, while other services are performed quietly to build and maintain strong individual relationships. Think about the services you offer and the services you deny. How well does your approach match expectations? Where are you vulnerable to competition on the basis of service, and where is your service subject to disruption beyond your control? If disruption were to occur, what are you prepared to do? (If you are really interested in learning more about the denial of service Internet attacks, go ahead and visit www.denialinfo.com). Welcome all you long legs and wide bodies American Airlines CEO Don Carty is 6’3” tall, and while he probably never rides in coach, he’s aware that the majority of passengers sit in the back of the plane, and many of them complain about the lack of legroom. In what Carty called “an important strategic announcement”, American will spend about $70 million to remove up to two rows of seats per plane from the total jet fleet of 700 aircraft to “provide more room for passengers throughout the coach cabin.” Carty’s emphasis is for competitive reasons: rival United Airlines removed one row of seats from the front of its aircraft, allowing more legroom in the frequent flier section of coach. Even infrequent fliers in middle seats will get extra legroom on American. Those of us with long memories recall that the new seat pitch of 34” is about the same as American and others used until the mid-1980’s, when Carty’s shorter and skinnier predecessor, Bob Crandall, and other airline CEOs crammed more seats onto aircraft to raise revenue. While American removes a key area of customer dissatisfaction with this change, we’re doubtful that revenues or customer loyalty will change as a result of this move. Other airlines are expected to match the changes at United and American. When do you decide to offer a service to selected customers, as United did, or to all customers, as American did? Would you see a change like the one at American as “an important strategic announcement”? American created a media event to announce this change; how well does your service message get across to your target audience? Are your customers fed up with some part of your service offerings? What will it cost you to change that area? Can you afford not to change? When a competitor changes service levels, how do you and your customers react? Elephants and donkeys in the same tent Membership in United States political parties can be long lasting or very brief. Voter turnout can be fickle. The Republican primaries through February have been fascinating to observe. George W. Bush has been winning about three-quarters of those voters in Republican primaries who define themselves as Republicans. John McCain has won primaries as a result of large Democratic and Independent turnout in Republican primaries in states where a registered voter can choose any party ballot. Years ago, it seemed like a good idea to have open primaries. We expect the results of the 2000 primary season will lead many loyal Republicans to look for a return to closed primaries. Which of your alliances or membership groups are open to all, and which are open to members only? Are the structural and membership rules appropriate to the group and its processes? Thanks, but no thanks We read in The Wall Street Journal (2/2/2000) that employees at Marriott hotels in Atlanta, many of whom work odd hours, were given the opportunity to use subsidized child care in a facility called Inn for Children, which was scheduled to be open 24 hours a day, seven days a week. Marriott teamed with other companies to create the facility that is now run by a non-profit organization. Marriott has long searched for innovative ways to retain employees, and child care availability and cost is one area of the company’s active involvement. Few employees ended up using the facility, mostly because existing family-based arrangements and facilities closer to employees’ homes made it not worth their while to take advantage of the new facility. Day care hours have since been pulled back and more than half the users of the facility are non-Marriott employees, but the lessons Marriott learned in Atlanta will be taken to other cities. One lesson involves lighter debt loads; the next venture will involve donated public space, local government involvement and day care space for city workers, as well as cost sharing on building improvements. What benefits attract and retain employees to your company? Are there obstacles that your employees manage on their own where some corporate involvement might increase employee performance, productivity, and retention? Have you asked employees what benefits or services they would use if you offered them? You are special Sometimes the most valuable perks are invisible and unadvertised. Have you ever noticed the carnation-wearing airline employees escorting selected customers through airports? Have you ever been one of those customers? The Wall Street Journal (2/18/00) enumerated the many invisible services that each airline provides to their very best customers. We read of one frequent flier whose Delta flight was cancelled and was whisked by automobile on the tarmac by Delta employees to an American flight where a ticket was waiting and checked bags were already loaded on the plane that took off as soon as this key customer boarded. Private rooms, usually without exterior signs, are available at busy airports to these selected customers. Membership can’t be earned; each airline chooses the individuals to whom they provide these unsolicited and valuable VIP services. How well do employees know your organization’s best customers? How do you recognize and reward those customers? How does your VIP treatment compare with that of your competitors? Do your best customers have to ask for service, or do you anticipate their needs and take care of them at once? Maybe yes, maybe no General Electric Company issued a recall last October for dishwashers sold from 1983 through 1989. It seems that a faulty energy switch could start a fire. Given the age of the dishwashers, GE offered consumers rebates on the purchase of new machines rather than offer repair of the old ones. According to The Wall Street Journal (2/18/00), some GE volume customers, like apartment house owners, were given a repair option. Now New York State’s Attorney General is expected to file a lawsuit claiming GE deceived customers into buying new machines when old ones could have been fixed for a smaller consumer outlay of funds. The Consumer Product Safety Commission is also in the middle of this muddle. The CPSC urged GE to offer a repair option to consumers. GE spokespeople explain that there really is no repair option: it’s a matter of turning on or off a heat switch for air drying or heat drying dishes.GE thought consumers would prefer a machine with working features. What makes you limit or expand choices for customers? Are different customers provided with different choices? If the same situation is dealt with in different ways for different customers, are you vulnerable to litigation or other forms of attack? Taxi! One of those mysteries of life was finally explained to us, thanks to The New York Times (2/23/00). We’ve always wondered why at 2pm in New York City, when we are inside a building, there are hundreds of empty taxicabs roaming on the streets outside, but when we leave the building at 4:30 or 5pm, all the cabs are “off duty”, or not to be seen at all. It turns out that day drivers switch to night drivers around 4:30pm each day, and suffer penalties if they don’t return their cabs on time. This schedule is meant to give the day drivers the benefit of the morning rush hour, and let the night drivers get the evening rush. The problem is that the turnover takes place just as the rush begins, and the penalty encourages drivers to turn the “off duty” light on rather than risk a trip that will make them late for the turnover. Are your employees going off duty at the same time your customers want to use your services? Have you developed internally focused reasons, such as the rush hour fairness division of hours that may work well for employees but create alienation, confusion or frustration for your customers? Dot com c’est moi Branded Every now and again a job title catches our attention like the Mister Boffo cartoon from 2/18/00: “I’m the omnipotent director and all-knowing overseer of interoffice distribution” (another way to tell when you’re dealing with the one who reports to the king of the mailroom). The same week that the largest bank in the United States, Bank of America, paid big bucks to acquire the rights to “loans.com”, bank President Kenneth D. Lewis announced a new direct report for him called “BankofAmerica.com Executive”. James D. Dixon has been the Bank of America Technology and Operations Executive for a long time, but now he’s the dot com executive. We wonder if Dixon will appoint somebody to be the loans.com executive. We wouldn’t be at all surprised. What’s a job title supposed to do? How are the job titles in your organization perceived by key constituents? Do job titles have any influence on the motivation level or productivity of employees? How important do you think job title is to your employees? Have you asked them? Enemies to amigos Dues to pay Some policy changes lead the more cynical among us to snicker. It seems like just yesterday that the AFL-CIO railed against illegal immigrants taking jobs away from American workers. In mid-February, the AFL-CIO Executive Council issued a resolution calling for amnesty for the estimated 6 million illegal immigrants currently working in the United States, and the removal of sanctions against employers that hire illegal immigrants. Those sanctions were put in place fifteen years ago after fierce lobbying to do so on the part of the AFL-CIO and other labor organizations. Given the current tight job market, there’s an opportunity to increase union membership if barriers are removed for immigrants. Immigrants built the labor movement, and this policy change makes it clear that the AFL-CIO favors immigration. Have any of your policies drifted from your organization’s mission and roots? Have you taken positions that work in the short run, but need to shift radically when business cycles change? How credible are you based on the consistency of your policies and positions? How clearly do your constituents know what you stand for? Getting attention to your messages Have you wired a Ford lately? Some companies attract positive attention to their organizations because of the way they present their stories to the media. We admired Ford Motor Company when they turned an obligation into a message of innovation, inclusion, and benevolence. Following an agreement with the United Auto Workers, Ford was obliged to provide personal computers and cheap Internet access to union members. Someone at Ford saw an opportunity here, and the company decided to offer PCs and Internet access to all Ford employees worldwide, and the company presented their story at a major press event. The many stories that followed were totally positive about Ford and its actions. (See The Wall Street Journal and The New York Times). A day later, Delta Air Lines announced that they, too, were providing PCs and Internet access to all employees. We read one story in The Washington Post about Delta following Ford’s example. Our guess is that no one at Delta envisioned the same kind of opportunity that public relations counterparts at Ford found in the same corporate action and the announcement was low key. How well do you get across the important messages about your organization? What tools or approach do you use to distinguish an opportunity in public relations? Cookie monster: “me love cookies” CEO Chris Larsen and the team at E-Loan, Inc. understand the need to assure consumers about the privacy of confidential personal financial information. We read (The Wall Street Journal 2/7/00) that Larsen called attention of investors, analysts, and other audiences to the fact that e-Loan did not use cookies as part of their online interaction with consumers, as a way to allay privacy concerns. Larsen has given that same assurance often since the company was first formed. It turns out that following an acquisition of another company and creating more links to other Internet sites, e-Loan started using cookies. Nobody got around to letting Larsen know until he was surprised when challenged with the information. Oops. What do you need to be sure the boss knows about your operation? How well do you keep your boss informed about changes? As the boss, what do employees need to know about your key messages externally to ensure that your facts remain accurate, especially during periods of rapid change? Follow Up Here are selected updates on stories covered in prior issues of Executive Times: Ø In the November 1999 Executive Times, we expressed alarm about the $25 million award to a former Miller Brewing Company executive on the grounds that the company withheld negative performance information from him. We were pleased to read recently that the case was reversed on appeal. Next stop is the Wisconsin Supreme Court. Ø When we called attention in the November 1999 Executive Times to the challenges Austrian Chancellor Viktor Kilma would have in incorporating Joerg Haider and members of the Freedom Party into the governing leadership of Austria following elections, we did not anticipate the significant backlash from the European Union including talk of sanctions and diplomatic isolation. Ø In the February 2000 issue of Executive Times, we described the challenges faced by professional partnerships in retaining talent and avoiding conflicts of interest. According to The Wall Street Journal (2/18/00), PricewaterhouseCoopers will restructure into two entities: one for management consulting and the other for accounting, joining other accounting firms that have taken this approach in the past. Legacies We admire and follow leaders whose beliefs and actions match our own; we often remember the actions of leaders that are unexpected, or out of character. Almost three-quarters of Americans support the death penalty, so it’s no surprise that almost all politicians take the same position. Illinois governor George Ryan continues to support the death penalty, but took the courageous action recently to suspend its administration in Illinois. For Ryan, the numbers didn’t add up: something was wrong with a system where, since 1977, a dozen people were executed and 13 death row inmates were exonerated after receiving death sentences. "Until I can be sure that everyone sentenced to death in Illinois is truly guilty, until I can be sure with moral certainty that no innocent man or woman is facing a lethal injection, no one will meet that fate," Ryan said. (Chicago Tribune 2/1/00). Following Ryan’s leadership, other states are examining their systems as well, and national attention to this issue has increased. Reading (Note: readers of the web version of Executive Times can click on the book covers or titles to order copies directly from amazon.com. When you order through these links, Hopkins & Company receives a small payment from amazon.com. Subscribers to the print version of Executive Times can receive the web version at no additional cost. Send e-mail to hopkinsandcompany@att.net with a request to be placed on the web version distribution list. Also, not all books we read make it to the pages of Executive Times. Check out other book selections on our bookshelf at http://www.hopkinsandcompany.com/bookshelf.html). “Doing the right things right” We looked forward to savoring Lessons from the Top: The Search for America’s Best Business Leaders, written by two Spencer Stuart executives: Thomas J. Neff, Chairman, and James M. Citrin, head of global communications and media. We expected in-depth stories about successful business leaders that would be instructive in gaining understanding of the most important factors in executive success. The authors were careful to use a quantitative approach to the selection of companies and individuals. They present five or six pages per executive and the reader is left with a pleasant flavor of some aspects of the individual executive’s uniqueness. In each case, we wanted to hear more. Had the authors profiled twenty executives in depth instead of fifty executives in brief, we might have learned something more useful. After reading the profiles, we re-learned the same thing the authors did: top executives do the right things right. Read this book if you like to pare away the detail and focus on general, high level themes. Otherwise, take a pass. A book of virtue We’ve had the pleasure of listening to James Carville and Mary Matlin speak together several times. They are engaging, bold, direct and opinionated. When we saw James’ new book, Stickin’: The Case for Loyalty, we decided to give it a try, and are better for it. Whether you agree or disagree with what he says, there’s a real pleasure in the clear and straightforward manner in which he says it. Here’s one sample: “In the end, sticking with the president does not make me a really loyal person. But had I not done this, I would have been a backstabber of the first order.” For equal time, after reading Stickin, we pulled down Bill Bennett’s Book of Virtues from the shelf, and re-read his chapter on Loyalty. We liked Carville better, and recommend this book. Lose it The Dirk Pitt novels by Clive Cussler can provide a distracting escape into a world of unlikely adventure where heroes “know what they have to do and they aren’t afraid to fight.” The heroes and villains in Atlantis Found contain few nuances of character, and the sloppy grammar used throughout the novel distracted us often from the flow of the story. We found the violence excessive and can’t imagine this story in a made for TV movie, even during sweeps week. If you’re a regular Cussler reader, we won’t be able to dissuade you from reading this one, but if you’ve never tried one of the 14 Dirk Pitt novels, don’t bother starting with this one. Doctor Death James B. Stewart helped make sense of the savings and loan crisis in his book Den of Thieves. His latest book, Blind Eye, is the most frightening book we’ve read in years. Stewart tells the story of a doctor, Michael Swango, who got away with killing patients intentionally, mostly because of a medical system that protects physicians.While Swango did serve time for one offense, Stewart’s tale of Swango’s murders around the world increased our concern about one more aspect of medicine. Time and again, investigating fellow physicians discounted the comments of nurses and patients in favor of giving one of their own the benefit of the doubt. If you expect to be heading into a hospital anytime soon, we suggest you not read this book. Otherwise, we highly recommend this well-investigated story of an unstable doctor who got away with murder. ã 2000 Hopkins and Company, LLC. Executive Times is published monthly by Hopkins and Company, LLC at the company’s office at 100 Forest Place # P2, Oak Park, Illinois 60301. Subscription rates for first class mail delivery of the print version are $60.00 per year (12 issues). E-mail subscriptions are $30.00 per year. Single issues: $10.00 print; $5.00 electronic. To subscribe, sign up at www.hopkinsandcompany.com/subscribe.html, send an e-mail to hopkinsandcompany@att.net, call (708) 466-4650, or fax to (202) 338-0065. For permission to photocopy or e-mail Executive Times, call (202) 486-3816 or e-mail to hopkinsandcompany@att.net. We will send sample copies if requested. The company’s website at www.hopkinsandcompany.com/archives.html contains the archives of back issues beginning in the month after the issue date.
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