Tuesday, April 14, 2009

An Industry Without Direction

Okay, here’s the scenario:

You are leading a business in a troubled industry. Rising costs, falling demand, and intense competition have been dragging profits down for years and many of your competitors are on the verge of collapse. Across the industry, customer satisfaction is low. What is your strategy?

How about pretty much continuing with the same outdated business model, while drastically cutting costs, and services to deal with the crisis.

Believe it or not, there are several companies in this situation doing just that. They are called airlines.

As a management consultant, I spend a lot of time in the air traveling between assignments, and I have to admit that I have never dreaded flights the way I do now. The service is poor (due to fewer people and improper focus – not the quality of the people), the food is awful, and even my frequent flier miles (if I get them at all) are not worth as much as they used to be.

What really does not make sense from a business perspective, however, is why, during a period of shrinking markets and increased competition, the airlines do not seem to think that increasing customer satisfaction is a way out of the crisis.

It has got to be that they are so focused on their balance sheets that they have forgotten about the customer, or still follow the belief that quality means higher costs. This is common to organizations, especially during a crisis. It is easy to get so focused on cutting costs that people begin to think of cost management as the organization’s fundamental purpose. When this type of situation occurs, employees suffer due to a stressful work environment, customers suffer because of poor service, and shareholders suffer because the fundamental problems are not effectively addressed.

If there was ever an industry in need of lean thinking, it is the airlines. As soon as someone discovers how to improve quality and costs together, and offer safe, clean, comfortable air travel to customers, they will clean up.

For now, however, I continue hoping that someone will catch on and the quality of air travel will someday improve.