Knowledge Is Power

September 2012 EastSight InSight

Do your marketing messages match what your customers value? Do your competitors’ messages reflect the needs of their buyers? You should check periodically with your and their customers to find out what they really value and if you—and your rivals—are hitting their important wants dead on.

Airlines Compete for the Bottom in Customer Service

Some of us remember flying an airplane before deregulation. It was a pleasure. Deregulation changed the business model of the legacy airlines to hugely unprofitable in bad times and somewhat profitable in good times. But overall, the legacy airlines could not develop a business model that was viable over time. Many of the new airlines fared no better. Many "no frills" airlines targeted at leisure travelers have disappeared also.

Warren Buffet expressed his opinion of the airline industry in annual letter to Berkshire Hathaway shareholders, February 2008:

"The worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money. Think airlines. Here a durable competitive advantage has proven elusive ever since the days of the Wright Brothers. Indeed, if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down."

Throwing away the concept of customer satisfaction and turning the concept of value pricing on its head, the airlines have lurched towards a business model of quoting low fares and making money on add-ons: checked bags, food, booking a ticket through a human agent, etc. The airlines claim that other industries unbundled their offerings long ago and why should passengers pay for services that they don't want.

OK, unbundled offerings is a valid business model and transitioning to a new model is difficult for flyers, but American Airlines, according to recent news article on a family traveling to Disney World, reached a new low in customer satisfaction. ("Airlines 'playing chicken' with passengers, charging 'you-get-to-sit-with-your-kid" fee," by Bob Sullivan, www.nbcnews.com) When American Airlines changed the type of aircraft flying to Florida, it seated John and Amanda Parish separately from their five-year old daughter and would not change the seating without a $60 fee. Ask the boarding agent at the gate said the airline.

American Airlines learned this pricing trick from European airlines. When I flew to India on British Airlines in July 2011, I arrived at the airport to find my 10 year old twins seated separately from me. But the staff at the gate quickly placed us together--in middle seats. Window seats would cost 60 pounds each. The good news was that foreign airlines consider kids under adult height to be children and we got priority boarding and seats together for every flight.

While I believe all industries should develop a viable business model, the airlines are so desperate for the fee income that they have forgotten that they exist to serve customers. This event will make me less likely to book on American as I have children. And if I am traveling without my kids, I do not want to sit next to your untended child.

I used to drive if the time it took equals the time to fly. Now I drive unless the travel distance is over 750 miles and time is tight. I hate flying. I wish the airlines could develop a viable business model that includes value pricing AND customer centric thinking. But I'm not holding my breath.

The CIdea Fest: Boston SCIP Meeting Wednesday Sept 19

The CIdea Fest

5.30PM - 8:00PM, Wednesday, September 19, 2012

Special thanks to our host, The Charles Stark Draper Laboratory, Cambridge, MA

Do you wonder how your chapter colleagues & leading practitioners approach CI issues?

Are you grappling with questions & issues on how to manage & deliver CI better?

Do you have ideas of your own to share? (But don’t want the fuss of a formal presentation.)

Join CI thought leaders and your fellow practitioners for our first CIdea Fest! Hear practical ideas from leading practitioners and chapter colleagues on how they have faced CI challenges, learned what works and what doesn’t, implemented novel approaches and solutions, foster creativity,…and more. Our featured chapter members will briefly present their topic, followed by discussions and your chance to share your questions. This is your chance to tap the collective experience and perspectives of your chapter colleagues, as well as share your own (but, as always, listeners are welcome)!

Our featured discussion leaders and topics include:

• Nannette Bulger, Intelligence Pathways, LTD; SCIP Board of Directors

CIdea: The Application of CI to Corporate Strategy

• Trip Krant, Digimind

CIdea: Re-Thinking the CI Process and Practice in the Networked Business Environment

• Robert Lehman, Fuld & Company

CIdea: Using Four Corners Analysis to Gain Management Attention

• Jennifer Swanson, Charles Stark Draper Laboratory; past member of the SCIP Board of Directors

CIdea: CI Team Participation

And remember to share the knowledge...and bring a colleague or your boss!

Please Note: If you have a question, an idea, or a topic/issue you’d like included at the CIdea Fest, please contact Cynthia Cheng Correia at [email protected].

LOCATION & DIRECTIONS

The Charles Stark Draper Laboratory, Inc. Hill Building One Hampshire Street Cambridge MA 02139

The Hill Building is located across the street from Draper’s main entrance, in the Duffy Building. The sign outside the Hill Building says “One Hampshire at Kendall Square” but does not indicate that it is a Draper facility. Parking is across from the Duffy Building in the Technology Square Garage.

VALIDATION IS AVAILABLE – please do so before 8pm at the guard station in the Hill building.

For complete directions and map, please visit: http://www.draper.com/images/Draper_Directions.jpg

AGENDA

5:30PM – 6:00PM Registration, Light Dinner, and Networking

6:00PM – 8:00PM Idea exchanges: discussions and Q&A

REGISTRATION

Be sure to register early to guarantee your spot!

SCIP/SLA Members and Students: $15.00 (SLA Members/Students please email [email protected]) Non-Members: $25.00

Registration includes a light dinner and beverages.

CONTACTS

Cynthia Cheng Correia/[email protected]/617.689.8877 Parmelee Eastman/[email protected]/781.416.3686 Robyn Reals, Educ. Mgr. SCIP/[email protected]/703.739.0696 X 107

CANCELLATION POLICY

Cancellations received in writing on or before Wednesday, September 12, 2012 will be honored.

ARE YOU LinkedIn?

Are you LinkedIn with the MA Chapter? If you aren’t, join the SCIP MA Chapter Group on LinkedIn! Find us at: http://www.linkedin.com/groups?about=&gid=2200786&trk=anet_ug_grppro where you can start and join discussions, get the first word about upcoming local events, view job postings, and more!

About Strategic and Competitive Intelligence Professionals (SCIP)

With members in over 70 countries, SCIP is a 3000-member global non-profit membership organization for everyone involved in creating and managing strategic and competitive intelligence. Education and training have been a critical component of SCIP’s member services since the Society’s founding in 1986, 1986 and SCIP provides its global membership access to the world’s most admired certification program. In addition to articles and books, SCIP provides networking opportunities at its annual conferences in the US, Europe, Brazil and Singapore, and through chapter meetings and webinars. The Society supports everyone involved in creating and managing strategic and competitive intelligence, and many members have backgrounds in market research, strategic analysis, science and technology.

IBM Follows the KISS Principle while Developing Strategy

Much of the time, simple beats sophisticated (AKA complex) because simple processes can be implemented more quickly and successfully. Lou Gerstner (Harvard MBA 1965) adopted this concept with a streamlined, focused, and simple strategy development process. IBM’s transition from a hardware supplier to a services firm is unique in business; no other organization that large has changed its strategy that dramatically.

Brad Hall discussed IBM’s approach in an 8/30/12 article on thestreet.com, “Reinventing Your Strategy Development.”

After joining IBM, Gerstner asked division heads how they implemented strategic plans developed for IBM by top consulting firms. To summarize the answer: “We haven’t.” So he banned outside strategy firms in favor of an internal approach called the IBM Business Leadership Model (BLM). All IBM executives use this model so they have a common process.

Each business unit’s strategy is developed during a week long session referred to as the Strategic Leadership Forum (SLF). Each forum has 10-15 members from four to six business units which join together for presentations on topics such as strategy and market insight, then separate into individual business unit teams to work on their unique issues.

Each team meets one month prior to the session to define what information is needed for the session. With only one month to gather the data, the emphasis is obviously on using just key pieces of information, not doing a data dump.

The teams start on Sunday evening by defining the one most important performance gap. Gerstner believed that addressing multiple gaps could not be done quickly.

By Friday noon, the teams have completed the seven parts of the strategic plan and return to their business units ready to implement. Over time, all the critical performance gaps will be resolved either through revised strategic plans or by addressing the one most important issue.

Compared to IBM, how does your organization do strategic planning? You as a CI professional should be involved in it to provide market insight. You might even be in the strategic planning department and can suggest streamlining the process as IBM did to produce plans faster.

How do your competitors’ handle strategic planning? Do they follow the IBM model or are haphazard about strategy? Either way allows you to take advantage of an unexpected event if you can react faster than your competitor can.