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Tag: Business

One-way Ticket to Nowhere: Economy Class

If you build it, they will come” is usually not a good piece of business strategy. But, in some cases, a product which nobody wants in one market, may be quite the hot commodity in another (from the Times Online):

AN INDIAN entrepreneur has given a new twist to the concept of low-cost airlines. The passengers boarding his Airbus 300 in Delhi do not expect to go anywhere because it never takes off.

All they want is the chance to know what it is like to sit on a plane, listen to announcements and be waited on by stewardesses bustling up and down the aisle.

In a country where 99% of the population have never experienced air travel, the “virtual journeys” of Bahadur Chand Gupta, a retired Indian Airlines engineer, have proved a roaring success.

As on an ordinary aircraft, customers buckle themselves in and watch a safety demonstration. But when they look out of the windows, the landscape never changes. Even if “Captain” Gupta wanted to get off the ground, the plane would not go far: it only has one wing and a large part of the tail is missing.

None of that bothers Gupta as he sits at the controls in his cockpit. His regular announcements include, “We will soon be passing through a zone of turbulence” and “We are about to begin our descent into Delhi.”

“Some of my passengers have crossed the country to get on this plane,” says Gupta, who charges about £2 each for passengers taking the “journey”.

The plane has no lighting and the lavatories are out of order. The air-conditioning is powered by a generator. Even so, about 40 passengers turn up each Saturday to queue for boarding cards.

Gupta bought the plane in 2003 from an insurance company. It was dismantled and then put together again in a southern suburb of Delhi. The Indian Airline logo on the fuselage has been replaced by the name Gupta.

Passengers are looked after by a crew of six, including Gupta’s wife, who goes up and down the aisle with her drinks trolley, serving meals in airline trays.

Some of the stewardesses hope to get jobs on proper planes one day and regard it as useful practice.

As for the passengers, they are too poor to afford a real airline ticket and most have only ever seen the interior of an aircraft in films.

“I see planes passing all day long over my roof,” Selim, a 40-year-old tyre mechanic was quoted as saying. “I had to try out the experience.”

Jasmine, a young teacher, had been longing to go on a plane. “It is much more beautiful than I ever imagined,” she said.

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How to Have a Great Company Culture

This past Thursday, I attended a presentation by Kent Thiry, the CEO of DaVita, a dialysis company and former partner at the management consulting firm Bain & Company. Thiry presided over a stunning turnaround at the firm, but the focus of his presentation was not so much on the corporate specifics but on DaVita’s culture.

Culture is not something I used to consider very much, because, frankly, I thought it was mostly fuzzy BS. And, in fact, many companies deliberately make it that way. They skim books like Jim Collins’ Built to Last and half-listen to human resource fads about how the mere fact that a mission statement and a list of values exists makes a company more productive and lasting — not appreciating that the employees know it’s a sham.

What Thiry had to present was an example of a community. DaVita, as presented by Thiry, was not merely a dialysis company where manufacturers and techs work with doctors and nurses to help treat patients, it was a village, where community members watched out for each other, watched out for the community as a whole, and got together on a regular basis to show each other that they cared. Never before have I seen videos of people proudly singing and dancing to the company song, crying when they discussed how much they loved working for DaVita and working with their co-workers and of course their village mayor (his title is not CEO!) KT (Kent Thiry).

So, how did Thiry help construct such a powerful culture? He attributed it to “show that you care“, no matter if business is good or bad. After all, its really easy to stick to your values and your mission statement and your ideas of community when business is good but what makes or breaks a culture is whether or not you stick to it when business is bad.

Among the tips that Thiry had:

  1. Make hiring and firing decisions based not only business and technical competent, but on adherence to the values of the company
  2. Emphasize that DaVita was a community first, a company second
  3. Spend time honoring those who adhere to the values, not simply pay lip service to them in a vague sense, not simply reward them financially — but actually honor them, with plaques, with ceremony, with recognition
  4. Make people self conscious by having them sing the company song, recite the company motto — because when you do things that make you self conscious you really analyze whether or not your life really stacks up against your values
  5. Establish a practice whereby senior management lead by example — if the C-level management (CEO, CMO, CTO, CIO, etc.) are not following community principles, then why should anyone else?

Thiry then walked through a host of amazing cultural stories to illustrate:

  • The DaVita community (meaning the broader community and not just the corporate leaders) chose to establish a fund to help the children of DaVita employees pay for college
  • DaVita has a practice where senior management and the firm match contributions that the community endorses to charities and noble causes
  • DaVita honors doctors who it considers to have made the biggest impact in their patients’ lives, because that is a broader part of the purpose of the DaVita community
  • DaVita established a practice whereby community members in need receive assistance from other community members
  • Thiry showed off amazing videos of interviews with cancer patients/employees who tearfully described how their coworkers not only raised money to help pay for treatment but sent cards, gifts, helped around the house, etc.
  • One of the most touching stories was of a female employee who died along with her husband, leaving a daughter in college to not only deal with the emotional impact of their deaths, but with huge financial burdens and with her own college tuition. The DaVita community came together to take care of the daughter — paying her tuition so she wouldn’t have to drop out and helping to cover the funerary expenses.

If there are two takeaways from this:

  1. Culture matters. Ask any of DaVita’s workers — or any workers, period. It’s very difficult to be productive or, more importantly, to be happy if you hate the environment you work in. Yes, technical and business competence is necessary, but in no way is it sufficient for creating a good business.
  2. To get a great culture, you have to show that it matters. You can’t just write a values statement and expect a wonderful culture to spring up. You have to stick to it, especially when it is hard to, especially when there are conflicting priorities.
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Consulto-nomics

While doing research for a secret internal project, I stumbled across a book, The Boston Consulting Group On Strategy, one of the many books that various consulting firms put out on a regular basis to establish themselves as relevant experts on business strategy. The book itself is a compilation of opinion and analysis pieces by various BCG (Boston Consulting Group) partners from the past including a few interesting pieces by BCG founder Bruce Henderson.

Henderson is interesting in that he is one of the “founding fathers”, if you will, of management consulting. BCG history is full of examples of powerful insights: the Experience Curve, the growth-share matrix, “The Rule of Three and Four”, among others. To this day, the public persona of the firm is one of a puzzle-solving/innovative thinking culture dedicated to solving and analyzing complex business scenarios.

Yet, despite his role at the beginning of consulting, Henderson’s writing is distinctively not consultant-like. Nowhere are the excessive TLAs (three letter acronyms) or use of impressive-sounding but utterly empty sentences and phrases which seem to mark today’s consultant. Instead, he is simple. To the point. Decidedly not long winded.

I like him already.

One of the points that he makes pertains to economists. Henderson makes the argument that economics leaves one very ill-prepared for the business world, because economists deal in abstracted, perfect conditions which bare no semblance to the world. In the business world, there is no perfect competition, or information symmetry, or pure rational agent which the economist often relies on in his or her thinking and theorizing.

I took a course in the Fall semester of my last year of college which dealt with evolutionary game theory, and while we looked at very complex bells and whistles (spatial components, strategies, memory, etc.), at the end of the day we were just analyzing the infamous prisoner’s dilemma, a game with only two possible moves, and it was surprising how complex the analysis could be: it was done with mathematical rigor in a complete fashion with hypothesis testing and reasonably advanced computational analysis.

But, ultimately, it was still just a two-move game (tic-tac-toe, by comparison, is an, on average, 5 move game) with idealized assumptions. The business world doesn’t have two-move games. It doesn’t let you make nice assumptions. It doesn’t give you the time to conduct complete analysis. You don’t have a Cray supercomputer at your desk with hours to code to do a hard numerical analysis. You have a deadline. You have gray areas. You have incomplete data. You have to deal with people and their volatile personalities and emotions.

So, yes, a proof, an experiment, a mathematical model — these are certainly beautiful and interesting. But, you just can’t do that in business. You have to prioritize. You have to manage your time. You have to work together to tackle a big, amorphous task. You have to make guesses. You have to sometimes leap before you look. You have to beg, to intimidate, to coax, to laugh and to cry and to smile.

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