THE LAST ONE TO GO, ARE YOU NEXT?

As a former legacy airline employee, it was sad to hear that American Airlines has filed for bankruptcy protection. American was the last legacy airline in the U.S. to file for Chapter 11. With this filing, the airline industry that I worked for is gone. It was an era when employees enjoyed serving passengers, and meals, pillows, and bringing a bag along was expected service, not an extra.

What caused the legacy airlines to fail? High labor costs and major debt are the reasons given by every airline that has filed for bankruptcy. True, but I think the fundamental problem was a business model that couldn’t survive a lack of new technology. In the heyday of the industry, the 1950s and 60s, faster and larger planes made controlling costs less important than flying planes that would increase productivity. If they carried more people, faster to a destination, airlines made more money.

Unfortunately, there hasn’t been a new plane in 40 years that has significantly increased productivity. Sure, new planes use less fuel and can be flown with fewer employees, but they didn’t dramatically increase productivity. Lack of technology and union work rules made improvements in productivity tough. So, with fuel and employee costs continuing to soar for four decades, the industry had no other choice but to change their business model to become a cost-driven “parity” product, where all airlines offer the same attributes, making all brands a satisfactory substitute for each other.

Why share this tale? Because I see many businesses, like financial institutions, retirement communities, and casinos, heading down this same path to parity. So, here are two questions to ask at your next marketing staff meeting: (1) What new technology are we introducing to increase productivity? and (2) What are we doing to make our product/service attributes unique and marketable?

ARE YOU THANKFUL FOR THE DAY?

In a week when your favorite football team lost (Go Ducks), our government lost our faith (the Super Committee wasn’t super), and millions are still trying to market themselves to find a job so they won’t lose their homes, it’s a great time to pause and reflect on how friends, family and just life should make today a blessing. That’s why I want to share this lovely video sent to me by my friend Bill Ferry.

http://www.youtube.com/watch?v=gXDMoiEkyuQ&sns=em=

I hope you will share this short video with people you love. It certainly sums up why I am grateful. Happy Thanksgiving.

TOO LITTLE, TOO LATE, AGAIN

In my marketing book (www.powershiftmarketing.org) I use Kodak as a classic example of a company that couldn’t change fast enough to cash in on the digital photo revolution. That’s why I’m fascinated by their latest misadventures. They just don’t seem to get it.

They are now focused on raising money for their computer printer business by selling their patents and assets like Kodak Gallery. The rise and fall of Kodak Gallery is classic Kodak, a corporation pretending to embrace change but fundamentally staying with old paradigms.

As reported by Dana Mattioli in the Wall St. Journal, Kodak purchased an online photo storage and printing business for less than $100 million in 2001. Then, re-branding it as the Kodak Gallery, they did everything they could to drive it into the ground by not investing in it. According to ComScore Inc, the Kodak site had 7 million visitors monthly (2008), it now has 1.5 million. The major competitor Shutterfly drew 6 million visitors last month.

In my opinion, Kodak is destined to fail. Why? Because they simply can’t shift from old beliefs. Instead of using their proven brand name to invest in recapturing photography leadership in all things digital (including the Gallery website), they decided to bet the farm that printer ink re-orders could be their next “film-like” cash cow. Dumb.

Food for thought: Are you really embracing change by listening to your customers or are you, like Kodak, just trying to apply an outdated corporate philosophy by chasing opportunities that others have already cashed in on?

THE REAL COST OF A BRAND

There has been so much written about the Penn State child sex scandal that I certainly don’t need to add anymore. There have also been plenty of articles and books about the importance of protecting your brand. So, here’s my question for today: How important is protecting a brand to you? Unfortunately, in 30+ years in marketing I have seen first-hand numerous examples of what I call “situational ethics” … i.e. “Well it’s wrong, but in this case, it’s not that wrong when you look at the consequences to our company.”

So, as we all profess righteous indignation about Penn State, the question you should be asking at your next marketing meeting is: “How far would you go to protect your brand?” Think about it. Think about it before others begin to think about it. I believe John Romano, a St. Petersburg Florida sports writer (http://www.tampabay.com/writers/john-romano), summed it up the best:

“What were they thinking? That’s the question yet to be answered by the football coach, the athletic director and the Penn State administrators who had apparently known for years about Jerry Sandusky’s creepy admission that he had taken showers with small boys, and were now being told that his perversions were actually far worse. And still they did not call police.

So when you wonder what they were thinking, you might want to start there. For these people protect their own. They protect their brand
name. They protect their image, and they protect anything that might interfere with the scoreboard. Apparently, they are willing to protect it at any cost.”