Ideapad

Blogging since 1998. By David Wertheimer

Category: business (Page 6 of 6)

GM and Chrysler deserve nothing

February 18, 2009 /

Here’s the thing about the latest auto industry bailout pleas: only under extreme duress are General Motors and Chrysler are making changes to their business plans. And only under the guise of getting more cash are they coming up with them.

I don’t want to see large-scale industrial failure any more than the next guy. But these companies do not deserve Federal assistance. They have proven for decades that their businesses are myopic and wholly resistant to change. While the rest of the world’s automakers adapted and excelled, Detroit was relying on focus groups, creating redundant models, ignoring macroeconomic and environmental trends, and overpaying employees.

The net result is companies that need overhauls and closures. Market forces should create the necessary change. Another $14 billion will only continue the status quo, which is akin to giving a drug addict just a bit more of his drugs in the hope he’ll figure out how to get clean if he’s given just a little more time. It won’t work.

GM in particular has busted its model by overdoing just about everything, starting with a proliferation of models. Take a look at model lineups in 1959, during its heyday:

  • Chevrolet: 8 including trucks (Bel Air, Biscayne, Impala, Corvette, Kingswood, El Camino, Suburban, Parkwood)
  • Pontiac: 3 (Bonneville, Catalina, star Chief)
  • Buick: 2 (Electra, Invicta)
  • Cadillac: 3 (DeVille, Eldorado, Fleetwood)

That’s 16 car models in total across their four major brands. Today Chevy has 15 models, Pontiac 7, Cadillac 6 and Buick 3–a total of 31 car lines, nearly twice as many models for less than half the market share. And that’s excluding Saturn and GMC, which heavily rebrand GM platforms for even more product lines. You’d think over the past, say, 15 years GM would realize it’s doing things wrong and try some fresh tactics. None ever came.

So add me to the list of “let ’em fail” naysayers. I’d like to see Detroit’s stalwarts continue to make cars, but only compelling concepts with strong identities that would actually have me consider buying one.

The potential ripple effects are frightening, but more bailout money will only delay the inevitable. Better to swallow hard and work on a Plan B.

On reconnecting

February 17, 2009 /

I’ve been on a reconnecting kick lately, and I’ve been diligently finding and reaching out to old colleagues on Facebook and LinkedIn (situationally dictated, of course).
It’s an interesting time to do so: I’m not looking for a job, although several of the people in my network are. Yet I wonder what my interest in connecting–now–says to my former coworkers and contacts.
Typically, building out one’s social network happens in two phases: in a big blur when first joining a network, and again a few months later as momentum builds. I’ve been on Facebook a long while now, though, and my LinkedIn profile dates all the way to 2003.
Why, then, am I reaching out now? Curiosity and comprehensiveness, mostly. That’s how I see it. But how do, say, my old Economist cubicle-mates read it? Am I hoping to hit them up for job leads? Ecommerce outsourcing opportunities? What might I want?
The truth is liberating enough, so I’m tick-ticking through my old names, building out my contacts as best I can. I’ve even updated my LinkedIn status line to indicate that I’m actually sourcing talent, not joining its pool. That plus a few lunches should go a long way. Besides, I’m an easy sell on lunch. Busy next week?

On being the bully (and a solution)

December 24, 2008 /

I was never much of a physical force growing up. Slowest in the 440 at school, always a few pounds overweight, I was more of a thinker, and made my way by being clever and omniscient, not all-powerful.
Which is why sometimes it’s hard for me to root for the New York Yankees. I get tired of seeing them outspend the league, overspend on players, and basically pummel the free agent market into submission every winter. Defending my team’s actions is tiresome, particularly since I don’t always agree with the maneuvers, despite being a loyal fan for 30 years.
More importantly, where has it gotten them? The most-expensive-ever Yankees of this season are the first in 13 years to miss the playoffs. The Yanks of the late 1990s achieved four World Series championships in five years with a foundation of homegrown talent. Since then the Yankees have proved (like the Orioles did a decade earlier) that a team can’t simply buy a championship.
The Yanks are determined to try, which is fine. But what particularly galls me is the level of disparity. Their 2008 payroll was 51% higher than the second-highest team and 140% more than the league average. I don’t exactly dislike the Yanees’ ability to spend, but come on. The system is surely broken that their budget can be $209 million when the average team is spending $90 million.
Major League Baseball needs to reconcile the Yankees’ payroll in a way that simultaneously appeases the players’ association and other owners. So the Yanks paid $26 million in revenue-sharing: that’s barely 12% of payroll, and didn’t slow them at all. At the same time, MLB must also continue to address parity; the Florida Marlins’ $22 million payroll, at 10% of the Yankees’, is equally embarrassing.
In lieu of a hard salary cap, which will be too hard to fit into baseball’s current economic model, perhaps a tether is in order. What if the maximum spend were set at, say, 200% of the previous year’s median? That would give wealthier teams room to pay, while preserving a realistic upper limit. It would allow the less wealthy teams to spend less, as is their wont. It might also realign teams’ responsibilities–the Yankees would suddenly have tens of millions of dollars of their own money freed up for other things. Like paying for their new stadium without begging for more public funds.
Last year’s median spend was approximately $80 million (between the Brewers’ $81 million and the Indians’ $79 million). If the tether were in place, the cap for the 2009 season would be $160 million. That’s more than $21 million higher than the payroll of every other team in baseball, but a good $40 million below the Yankees’ expectations. It would have allowed them to sign CC Sabathia or Mark Teixeira or A.J. Burnett but probably not all three. Which in turn would put, say, Teixeira in Washington, boosting the Nationals’ payroll by $20 million, which raises the median price, bumping the 2010 tether, and so on.
This is just one of many ideas, and it may not get noticed beyond this blog. But it would sure be nice to do something about this imbalance. Because like the bully in many a Hollywood tale, the Yankees keep proving that might does not make right. A little fiscal restraint might do them, and the rest of baseball, some good.

On performance reviews

October 20, 2008 /

Get Rid of the Performance Review! in the Wall Street Journal tackles the outmoded concept of one-way personnel assessments. In it, Samuel Culbert makes the case that reviews slow productivity and breed animosity in ways that are not particularly useful. Employee “previews” are suggested as an alternative.
But a far better mechanism already exists: the employee-led performance review. Staff are given blank assessment sheets and write objective reports of themselves. These are then shared with management; the boss leads a sit-down session to discuss areas agreed upon as well as areas omitted by the employee.
I’ve been giving and receiving self-administered performance reviews for years and see many benefits. Employees are often more critical of themselves than their managers. They encourage improvement even before the face-to-face review begins. The process also eliminates the one-sidedness of employer reviews, because the process begins with a dialogue rather than a directive.
Some organizations do two-sided assessments, which is even better: employee fills out a form, employer fills out the same form, then both sides review the two sheets together. This provides great momentum for consensus-building and easily identified goals. It also clarifies why areas are included or excluded by either party (e.g. “I hadn’t mentioned my early Friday departures because I thought my late nights offset them… I’m glad you highlighted this as something that’s important to the company.”).
My current employer has begun managerial reviews, which is an interesting twist: we’ve got one-way reports, but they’re up the chain of command instead of down, so I’ve been reviewed by a project manager and am scheduled to review the president. I was reluctant to do them at first, and now I know why: they are the one-side-accountable, administered/received reviews outlined in the WSJ article. Fortunately, bubble-up reviews work differently–they’ve been excellent sessions of constructive criticism and a good chance to think objectively about peers. Very useful for continued personal growth, particularly in a small company.

An open letter to Biscuits and Bath

August 4, 2008 /

Dear Biscuits and Bath:
“I didn’t make her cry. She chose to cry.”
This is what I was told by the manager of the 13th Street Biscuits and Bath when I asked him why my wife had just left your store in tears. She had asked him why Biscuits and Bath called our vet for vaccine information without informing or asking us, then contacted us anxiously three times in a week leading up to our grooming last Saturday. The manager, John, was aggressively unapologetic, and suggested “this isn’t the place for you” anymore.
This would be an uneventful customer service story if it weren’t endemic to our experience with you. Having found a great dog groomer, we dealt with error after insult for more than three years, figuring a happy, handsome dog outweighed the nuisances. Among them:

  • On at least three occasions, our appointment time was moved without our knowledge. More than once we found out we had a new time less than 24 hours before the appointment.
  • Twice the staff failed to inform us in advance when our groomer’s schedule changed, leaving us to arrive at the store for a nonexistent appointment.
  • The groomer regularly got double- and triple-booked by the main office, leading to our dog being trapped for hours on end. Customer service once told me, “You’re the only 9 a.m. tomorrow,” only for me to be the second 9 a.m. appointment to arrive, moments ahead of a 9:15. Our poor groomer was often harried first thing in the morning.
  • Despite repeated calls to the company, customer service representatives refused to escalate any complaints. Management is completely opaque–when I asked John the store manager for his boss’s name, John flatly refused to tell me.

This culminated in Saturday’s incident, where Amy, looking for answers, was instead told to take her business elsewhere, and my attempt at resolution was met with the quote at the top of this letter and a threat to call the police. I left your store wondering if other Biscuits and Bath customers have had similar problems, and sure enough, the posters at Yelp and Citysearch tell more of these tales. One saga on Yelp sounds almost exactly like ours.
I’m also wondering if other Biscuits and Bath patrons would frequent the store if they really saw what went on there. How the 13th Street location packs 30 or more large dogs into an 800-square-foot space in the name of exercise. How the smallest dogs sit alone and unstimulated in the front of the store, often lying in their own urine. How a dog died last year while supposedly under active monitoring. In a way, I’m glad we were asked not to return–I will miss our groomer, but I have momentum to take my business to a more reputable establishment.
Of course, there are two sides to every story. No doubt if you were to reply, you’d cite how we became upset at your staff’s insistent phone calls, and how we often bristled at waiting three hours while our triple-booked groomer took care of our dog. And how I used foul language after John the manager sneered at the suggestion he did something wrong. All we wanted was a pleasant, hassle-free trip to the groomer every month. We rarely got it.
The unprofessionalism at Biscuits and Bath suggests a business that should be running into the ground. Somehow smart marketing positions it as a premier, high-quality dog care establishment. In the process, you seem to have forgotten about the service and operations that go into a well-run store.
I hope someone at Biscuits and Bath reads this letter and acts upon the many flaws in this business. But I’m not expecting much. Your true reputation precedes you.

Update: slippery slope

July 9, 2008 /

I noted in this space in March JetBlue’s potential for evolving away from its roots with its new seat pricing plan.
Well, not only has the option to create a First Class cabin been raised, but my concern about the $10 legroom seat was accurate: booking a flight yesterday, I discovered that the premium row had quite suddenly become a $30 upgrade each way. I’m all for airlines making money, but JetBlue tripled its surcharge in three months, and the $60 upgrade amounted to 15% of the cost of my ticket.
If Virgin America offered more than 32″ of seat pitch (or a more affordable business class cabin) I might have switched airlines. Which is the last thing JetBlue needs from its loyal customers.

FedEx/Kinko’s

May 11, 2004 /

FedEx unveiled a new logo for Kinko’s recently, a bold move toward corporate brand integration. The new logo tries mightily to integrate two disparate commercial images. Kinko’s old logo didn’t have enough structural similarity to its new parent’s identity, so FedEx had to start fresh.

Several noteworthy touchstones can be found in the graphic element. The use of existing FedEx colors for the new icon nicely ties the parent company’s numerous services into Kinko’s visual presence. The light blue continues the FedEx trend of introducing muted secondary tones to complement its trademark purple. Most importantly, the star contains in it a right-facing purple triangle–a delightful nod to the allusive arrow in the original FedEx logo.

Simplifying the word “Kinko’s” to a thin sans-serif font is FedEx’s way of maintaining the brand name without encroaching on the master identity. Putting “Kinko’s” in the FedEx font would detract from the main logo, while keeping the original would not mesh as smoothly. FedEx clearly wants people to associate Kinko’s stores with FedEx, but it wants to maintain the brand equity of the chain it bought. Yahoo! performed a similar logo revision when it pulled Hotjobs into its master brand (see before and after).

The new FedEx Kinko’s logo is not without critique. There is no apparent justification for the use a sans-serif font for the additional text while the text add-ons to other FedEx logos (Freight, Ground, and so forth) use a serif one. Perhaps the old font can’t sit full-size next to the master brand, but the continuity is lost. The light blue in the icon represents one equal portion of FedEx as a whole, but it doesn’t seem to play a strong-enough role in defining the image as Kinko’s. And the asterisk (is that what it’s supposed to be?) doesn’t ring true as iconography: no other FedEx logo has a dingbat to call its own, so why does Kinko’s?

Still, the design succeeds far more than it fails. A quote from the FedEx brand FAQ sums up the initiative (paraphrased): “The icon represents the collection of the three kinds of FedEx services available at these locations–orange for global express shipping, green for ground shipping, and blue for the new retail business service centers. At the heart of the icon is purple, which is shared by all FedEx companies.” Without a doubt, the new logo serves its purpose, and serves it well.

Newer posts »

Ideapad © 1998–2024 David Wertheimer. All rights reserved.