United, And The “Unfair” New Reality of Business

“But dad, that’s not fair!” I’d protest as a child.

My father, determined to teach me the futility of expecting that life would be fair and whose grasp on the English language seemed to fail him whenever convenient, would reply “Fair? A fair is a place where you go to have fun!” and he’d walk away cackling at his self-perceived wit (yes, dad jokes exist in all cultures).

In case you missed it, United Airlines is taking flack for having police forcibly remove a passenger who was already seated — a doctor on his way to see patients the next day. They did this because they had oversold the flight and needed 4 seats for employees who needed to be moved to another city.

Overselling flights is a common practice on airlines, with them betting that some will cancel or no-show and they’ll maximize the value of putting the plane in the air. It’s a process designed around efficiency and betting that maximizing the utilization of resources will generate more long term revenue than avoiding customer pain. In theory, it’s not a bad plan.

But in reality, a passenger resisted and was dragged off the plane by police only to return later bloodied and visibly traumatized.

I’m not qualified to comment on the legality of the police officer’s handling of the situation (the officer has been suspended and his actions are “not condoned” according to authorities). However, many have pointed out that United Airlines’ policies — that everyone agrees to when purchasing a ticket — entitle them to bump passengers involuntarily.

“It’s not fair! We didn’t do anything outside our terms of service!” United might protest. True, but also true is this:

If your business model requires you to use the minutiae of legalese to protect you from your customers — your business model is broken.

Legalese might be needed to protect you from competitors and regulators and courts, but don’t expect the court of public opinion to pardon your inhumanity on the grounds of your carefully crafted fine print.

United needed to get those 4 employees to Louisville or they claimed they would have had to cancel a flight the next day. Revenue loss! Then again, at this point, United could have hired a luxury limousine where their 4 crew members received en suite massages using freshly imported eucalyptus leaves from Australia and it still would have cost them less than this situation will.

Create flexible (and always evolving) processes

It’s rare that a company has a process built into their model that is designed to piss us off. Most of the time when we’re angry with a company it’s because some reasonable person designed what seemed like a reasonable process to deal with most situations.

If you’ve ever submitted a bug ticket to a software engineer, you may have seen it closed as “Works As Designed”. What that means is that even though it seems like a bug to you, the user, and even though it may be causing your blood to boil, it is in fact operating the way in which it was designed.

United’s processes worked as designed. “Our employees followed established procedures for dealing with situations like this,” wrote Oscar Munoz, CEO of United Airlines.

Most business leaders today grew up in the Lean Six Sigma century: Eliminate any waste or variation and standardize all processes in order to monetize operations.

Today, we’re in the Fix-Then-Fix era.

Fix: The customer’s problem. Step back from what the process protocols tell you is supposed to happen and deliver the most human and helpful solution. In United’s case, they should have either found a way to get their Louisville flight off the ground without that crew or they should have found a way to get their crew to Louisville without this flight.

Then

Fix: The process design error that led to the breakdown. You’ve just made an expensive mistake, for example having to buy your crew last-minute tickets on another airline to get them to Louisville. Conduct a post-mortem to figure out what broke in the process and fix it in the future.

Most companies only do the second Fix after there’s an issue. Right now, the highest levels of United’s executive management teams are talking about how to deal with the blow back and how to make sure it doesn’t happen again in the future. How about we skip the blow back and go right to making sure it doesn’t happen again?

Empower employees to solve customer problems

Companies in the 20th century withheld authority from their employees in order to protect their efficiency processes from the judgement and whims of their employees.

Companies that survive the speed of the 21st century will empower their employees with the authority to break from set process to serve the interests of the customer.

This will be a less revenue-efficient model. You’ll lose some revenue to the solutions your employees deploy to solve customer pains. You’ll also probably lose some revenue to employees who deploy unnecessary fixes. That’s to be expected — solve that with post-mortems and additional training and guidance.

Every employee should be able to solve a customer’s problem or find out who can. If they can’t, then something in your business process has broken down.

The Social Mob-ia

There will be consumers who try to abuse this. I once had someone start bashing my company on Twitter and, when we reached out to handle the situation, they said they’d stop if we paid them $100,000. Obviously, that was not going to happen. Fortunately, one of our executives was able to de-escalate the situation without succumbing to the extortion, but our social media team was ready to deal with the situation if it occurred.

We had taken an honest look at the situation and determined that we had done nothing wrong. Not “nothing outside our terms of service and legal obligations” kind of wrong, but legitimately humanly wrong. We knew we could honestly defend ourselves and were confident that even the mob mentality of the social mediasphere would see through the extortionists nonsense.

That was an enormous act of trust on our part as well, to place our faith in people’s ability to see the extortion for what it was. It worked.

I know that there’s a temptation to worry about people abusing your goodwill, to worry about the possible edge cases of the process. Trust in your ability to handle those edge cases rather than your ability to handle a genuine PR crisis.

Do the right thing, right away

“I would have gotten away with it if it wasn’t for those meddling kids!”

Relax, Scooby. Yeah, for hundreds of years corporations have been able to treat consumers harshly because the potential for damage has been so limited. That is no longer the case.

Every interaction with every consumer now occurs in front of a billion meddling “kids” with cameras who can — and will — call you out on B.S. I’ve been watching with morbid fascination as another, less notorious customer service situation has unfolded in my Twitter feed:

The woman, Rachel, used Priceline’s feature where they don’t tell you the specific hotel you’ll be staying in, just the area and some comparable examples.

Very cool model that relies on dynamically utilizing extra capacity in the hotel system. But you can probably already see how this could go horribly, horribly wrong:

I think that most humans might reasonably say that, at the very least, Priceline failed to deliver on their goal of customer value here. At worst, given some of the complaints of sexual harassment and other issues with this hotel, they may have put one of their customers in potential danger.

Obviously, they’ve lost this one customer forever — which is already a net-loss from not having solved the problem.

They’ve also created a very determined detractor who is already costing them other customers (based on replies I’ve seen to her posts) as well as costing them money in social media and customer service bandwidth costs having to deal with her persistent complaints.

There’s no economic rationale for not just solving the problem. If you want an example of doing this right, go to a Starbucks. Order a drink. When you get it, tell the Barista that you meant to order something else. Odds are they’ll take the drink back and make you the new one — even though this was your mistake, not theirs. (Then leave a big tip because what you just did was super rude).

Starbucks isn’t doing this because of fear that you’ll bash them in social media — they’re doing it because they want to optimize the probability that you’ll remain their customer. Taking a shave on net product margin here or there is a small price to pay for long term monetization.

To Starbucks is that fair? No, it’s not a place where you to go to have fun. But it’s damn good business.