I make my living, in part, by teaching Problem Solving. I enjoy following the business press to see how different corporations deal with their problems. Unfortunately, we typically only get to read about what they’ve done – their solution – not how they did it, their process. So, I often like to imagine the how part. How did Acme Corp. decide to do XYZ? Does their solution make sense? What else might they have done? Again, the answers lie within the process.
Earlier this year, the press was awash with stories about a big problem facing the airlines: rising jet fuel prices, which were wreaking havoc on their profit margins.
The airlines responded with a two-fold solution: pull back capacity, and charge customers for additional services, many of which had previously been provided as part of the fare.
Reducing capacity made sense, that’s simple supply and demand at work. But charging extra for existing services? The logic behind that was less obvious, especially when I considered the services for which they would now charge. Additional bags? Stale, overly-salted snacks? Those tiny, scratchy pillows made of gauze? This, I thought, was a solution as likely to annoy customers as to improve the airlines’ top line. Was it really based on thoughtful, objective analysis, or simply pulled out of the air (pun intended)? How did they make their decision? Again, the process.
If it were up to me, I’d start with a series of focus groups to determine which services customers valued (and which they didn’t), and how much. And very importantly, I’d test their reaction to having to actually pay for those services in addition to the fare. Then I’d use a survey to test my focus group results with a much larger audience. I’d then conduct a series of small trials to validate the focus group and survey findings (peoples’ actions and words often differ). I’d try to run those trials in as controlled a manner as possible – identifying routes with similar characteristics and implementing the policies in some, but not others. I’d analyze the impact on revenue and passenger traffic. This approach would take time and wouldn’t be perfect, but it would reveal real customer behavior, and inform our final decision.
So maybe research like this took place. If it did, though, I’d guess the airlines would have come up with a different answer. Charge me for a high-quality glass of wine, a seat in a newly established “quiet” section, or a wider seat (forget the extra leg room – I’m short – I just want a “no touching” zone with my fellow travelers), or a seat where I couldn’t feel someone’s knees in my back, but not things I’ve always received as part of my fare, and which I don’t value in the first place.
OK, all sarcasm aside, problem solving is about better decision making. It’s about informed decision making. It’s driven by creativity on the front end, and thorough, disciplined analysis on the back end, to produce superior solutions. We live in a highly competitive, data-driven era. Decisions based on intuition and instinct, no longer cut it, and will prove increasingly costly.