How hard is it to say “I was wrong?”October 26, 2009
I am a huge cheerleader for companies that innovate. The problem is with weak execution. Do not innovate until you truly understand your customer. So many companies today are trying to find ways to create “other income” to keep their doors open. I understand that paying the light bill is harder to do today and I caution executives to think about their customers before making decisions.
Let’s look at the Web Van debacle. I loved this company. For me, a business traveler who loves a home cooked meal, I could arrange to have my selected groceries delivered with in an hour or two of arriving home from a trip. The last thing I wanted to do was to give a hour of the few I have to be at home to the chore of gorcery shopping. With Web Van, I could let my computer mouse do the shopping while sitting in a hotel room!
Web Van was one of the darlings of the techonology boom and quickly became a dot bomb. Many people wondered why and it was explained that the economics of having a warehouse and delivery trucks made the prices too expensive. It was suggested that they charge a delivery fee of $10. Web Van’s CEO said that Web Van would never charge a delivery fee when it was one of the actions that might have saved the company.
As a loyal customer, I would have happily payed the $10 fee just to continue to have the service. Web Van made the mistake of not really understanding their customer and that what we benefited from the service was convenience and that was worth $10. And so today, Web Van is out of business, shareholders lost a fortune and I do not have my groceries delivered to my door. They were so wrong, the lights were out before they ever had a chance to admit it. Bottom line, know your customer or lose your business.
Another case study is USAirways who started charging for drinks and pillows. This is a company that keeps getting it wrong because they never seem to think about their customers. The funny thing about this mistake is that USAir actually thought they were wasting liquid because when they started charging for drinks, people drank less. In a matter of months, USAirways figured out that we were still drinking liquids, we just were not buying them on the plane and they still have the weight on the plane and trash to remove. The backlash and poor publicity cost this airline that already had a bad reputation due to the fact that their employees are either indifferent or downright rude because they simply do not like their jobs. This was a serious mistake that did not help the airline in any way. Complimentary drinks are now being served once again. Can we bring back the video equipment for the long flights?
When I think about these two examples I can only say that the mistakes could have been avoided had they known their customers needs and wants. And, if you do mistake your real customer, have the guts to say you are wrong and adjust.