To Serve or Not to Serve?

There is an interesting 'conversation' going on in the readers'opinion page of the NST these last couple of weeks. It all started a few weeks earlier when a frequent Malaysian Airlines customer wrote-in to remind Malaysia Airlines (MAS) to not loose focus by competing with low cost carriers and to stick to full service offerings. This was followed by another reader who complained about MAS providing only mealboxes for domestic and short haul international destinations. This was followed by a reply from MAS that their survey had indicated that MAS customers are satisfied with the mealboxes and it is comparable with 15 other international airlines. This was followed by a letter from another MAS customer who questioned many aspects of the reply and insisted that either MAS bucks up or he will take his business elsewhere!

According to the reply from MAS, the survey found that customers are quite happy with the mealboxes. Its not clear how many respondents were involved in this survey or which sectors were covered. Did the respondents say mealboxes are ok, great or one of the 10 things that are ok? It seems customers, during the fasting month found the mealboxes useful as they can 'take-away' for later consumption. What would these very same customers say now when it is no longer the fasting month? Comparable with 15 other international airline standards? Well, lets be clear here. Firstly, just because it is a foreign airline it doesn't mean that it is of international standards. The benchmark for MAS must always be the likes of Singapore Airlines, Cathay Pacific, BA, Lufthansa, Emirates and the like. Secondly, air-travel in the USA and Europe has lost most of its privileged status. Air travel for them is just another mode of transport. In Asia and Malaysia air travel is still considered a status symbol even after the arrival of low cost carriers like AirAsia and Tiger Airways. So, if a Malaysian flies MAS to Kota Kinabalu (2 1/2 hours) instead of AirAsia I can quite safely say that there is still a prestige issue at play here. Otherwise, why would he /she pay so much more for a MAS ticket when a much cheaper alternative is available? Now, with that purchase, what does he/she expect? Full service treatment of course! That means what was previously offered if not better.

Lets look at some of the possible reasons why MAS would want to take this path. Having pre-prepared mealboxes instead of the usual full service offerings together with its utensils will reduce take-off weight of the plane which will translate into reduced fuel consumption ( a huge cost savings) and increased RPK (revenue per kilo metre). There will also be a reduced need for a big team of cabin crew which once again reduces cost and increases revenue.

So, its all about cost reduction. I can appreciate that. Idris Jala said he will do a business turn around and as far as I am concerned, such cost reductions are absolutely critical for him.

However, what is the impact on MAS over the long term? The following 3 possibilities present themselves:

1. MAS customers get used to this new service offerings and are pacified by an increase in service standards in other aspects, or
2. MAS customers find little differentiation with low cost carriers on those routes and switch their alliance, or
3. Regional airlines fill the gap left by MAS in the full service category once the open sky policies are in effect.

The thing is this, service and the resultant customer experience is more a function of 'perception' than real product/service experience. For example, Japanese watch brands like Citizen make great watches but the perception is that Swiss brands are a class of their own. How would a current Porche owner feel if Porche starts selling RM100,000.00 models in Malaysia? It is a precept ion game isn't?

Good things have started to happen for Malaysia Airlines. However, lets also remember what one modern business sage have said : "Good is the greatest enemy of Great".

We would like to see a great Malaysia Airlines. You with me?

That Magical Thing Called Branding

I read an interesting piece of research news today. It seems a research was carried out in Scotland to compare the effectiveness of cheap running shoes compared with their more expensive rivals. The data which was scientifically recorded by a small back pack, apparently showed that the cheap ones are quite as effective as the expensive ones in absorbing shocks and keeping pressure away from the knees and other joints. But what actually caught my curiosity was an expect of the findings that the researchers mentioned only in passing. It seems, when asked to comment on the effectiveness of the shoes, the 43 volunteers judged each pair of shoes on very subjective terms. They can hardly see much difference between these shoes. The catch is this : The labels of these shoes were masked with tape. So, the volunteers did not know what brand (hence the price range) of the shoes they were using.

Now, I wonder if they knew the brand that they were wearing would that have changed the way they responded about each pair? Would they have given a more favourable feedback on say, Nike compared with a cheaper and unknown brand?

In all likely hood, I believe if they had known the brand, their perception would have been dramatically altered. After all that is what good branding is all about isn't it?

I am passionate about cars. To be more precise, I am passionate about how each manufacturer brand their models. Recently I noticed a Proton Satria Neo side by side to a similar looking and same in category American make and to be honest, Satria Neo looked much better. In fact it looked sturdier and solid all around. Immediately (as it often happens) my thought wondered to the branding behind each of the model. What does the Satria Neo stand for? What does its rival stand for? What image do I show if I drive a Satria Neo?

You may not realize this but Audi is actually in the same league as Merc and BMW. In Europe these brands compete with each other. In Malaysia, Audi is catching up but still peeople always look at the Merc as the signal of their arrival on the corporate/VIP scene. However, the Audi is creating an image for itself as the embodiment of 'dare to loose' , 'class', 'the hell with the known' image. If you drive a Merc you have arrived (in the traditional sense). If you drive an Audi, you have arrived trail blazing!

So, how do I arrive in a Satria Neo? I suppose Proton expects me to figure that out!

There is very little branding. As the Scotish research shows, two products may be of equal quality but then selling them is not merely about quality as it also involves perception and perception is all about branding. Why else do you think Proton Arena is doing so well in Autralia as the Jumpbuck while it is a flop on our own soil?

Ok, lets look tourism in this context. If you travel to Italy or France, you are romantic, cultured and stylish. If you travel to India, Tibet, Nepal you are spiritual, searching and soulful. If you travel to Cambodia you are adventureous. Malaysia?

See, where is the branding?

Not too long ago, I shared with you guys about my visit to the pre-launch of the Persona. I hope by now you have had the opportunity to view the car. Quite a few are on the roads now. Don't be fooled by its similarity to the Gen2. Both use the same platform. But the Persona is no doubt, in my mind, a superiors car.

If you remember, I also said in that article that I am not so sure whether the Persona alone can help to turn around Proton. The reasons, as I have said, is simply because the problems at Proton are much more deep set than the management would like to believe. I just read a wonderful piece in the Edge (October 8) by Leela Barrock entitle "Malaysia Needs to Play Catch-up". She explored the sad truth about how far behind we are in the automotive industry. The following are some of the interesting points that I gathered from Leela Barrock.

22 years ago when we started our natoinal car project China, India, and Thailand were not even anywhere on the automotive map. The Japanese and Koreans were struggling to win over North America and Europe. Vietnam? Vietnam who?

Today, Toyota is the number 1 automotive company in the world. Hyundai is relocating its entire Atos line to South India to be exported to 65 countries. The Getz is next in line. Thailand is the world's second largest manufacturer of pick-up trucks. In 2005, Australia exported 140,000 vehicles although it doesnt have an Austalian car brand per se. Vietnam is the next blued-eyed boy for car manufacturers.

Proton had a 22 years lead time. But.....

So you see, a new model maketh no new future. The sooner Proton admits this the better. Whether VW is going to make a difference is another matter. I would still want to have the Proton as a Malaysian brand name when my children buy their first car. Why not?

All is needed is Change. Change at Proton. Now!

Gary Hamel in his latest work entitled 'The Future of Management' asserts that newer and more effective ways of managing people will be the competitive advantage of the future for companies. For those of you who have attended my Shifting Moments program, you will see that this is similar to what I have said many times : Organizations must develop a winning culture as that is much more difficult to be copied compared to a winning strategy.

I have written in my articles before of 200 year old companies that are still going strong today. Yes, they may have continuously reinvented themselves. They may have changed winning strategies after winning strategies. They may even have changed their entire business focus. Yet, I find it difficult to believe that all these were done despite their culture. How will a company continuously reinvent it self if there was a culture of blaming and a fear of risks? How could a company stay at the peak of its industry by merely having a winning strategy?

What is a winning culture? A winning culture is an organization's state of being. It is it's DNA. This DNA will determine how it creates, how it serves, how it rewards and most importantly it will determine how it sees it self under the sun. A winning culture is therefore akin to the soul of an organization. This soul/DNA is formed through a combination of chance and design. The Malaysian Rangers for an example is an organization that is rich with history and has a winning culture. It's DNA was influenced by the fact that it was born and bred during the Malayan Emergency. At the same time, its winning culture is also a result of the winning strategic designs of its earliest commanders. Similarly, NASA was born as a reaction towards the unexpected Soviet-led space race and yet it is as powerful at is today also because of its winning strategic designs. This DNA of winning culture takes time to form. we may be able to create a winning culture in a day through sheer empirical analysis or a burst of creative insight but not a winning culture.

What do you think will happen to Malaysia Airlines once Idris Jala leaves. Or, what do you think will happen to TM now that its supremo is being linked to the banking industry? If these organizations' success today are the results of their wining strategy, there is A huge possibility that their successes will end with these two towering individuals. If on the other hand, it was the result of a winning culture than their successes will continue no matter what. One is a short term share-holder judged success while the other will be judged by history as the winning formula.

But then, how are CEOs rewarded... for a winning strategy or winning culture?