In the second
presidential debate, the incumbent was asked to give three
instances in which you came to realize you made a wrong decision
and what you did to correct it.
Its not a
comfortable question to be asked in front of millions of people,
and aside from acknowledging a few bad hires, the president wasnt
about to tell stories against himself.
One wonders how
other presidents would answer this question -- not other presidents
of the U.S., but presidents of major corporations. Say,
This has been a
year of recovery for most of the travel industry, but the airline
segment is lagging. Are the CEOs of US Airways, Delta, United,
Northwest, American and Continental willing to look into the dark,
truthful mirror and cite three mistakes they and their predecessors
made that have helped land them in their current dismal
Of course, in many
industries it would be unfair to expect the same answer from six
fierce competitors, since businesses tend to run according to the
individual direction of the chief executive.
Which brings us to
Mistake No. 1: Willful homogenization.
If ever there were
a copycat industry, it is the airline industry. From
yield-management techniques to embracing hub-and-spoke systems,
from commission cuts to inflight service, as one goes, all
Why is that?
Because the airlines may have been deregulated, but theyve never
lost the mentality of a regulated utility. Its why you can fall
asleep on an airplane and, when you wake up, the only clue as to
what carrier youre flying is the seat coverings.
The most successful
airlines -- JetBlue and Southwest -- went their own way and found
profitability. In the final irony, Delta (with Song) and United
(with Ted) tried to copy their models.
Mistake No. 2 was
seeing their employees as enemies. The airlines are unionized, and,
therefore, employee relations have an inherent adversarial
component, but the bitterness that emerged between management and
employees has affected everything from operating costs to customer
Two carriers have
acknowledged their mistakes and moved to correct them. It is
perhaps fitting that, after Continental and Frank Lorenzo brought
airline-union relations to the lowest possible level, Continental
and Gordon Bethune have now set the standard for employee-friendly
may well have avoided bankruptcy only by installing fresh
leadership that could start down a new path with
Mistake No. 3 is
admitted in private, but not in public, and despite understanding
this mistake, no action has been taken to correct it. Knowing what
they know now, the airlines never would have embraced the Internet
intermediary channel as they did. It completed the commoditization
process their pricing policies started and set them on a fast
There is, of
course, one overarching cause behind all three mistakes, one primal
source for airlines woes: Bad hires, of course.
The questions for
shareholders to debate is: Were the bad hires made by the CEOs or
the boards of directors?