Delta: Melancholy in Seat 41F

Dear Delta airlines,

Oh what a tangled web you weave!  You, Delta, have achieved an oxymoronic height of customer (dis)satisfaction I didn’t know existed.  Who but you could get me across the country twice, safely, and without hitch or delay in my flight, and yet still manage to make me feel like I’d rather never fly your airline again?  Could it be that this is all part of some Grand Marketing Plan, a word-of-mouth viral campaign premised on the notion that “there’s no bad press” and the surprising, even counterintuitive revelation that coupling on-time arrival with terrible customer service will create stories that spread and a groundswell of interest in experiencing this impossible cocktail of joy meets frustration?

How else could one explain that, for the second time this month, I’ve booked flights on your airline and been denied a seat assignment?  That twice in the last month I have been seated in the very last row of coach, in a seat that doesn’t recline, optimally placed to have my head bashed by the beverage cart that cheerfully offers Delta’s signature $7 “It’s 5 O’Clock Somewhere” cocktail, a coy mixture of Bacardi Rum, Minute Maid Orange Juice, and a splash of Minute Maid Cranberry Apple, served over ice, created by Delta Flight Attendant, Linda Kelly (product placement home run!)?

Yes, it’s true, I was one of 30 confused, nearly irate passengers who, without a seat assignment, eschewed going to the bathroom or grabbing a bite to eat and instead queued up for 45 minutes for the gate agent in JFK.  What a tantalizing possibility it was (“Might we get bumped from the flight?!”).  And then, miraculously, like Scotty on the Starship Enterprise, you saved the day and (drumroll please) got us all on the flight!    Ah, the market research must have shown that we would appreciate it so much more, appreciate YOU, so much more, if you snatched victory from the jaws of defeat.

Now I’m beginning to see the contours of your master plan, now I’m beginning to understand why, heading to San Francisco, my video screen would turn on but not play any movies; why you’ve simultaneously added Wi-Fi to your flights while ripping out the power jacks that will fuel our laptops and our power-hungry 802-11g Wi-Fi cards.  You can fool me no longer!  You want us to know what is possible and then take it away, to whet our appetites and leave us wanting more!

So here I sit, in seat 41F, just three rows from the back (“You like me!  You really really like me!”) no longer confused or perturbed that I’m one of only a handful of people told that I couldn’t bring my small rolling carry-on onto the plane.  Now I understand why I was made to check this oh-so-tiny bag and pick it up at baggage claim at 8:30pm in JFK, where I, shifting my weight anxiously under the flickering lights of a cramped airline terminal, will wonder if I’ll see my wife before she heads to bed.  Yes, there was plenty of space in the overhead bin, yes the stewardess told me it made no sense to her and suggested that I should try to get my bag back.  But now I understand that ever elusive happy-yet-melancholy state you hope I will achieve.

This even explains why your tray tables don’t slide, so that when the person in front of me reclines his seat (as he did an hour ago), not only am I almost hit in the nose by my video screen (Will it work this time?  Ah the mystery!), but my laptop literally is pushed onto my lap, testing the very flexibility of my shoulders and daring my now-gnarled, aching hands to keep on typing.

Oh Delta, your mysteries elude me no more!!  You are the yin and yang of airlines, the sweet and sour pork that makes flying across the country an adventure.  You deposit me where I want to be when I want to be there – nay, sometimes even arriving early! – and yet you find a way to leave me just a little bit crabby, annoyed, and yet, strangely, elusively, wanting more.

A clever strategy indeed, and it’s working.

Sincerely yours,

Melancholy in Seat 41F

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Inefficient nonprofit marketplace – addendum

For those who don’t subscribe to the comments section of this blog (horror!) you might be interested to see the comments from last week’s post.

I’d like to highlight Sean Stanndard-Stockton’s point (paraphrased): it is specifically because donors do not directly experience the end product of most nonprofit work that the feedback loop (from “purchaser” to the “end product”) is likely less well-developed than in other sectors.

I think there’s probably something in what Sean is saying, though I would still ask whether, for example, the buyer of High Price Mutual Fund X (or Crummy Subprime Loan X) really has much of  a feedback loop at all (since the data says that, in the long term, nearly all mutual funds underperform the market, yet the money persists year after year in these funds.)  And I think Sean highlights another important question that we can ask, namely: in which sectors/products are feedback loops strong and where are they weak, and what can we in the nonprofit sector learn from these observations that will inform our work?

More broadly, my latest reflections a week after the post are:

a) I’m all for more transparency and better feedback loops, I just think we should be realistic about what the impact will be (less, I think, than some are claiming)

b) There’s a lot to learn from other sectors – specifically the corporate responsibility space (new standards and transparency launched a decade ago were meant to drive wholesale shifts in corporate behavior; changes have been much more incremental); and the individual investing space (multiple suboptimal products successfully competing for investor dollars).  And I’d like us spend more time looking at adjacent spaces that have things to teach us, and less time beating ourselves up about how messed up the nonprofit capital markets are.

c) I firmly believe that for significant changes to occur in how capital flows in the nonprofit sector, leading advocates will have to get into the capital moving business.  This could be by moving money in $10 increments (by building a powerful new online platform) or $10 million increments (by raising capital from forward-thinking philanthropists); it could be with predictive markets or challenge funds or some other mechanism…  But “provide better information and great stuff will happen” has, I believe, proven to be an ineffective model for making real change happen.

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Needle in a haystack

In the midst of a productive strategic conversation today, a friend said, “Well it sounds like you’re looking for a needle in a haystack.”

“That’s dispiriting,” I said.

“It’s not,” he said.  “All you need is a magnet.”

The magnet is two things: first, literally, it’s the story and the relationships and the positioning that helps the right people find you.

And figuratively, it’s turning an impossible situation into something easy and effortless when you find the right tool and employ it in the right way.

More effort is appealing.  The right effort is transformational.

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More or deeper?

More is:

  • The hunt
  • Acquisition costs
  • Onsite blog traffic
  • Splashy PR
  • Small bets
  • Millions of followers
  • Friends and admirers

Deeper is:

  • Relationships
  • Low churn
  • RSS subscribers
  • Specialized media
  • Big bets
  • 1,000 true fans
  • Allies

Neither is better or worse, but  (there’s always a “but”)…  BUT one of these has to be your dominant strategy if in fact you have a strategy.

(And if your answer is “both” then it’s time to reread Kevin Kelly’s original post about 1,000 true fans, starting with,”To raise your sales out of the flatline of the long tail you need to connect with your True Fans directly.  Another way to state this is, you need to convert a thousand Lesser Fans into a thousand True Fans.”  I can think of few things more dissimilar than the actions you’d take to “run out and find new converts” versus “convert a thousand Lesser Fans into a thousand True Fans.”)

So which one is it for you?  And why?

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Four ways to approach business school

  1. Good students go and treat it like school.  They’re good at school and it’s a familiar model: the teacher knows more than I do, assigns stuff to do, teaches me stuff.  I try hard and get good grades because that’s what I know.
  2. Credential-ers are there for the name and the doors it opens – most of which were probably open anyhow.  Tend not to worry as much about grades, care a lot about affiliation with other classmates.
  3. Career switchers are another version of credential-seekers, though usually much more focused on where they were and where they want to go.  B-school is a ticket to get there, and they’re going to work the system (especially recruiting) as much as they can to get that plum job.
  4. There for themselves know that this is a professional program, a collection of smart people (students and teachers both), and curate their own experience inside and outside the classroom.  They work hard, but not for the grades and not necessarily mostly in the classroom.  They’re there for themselves, since it’s their time and their money.

If I were to do business school all over again I would be a 4 (there for myself), but in truth I was mostly a 1.  That’s what I knew how to do at that time in my life – be good at school.

Maybe that’s all I was ready for then, but I wish someone had grabbed me by the lapels and said: “This isn’t about the job you’ll get, it isn’t about being a good student.  It’s about the trajectory / discovery / exploration / learning you need to do – in whatever way makes most sense for you – to walk from where you are today to where you want to be.”

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The inefficient nonprofit marketplace

A friend who’s doing a lot of work to improve giving practices and flows of capital in the nonprofit marketplace asked me the other day: “do you think capital is allocated efficiently in the nonprofit sector?”

“Of course,” is what I was supposed to say, but instead I asked, “Compared to what?”

Here’s another version of these questions, played back with a little more detail:

Question 1: Is there a significant gap between the way capital optimally would be allocated in the nonprofit sector and how it is allocated (where optimal = the best, most high impact ideas / organizations get the most funding; the worst get the least)?”

Answer: Yes.

But before we stop there and dive headlong into the steps we can take to “optimize” how capital is allocated – with better rating systems and more transparency and standards – I’d like us to ask and answer this question too:

Question 2: Is the nonprofit sector any worse than any other sector in how it allocates capital?

Answer:  I haven’t seen any data that helps me answer this question.  So for now, I have to say I don’t know.

Or, more simply:

Might we be a mess? Sure.
Are we any more of a mess than anyone else? Dunno.

For example, let’s compare the nonprofit sector to the mutual fund industry (since both involve individuals and institutions allocating their capital in pretty significant ways).  Mutual fund clients have the clearest incentive to allocate their capital efficiently and to avoid paying for things (like high management fees or stock-picking managers that say they’re going to beat the market) that are proven to be inefficient.  Plus, tons of time and effort has gone in to creating standards and disclosure requirements to protect individual investors and provide them with clear, easy-to-understand information.

And….?  And investors make all sorts of screwy decisions about what to do with their money, pouring billions of dollars into funds that cost 10, 20, 30 times the cheapest and most efficient option.  (And in further proof that we keep on getting halfway to the wall, just three weeks ago the mutual fund industry had another call to action about how disclosure and transparency need to be radically improved.)  In the meantime, high fees persist, people put money into underperforming funds, and investors ignore reams of data that says it’s impossible to beat market returns in the long term, especially with high-fee mutual fund managers.  On average, we buy high and sell low most of the time.

So what about another, simpler point of reference, like, say, just about any consumer product on the market?  Because while mutual fund fees may be obtuse and hard to understand (so arguably a great point of reference for the nonprofit sector), people also routinely spend, say $250 for 1.7 ounce facial moisturizer when its non-comodogenic cousin costs $10.99 for a 20 ounce container (about a 300:1 price difference).

$150/ounce or $0.50/ounce?

The point is not that the nonprofit marketplace doesn’t need better disclosure, more transparency, more accountability – it does. But we need a mental model of what we hope our sector will look like when we’re successful if we’re ever going to get there.  And “better than where we are now” isn’t much of a rallying cry.

Is the model publicly traded companies (with GAAP and ratings agencies…which failed us spectacularly in the latest economic meltdown)?  Is it the mutual fund business?  Consumer credit?   The point is obvious: lots of markets more “advanced” than ours fall short the same ways we do.

Since it’s so hard to find examples of markets that are “working” in the sense that capital is allocated in the “right” way, I would advocate starting by understanding how we’re the same (we’re interacting with consumers who, with limited time and attention, are allocating capital) and how we’re different (nonprofits tend to die slower deaths than their for-profit brethren), and then be clear about what these differences and similarities  mean and, from that, describe the gap we hope to close from where we are to where we hope to be.

In the meantime it feels like there’s a lot of railing about what’s wrong (“it’s not all about overhead ratios!” “Donors just respond to stories and sad pictures instead of digging in and understanding who is most effective!”), and a lot of effort to improve on what we have (by the nonprofits “rating” agencies and work to improve online giving marketplaces) which is all probably productive, but if we don’t know where we’re ultimately trying to go I have trouble seeing how we’re going to get there.

So my closing question is, “What does a highly functioning nonprofit marketplace look like, one filled with real actors who act like real human beings when deciding how to allocate their capital?”  And from that statement, let’s figure out what it will take to get there.

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Too busy to do the scary stuff

We have to give ourselves credit – we don’t hide from the hard, scary things in obvious ways.  We get creative, and do things that look similar enough to important stuff that we can fool ourselves.  For example:

  • Yesterday I needed to call someone to have a “fish or cut bait” (that is, are you in or are you out?) conversation.  I calendared it and everything (for me, not for him).  But the calendar reminder came and went, and I kept on doing the “important work” I’d been doing.  Tick, tick, tick….it took a while for me to stand up, walk away from my computer and make the call.  I was probably busier and more productive in those minutes when I was putting off the call than I’d been all day long!
  • The other day I was talking to the founder of a smart new nonprofit.  He’s trying to get 150 institutions of higher learning to make a substantial change in their curriculum.  Right now, for various reasons, he’s focused on getting 1 million signatures to an online petition as ammunition for those meetings (so far he has 8,000 signatures).  Sure, the signatures will help, but why not call the 150 schools right now and talk to them?  Why not commit to calling the first 10 this week?  The strategies can (and will) be complementary, but it also will be easy for him to spend so much time focusing on the 1 million that the 150 (which is the real, harder goal) fades to black.

These are just two of many examples.  We see this every day – we build our websites before we have any customers and hire staff before we have any clients – not because we don’t know what the real work is but precisely because the real work is so much harder, and being busy with stuff that looks a lot like the real work is a wonderful way to hide.

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