There are three types of change in running a company. Those that fix the problem. Those that make the problem worse. And those that look like the former but accelerate the latter.
If you apply the forces of creativity to them you greatly accelerate the results. A fact the U.S. airline industry is already experiencing.
This week the eight largest U.S. airlines announced their highest profit margins in a decade. Projections are that in 2011 the industry will earn $5 billion. If all goes well, next year that number will rise to $5.6 billion.
Which sounds healthy, until you realize that during the past nine years the airlines lost $60 billion. And 160,000 jobs.
Which means that even if they can sustain these new levels of performance for another ten years or so, by 2021 the US airline industry will have spent two decades producing a net return for its owners of exactly $0.
And that’s the best case scenario.
The worst case is that this turn-around will collapse like a suddenly depressurized cabin.
If you believe in the power of creativity bet on the latter.
Because the airline industries have used a lot of it to create this turnaround. And most of it has been applied to finding new ways to take advantage of the customer. Bag fees. Change fees. And now potentially, use of the overhead storage compartment fees.
In fact the additional fees charged by the airlines in 2010 are higher than the industry’s actual profits. Which means that without those fees the airline industry is a loss making business.
But, when the gain to a business comes at the expense of its customers, with no improvement provided in return, the inevitable outcome is short-term increases in profitability followed by long term damage to the desire of the customer to be a customer.
Let’s apply positive creativity to this issue.
Peter Drucker once famously said that the Purpose of a business is to create a customer. The ability to provide something that people value and the ability to do so profitably.
But when a business focuses only on price, it makes irrelevant the thing that is actually most important to its customers.
The reason they paid the money in the first place. Whether that is whiter whites, lower taxes or satisfaction of a personal vanity .
And when judged by the results of a purchase, the airlines offer something of inestimable value.
Our lives.
The virtual guarantee that they will get us to our destination safely.
A value proposition on which to change the world. And one which supported by fair pricing, comfortable seats and an investment in the future would radically change their future.
It’s late in the game for the airlines to be re-establishing their core value. Perhaps too late.
And when airline travel is finally replaced by something that makes sense, something that delivers us quickly, comfortably and safely without destroying the ozone layer and ending the existence of Polar Bears, something that has no need for pat-downs and retinal scans, something that greets its customers with enthusiasm and innovation, something that stimulates and satisfies its employees, and something that creates shareholder value, it is unlikely that whatever that something is will carry the names of any of today’s airlines. So small is the value of those brands in the eyes of their customers.
Unless, of course, the airlines unlock the power of positive creative thought, and apply it to creating long-term value.
For us.
And thus, for them.
