He Said, He Said

YOU GOT AN OPINION ABOUT THAT?

A Broken Outsourcing Model,” by the Editorial Board of The New York Times. Suppliers in Bangla­desh compete to minimize cost at the risk to their workers lives. “A race to the bottom in the clothing industry needlessly puts lives at risk.”

Competing.com asks: How can we avoid races to the bottom? Should we avoid races to the bottom?

Mark: Employers have a huge advantage negotiating with employees, especially where unem­ploy­ment, poverty, and desperation are high. “If you don’t want this job I’ll get someone else who does” is not a willing buyer and a willing seller. One benefit of regulation (which some companies welcome for exactly this reason) is that it lets companies do the right thing and not incur a competitive disadvantage. Skillful competing is not only about undercutting the other guy; it’s also about recognizing that excesses may drive customers to look elsewhere (in this case, outside Bangladesh). In other words, don’t ruin the industry.

Ben: Retailers using shoddy suppliers pay a price in lower quality and missed deliveries but ap­parently that is not enough. The market punishes bad management with lower profitability. If using fewer but safer suppliers pays off that will emerge as the solution. Regulations will simply increase the cost of clothes, making them less affordable while driving textile work into the next lower regulation environment and reducing employment in Bangladesh. Complaining about sweatshop jobs may appeal to emotions but not solve any problem. The employer and em­ployee are both better off as long as they are alive. Maybe we should fund construction-standards enforcement, not regulate the poor people out of their jobs! I am not advocating subhuman conditions, I am saying regulations are the wrong tool for correcting abuses. If some­one breaks the law (unsafe buildings), throw the book at him. Regulations raise the cost on eve­ryone.

The bottom line: How about a compromise that ties US foreign aid to Bangladesh to cleaning house on corrupt building inspectors?

F. Grading Bangladesh on competing as a skill: Ben, F. Mark, F.

 

Why the Airline Industry Needs Another Data Revolution,” by Steve Lohr in The New York Times. “An early pioneer in the use of advanced computing and data tools, the [airline] industry has lagged in using technology to personalize offers and customer service, according to a re­port.”

Competing.com asks: Despite all their data, no one seems to like what the airline industry has created for customer experiences. What’s the solution?

Ben: Now airlines are being urged to use Big Data better to tailor revenue-generating offers to their customers. This is hype similar to Big Data’s pitch to consumer products and big advertis­ers. It may make advertising and promotion more personal, as if that matters. That has nothing to do with the hassles of flying. Maybe it generates some incremental sales to some customers, which I doubt covers the cost of the analytic service, but as an investment it is misguided. The true issues, which are not IT-related, are a lack of leg room that should qualify as torture, delays where gate agents do not update waiting passengers to set their expectations, and the like. Such nonsense.

Mark: I couldn’t agree more. Here’s an example. An airline on which I have flown nearly three million miles sent me a gift, a Tiffany luggage tag. I felt as though they’re trying to pacify me with shiny baubles. The real issue, which Big Data will not address, is why the industry doesn’t act on what they already know customers want. As for me, I would have sent the luggage tag back in a huff except it is really shiny.

By the way, it’s a different story when it comes to the front of the aircraft. See “JetBlue Unveils First-Ever Business Class ‘Suite Seat’ with Sliding Door.”

The bottom line: We’re hoping someone invents a safe method for suspended animation.

B-. Grading the USA domestic airline industry on competing as a skill: Mark, C. Ben, B.

 

Choice of Health Plans to Vary Sharply From State to State,” by Reed Abelson in The New York Times. “Some states have attracted an array of insurers for their exchanges, while options in other states may be limited.” See also “Missouri Citizens Face Obstacles to Coverage” and “Colorado Presses for Uninsured to Enroll,” published on the same day in The Times.

Competing.com asks: How will states’ decisions about healthcare affect their ability to compete with other states? Are they competing with other states?

Ben: Do people move in and out of states because of state tax differentials? If they did, would anyone live in Oregon or California or New York except the very poor or the very rich? Or maybe this is what is happening already? Health coverage is a similar question, but a bit less obvious because at the end, chances are the whole experiment will fail. Adding competitors doesn’t guarantee greater competitiveness, as long as the law sets rigid terms to what the insurers offer. It is a guarantee that there will be zero innovation and mainly a dash to get federal/state money. At the end only a few players will remain standing. As cost-containment fails, the an­swer will become clear: a single-payer system. Innocent question: isn’t that what Democrats have wanted all along?

Mark: States may not set out to compete but they behave that way. They use tax and other fi­nancial devices to lure companies that would otherwise locate somewhere else. The states do so to get jobs, and that means people moving. (I guess we both obey our principles: you live in Florida, tax burden 9.3%, and I live in Oregon, tax burden 10.0%. But they’re actually pretty close, given that the states range from 7.0% to 12.8%.) Cost-of-living differentials factor into people’s deci­sions to relocate, and healthcare is part of that. So does the availability of health insur­ance: having insurance is better than not having insurance. Massachusetts enjoyed a competitive ad­vantage thanks to Governor Mitt Romney, MBA, that it’ll lose as the Affordable Care Act phases in. Innocent answer: a single-payer system has manifest cost and care advantages that Republi­cans will love.

The bottom line: The USA and its states are running a major experiment. We hope for good, clear answers because what we’ve got now is going to bankrupt us or kill us or both.

B+. Grading the states on competing as a skill: Mark, B. Ben, A.

About the author  ⁄ Mark Chussil & Ben Gilad

Mark ChussilMARK CHUSSIL is founder & CEO of Advanced Competitive Strategies, Inc., and, with Benjamin Gilad, a cofounder and partner of Sync Strategy. He has conducted business war games, built custom strategy simulators, and taught workshops on strategic thinking for dozens of Fortune 500 companies on six continents, resulting in billions of dollars made or saved.

A pioneer in quantitative business war games and a highly rated speaker, he has 35 years of experience in competitive strategy. One of his simulation technologies has won a patent; a patent is pending on another. He has written three books, chapters for five others, and numerous articles.

He has been quoted in Fast Company, Harvard Management Update, The New York Times, The Wall Street Journal, and elsewhere. He received the Fellows Award from the Strategic and Competitive Intelligence Professionals society in 2013. He earned his MBA at Harvard University and his BA at Yale University.


Dr Ben GiladBENJAMIN GILAD, PhD, is founder and president of the Academy of Com­petitive Intelligence, Inc., and with Mark Chussil, a cofounder and partner of Sync Strategy. He is a former associate professor of strategy at Rutgers University’s School of Management, and a pioneer in the field of competi­tive intelligence and war gaming. He has published seven books and more than 90 articles in academic and practitioners’ publications on the topics of behavioral economics, competitive intelligence, and business war gaming.

He has been running war games for Fortune 500 companies since the 1980s and teaching a course on war gaming as part of Fuld-Gilad-Herring Acad­emy of CI which grants CIP certification in the field of CI. The Strategic and Competitive Intelligence Professionals society awarded him its highest Meritorious Award in 1996.

He earned his PhD in economics at New York University, MBA at the University of Central Mis­souri, and BA at Tel Aviv University.

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