The world from 35,000ft
Friday, November 16, 2007/
At 35,000 ft, sipping a glass of Chardonnay, the world looks different. I can see what a lot of people are missing.
The world from 35,000 ft
Somehow, at 35,000 ft, sipping a glass of Chardonnay, courtesy of the steep Qantas Business Class air fare, the world looks and seems different.
One forgets for a moment the unwinnable battle through the over populated and under serviced air port; the competition for a taxi to get you through the crowded thoroughfares to a meeting that goes too long and achieves not much more than the necessity to have another meeting; being jammed in the traffic in your rent-a-car trying to make the next flight; the reduction to insignificance waiting at the check out counter at the hotel and the frustration at even finding a table to have breakfast.
At 35,000 ft and a sip of wine, as I say, things seem different. For a few moments you are released from the prison of a society crushing in on itself. I ask myself “why do we put up with all this?” and I am then reminded of quite a few conversations I have had across the country over the past couple of weeks.
“Mate, we don’t have a problem – we are fire proof; we virtually have a monopoly. Our problem is keeping up with demand”.
I remember when IBM sold machines and not solutions. They said the same thing and whacked margins on their product like you can’t believe. Do you remember their one page a minute ink jet printer that sold for $17,000 in days when a dollar was a dollar and it broke down twice a week?
Do you remember Compaq, the computer market that took on IBM and cornered the market in PC’s. You won’t find it listed on the NASDAQ; it has been swallowed up by HP.
What about Boeing that knocked Lockheed, McDonnell Douglas, BAC, Focker and the French out of the commercial airline market and stood to have a monopoly? Airbus now own 50% of the market.
Goodness me, what does 50% of that market mean when Qantas have just place an $8.0 billion order (the majority of which is going to Airbus)? How could you blow 50% of a market when you stood to own the lot?
So, my past two weeks has been spent in talking to people who say “Don’t worry mate, I have a monopoly”. For them, things just keep rolling along. Great! I hope it keeps going.
Do you know what occurred to me at 35,000 ft (I still haven’t got used to the metric when it comes to flying. 11,000 meters doesn’t seem high enough). It struck me that there is no such thing as perpetual motion. This plane that I am on will run out of gas if it stays up too long.
I might have misinterpreted the last two weeks of travelling around the country, but from 35,000 ft I feel that I saw a lot of people running out of gas and not bothering to call in at a refill station.
I worry about the about stories of people in the USA using their credit card to pay the interest on their mortgage; I worry about the unreliability of the quality of goods manufactured in China as a result of corruption and the turning of a blind eye to environmental regulations because sooner of later their will be a cost to be picked up by someone.
I have seen technological developments that enable Asian countries to penetrate Australian industries as basic as packaged Queensland nuts. I worry about America that has to borrow to service its foreign debt (a bit like using your credit card to pay your mortgage interest).
I worry about spending trillions on adventures in the middle east, a lot which ends up in spent bombs, destroyed tanks rusting in the desert and worse still, the thousands upon thousands of lives splattered in blood across the desert.
So, when I go around the country and people tell me that they have a virtual monopoly and that the merry go round will go on forever, I ask myself at 35,000 fit sipping Chardonnay “are we really getting it?”
There is no such thing as a monopoly as IBM and Boeing discovered to their detriment. Anyone who thinks they have a monopoly ought to take a plane trip, sip some wine and recognise that the world is changing faster than the jet on which I am travelling.
If you think you have a monopoly, invent a competitor and develop strategies to compete with that competitor. Sooner or later, the competitor will come from left field or an economic threat will emerge that we had not anticipated. More likely than not a competitor will come from another industry.
The best strategy for anticipating competition is to make your value offering irresistible. If you think that you can leverage your margins because of your monopoly; pretend you have a competitor and adjust your margins to ensure you are giving value to your customer for a service that no competitor can meet.
No matter how well you are doing, keep asking yourself “how can I do better while at the same time making my price more attractive?” “How can I continue to add value to the customer?” Here at 35,000 ft I wonder if sometimes, we are seeing things from the right perspective and are just rolling along. Perhaps we are on the crest of a wave.
So, hopefully, things will keep rolling along but knowing that there is no such thing as perpetual motion, I know that somewhere down the track, new threats will come out of the wood work and we ought be ready to respond. Think about refuelling so that you can keep your foot on the gas and constantly improve your value offering so that even if a tsunami comes along, you will still be in good shape.
So, take a flight every now and again and look at the world from a different perspective and remember that monopolies never last. Perhaps one day, a business class fare in Qantas might reflect the existence of competition rather than that of a monopoly.
To read more Louis Coutts blogs, click here.
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