Strange economies bring out strange behaviors. The airline industry is one of the most visible which is demonstrating strange behavior as it tries to cut costs, improve efficiency, and make more money. One key to business survival is to be profitable yet competitively priced. Therefore, on the surface, it makes sense that some airlines have chosen to charge a nominal fee for checking a bag. However, this nominal charge has led to an unexpected, costly ripple effect. Airline passengers are now carrying their luggage onto planes to avoid being charged the fee to have it checked. As the overhead compartments fill, the flight attendants must continually stop the boarding process and check the bags that do not fit. Hence, zero fees collected for these bags and extra work for the flight crew, which costs the airlines time and money. Adding insult to injury, the delays and costs are repeated when the flight lands. What seemed like a good, money saving idea for airlines is quickly proving to be more costly than the previous “no bag-check fee” policy. Said more simply, it is not working. Flawed decisions such as this can be seen in virtually every business throughout the world. To cure these flawed decisions, you must first cure the thought process that led to the flawed decision itself. In both business and personal settings, we are all trying to cut costs, improve efficiency, and earn more money. Whether scanning a financial statement or a personal checking register, it is natural to scan for line items to address. We ask ourselves what items can be reduced, what areas can be improved, and what can be done to bring in more money. In spite of the thoroughness of this line-item mentality, though, it fails to address the bigger picture – providing the highest value. Many airlines have stopped throwing peanuts and bad food at passengers. Instead, they offer better options for a nominal charge. This change has cut millions of dollars out of the airlines’ expenses. Yet, if passengers are not eating, how are they entertained? Ah, they have added value there, too, with in-flight wireless internet access, personal movies-on-demand, and satellite television – all as options for a nominal charge. So, a select few passengers may have a delightful in-flight experience – if they choose to pay extra for their airline’s highest values.
Charging for luggage may appear attractive when considering it as a one line item; however, it fails the adding-value principle and that is why the policy is failing miserably. Other profitable, value-adding options are working well and have the added bonus of boosting the morale of the company, the employees, and the customers. Offering the highest value needs to be your first priority if you are aiming to cut cost, improve efficiency, or earn more money. In fact, adding the highest value should always be your first priority and must include all facets of your life. In your business and your personal life making decisions is a constant: Do I finish my report or leave work an hour early to watch my kid’s soccer game? Do I forward this email or delete it? Do I keep making my point – just to prove I’m right and he/she is wrong – or do I just shut up?
The adding of value test applies to all of these situations. Ask yourself frequently if you are adding value to each situation you encounter. Use this to guide your decision making process and you will start to see synergy form in every area of your life, including your business. This synergy will not only allow you to cut cost, improve efficiency, and earn more money, but will allow you to add the highest value to every area of your life without ever having to leave your bags at the curb.
For more ways to work the value test into your business go to www.BoltFromTheBlue.com and enter FRUGALITY in the blue print box.