A Pain is a Pain
A pain is a pain no matter how you put it and in whatever context it comes up. I wrote this article in the first class section of a Philippine Airlines flight (PR811) to Davao on 19 September 2009. As a first class passenger, I was entitled to all first class amenities from boarding to the in-flight services. PAL customer relations upgraded me to First Class because I was bumped off from the first flight of that same day.
But enjoying all these privileges (including a free round-trip ticket to any local destination) did not ease up a bit the pain of being bumped off and of missing my scheduled meeting for the day. It also did not erase from memory how I thought I was callously bumped off.
I thought that I was literally chosen to be bumped off, not randomly as the PAL staff claimed. I was ahead of three other passengers on the same flight to Davao to approach my counter. These three other passengers got the boarding pass. I was bumped off.
I was almost impressed with the effort made by the customer relationship group and the counter staff, but as they were about to hand over to me a ticket for the original flight I was booked, they decided to release that board pass in favor of another passenger. Somehow, so I thought, everyone decided that I was the chosen one, that is, I was chosen to be bumped off.
From this experience, three things about PAL’s operations come to mind – staff competency, revenue management, and customer relationship management. If there were elements that led to this pain, they were probably at the top of the list. They were what I thought significantly contributed to the scenario where I was bumped off. I am prefacing my third article of part 2 of this series precisely because of these three points.
Data Driven Decision Making
In the last 20 years, Acre, Inc. has invested a lot of its resources to promote data-driven analytics and decision making specifically SPSS. This has been a very painful and expensive advocacy. I cannot say that we have gotten back the resources that we put into promoting SPSS -- thus, the term advocacy rather than investment. Yet in other countries, my counterpart SPSS partners have moved forward and are now reaping the benefits of their investments in SPSS data-driven analytics.
There are some fundamental pains that are endemic to the Philippine analytics market. First, decision makers prefer to employ qualitative judgment (or gut feel) even in the absence of or without the benefit of analytics. I attribute this to the managers’ financial orientation, reliance on decision-making tools acquired in classrooms and seminars, and prevailing management practices.
Second, the Philippine market remains wedged in a system where the IT division makes the final and important decisions on IT-driven investments. In other countries where decision-making has been more incisive, investments in IT-driven processes had been more of a responsibility and decision of the users.
In one of the premier universities in the Philippines where I also teach, the IT literally made the decision on the scope and type of analytics software that the university acquired for its computer laboratories. The decision was made based primarily on financial considerations even if that decision breached the process and the recommendation of the users. It was as if IT had to approve and decide on the book to be used by the professor and students.
Staff Competency
Why staff competency? I had the luck of queuing in a counter where the counter clerk was less competent than the others. Even if I was first to the counter than three other passengers in other counters, the staff assigned in my counter was not as fast in typing and processing as those in the other counters. As a result and because of PAL’s practice to overbook, I lost my chance to get a seat and boarding pass. Different service skills translate to different service quality. The customer relation staff who attended to me admitted that indeed the competence of counter clerks differ.
There was an attempt to upgrade me and give me a boarding pass. As that boarding pass was to be handed to me, the supervisor over-ruled the decision and ordered my boarding pass cancelled and shredded. The supervisor’s decision was based on his assessment on who deserved to get the boarding pass. Unfortunately, that was not me. His judgment was most likely flawed, discriminatory and ill-advised.
His judgment was not aided by data-driven decision making tools which is a practice now common in other airlines in other countries. I can only guess, but I suppose that cost considerations prevented PAL from investing in the appropriate tools. I can say this because I know that PAL had been actively searching for such a tool. Somehow, they never made a decision or the investment was downgraded to something that cost less.
Revenue Management
Why revenue management? Revenue Management (RM) is a pricing and revenue optimization tool. It focuses on how a firm should set pricing and product availability given different scenarios and resources. It is also known as yield management the objective of which is to maximize the use of resources given certain capacity constraints and customer demand.
It is commonly used in the airline and hospitality sectors. Airlines practice price discrimination throughout the booking schedule based on several pre-defined conditions such as capacity, timing of booking, customer profile and type of service provided. Now, RM is tightly integrated in the supply chain management of many other industries.
Under this framework, there are customers who benefit from the application of RM and there are those who become victims of RM. The concomitant result is supposed to represent an optimal solution for the company, that which gives the company the most profit.
It is not meant to be an equitable solution for customers. As such, users of revenue management are expected to exercise due diligence and to exhaust all possible remedies and strategies to increase profit generated from the optimal solution and, at the same time, minimize customer dissatisfaction. This is where I thought PAL failed – to exercise due diligence and to exhaust all possible remedies.
In my recent encounter with PAL, I did not see any evidence of a data-driven decision making tool powered by a quantitative model that makes use of past data, consumer profiles, and analytics.
Customer Relationship Management
Why customer relationship management? PAL’s solution applied to my problem was a solution after the fact – an aftermath. What I believe PAL failed to do was to apply a solution before the fact – the beforemath.
Best practices in quality and performance management demand a solution that manages the beforemath and avoid the pitfalls of an aftermath. The highest level of ISO requires a system that manages the beforemath. Even the Computer Maturity Model (CMMI), a standard for defining capabilities of software development companies, has several grades the highest of which requires a methodology for predicting customer problems and requirements. The supply chain management system is heavy on such data-driven decision making tools.
These three elements are representative of the decision-making landscape (or lapses) in the Philippines – the lack of data-driven decision making tools and the absence of an organizational discipline that demands the application and implementation of such a framework to delight customers. What we in Acre, Inc. are proud of is that despite these pains, we have persevered and continued to advocate the mission of driving the widespread use of data-driven decision making analytics. We are committed to continue with this advocacy.
(This is Part 2 of a series of articles on the history of acreinc@20. Part 2 talks about the start-up years from1989 to 1994. What is the main purpose of the business? What are the secondary purposes of the business? What markets and customers will the enterprise aim to serve? In what processes should it excel in a business where systems, methods and technology are victims of obsolescence? In what way should the enterprise position itself in an industry dominated by multinational companies or companies that have been operating for many years? This part discusses the important decision-making days and documents the impact of these decisions on the future of the enterprise. Some are book-line strategies and decisions. Some are blue ocean scenarios. For comments, write to abfontanilla@yahoo.com or nick.fontanilla@gmail.com)
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