Boozonomics 101

Every once in a while I see a data set somewhere online or in a newspaper that captures my attention – and my playful (but nerdy) side.

On a random newsfeed this week I saw the following Economist dataset that grabbed my eye (first image, left), probably because I saw the word “beer” in the headlines. I love beer, plus it’s a good manly topic, don’t you think? I am also trying to eliminate it from my diet as part of losing some weight (‘cause my wife called me chubby the other day) and so when I saw “beer and labour” (that’s ‘labor’ for all you Norteamericanos) I thought “cool” not only am I losing some flab but I also get to understand how I am positively diverting my personal financial output relative to everyone else in the world.

When I first studied this graph I immediately recognized that the price of a beer varied widely – and that the relative purchase power of the average person varied even more widely. This is what makes this data set intriguing – because in fact, not all of the countries at the top of the list (like India) are big drinkers. It turns out that in terms of total (equivalent) units of pure alcohol consumed per head, India is the lowest on the list. Considering that India is a massive population, even modest consumption should still enable a big enough market to exist that a price point that isn’t hampered by production scale (indeed, the average cost of a beer in India is lower than the world average).

(Left) the original Economist data set (Middle) alcohol consumption by country and (Right) the most important ranking - the % of working life spent on earning beer.

(Left) the original Economist data set (Middle) alcohol consumption by country and (Right) the most important ranking – the % of working life spent on earning beer.

In addition, the fact that a beer in India is cheaper than the world average would imply that there are probably no excessive tariffs (taxation, religious drivers, public health policy, etc.). This is unlike, for example Britain, where alcohol is massively taxed and where a beer costs ~3 times just about everywhere in a desperate attempt by the government to curb binge drinking. Practically, though, if you earn your wage in Pounds Sterling and you are thinking of going on a bender, maybe a trip to India is not a bad idea. On a big night out, you might just about break even on low-cost charter flights and a cheap hotel in Goa.

On second thoughts, let’s keep those rowdy Brits away (again) from beautiful India and just keep sending them to alcoholic tourism hotspots like Ibiza and Benidorm instead… (Sorry mates – couldn’t resist).

When I apply my amateur cultural analysis lens to this graph, I also notice that beer costs about the same in Russia as it does in India. Although I suspect vodka is a lot more popular than beer in Russia, it is an absolute fact that Russians will pretty much drink anything. I know, I married a Russian and the top 10 drunkest moments in my life have been around my wife’s family. And yes … it turns out that Russians and other ex-Soviet nations are the biggest drinkers in world. Unsurprisingly, Koreans are not far behind (I’ve done a fair amount of damage to my liver from business trips to Seoul over the years, so I can attest) followed by most of the Euro-zone quaffing countries, which have a fairly equivalent drinking culture. You’d think all those Latin American countries would be big drinkers (like Mexico, Columbia) but in fact they are pretty modest. They manage to trash football stadiums without alcohol, which is quite impressive.

Interesting…

Then I started wondering. Based on the total alcohol consumption of these countries and considering that this nifty dataset tells us how long it takes to earn a beer, and throwing in a few rough rules of thumb (like converting total pure alcohol to a rough 5% beer pint equivalent) I was curious to know what percentage of the working life was dedicated to getting tanked. Irrespective of (or ‘normalized’ for) how much people drink in each country, I wanted to know what proportion labor output was effectively directed to getting boozed. The result is more what you’d expect of all the cultural stereotypes. The Columbians are slaving away for that cold one, the Poms are cranking away for a pint and the Russkies and Koreans are spending all their spare dosh on ‘shine. At the other end of the scale, the studious Chinese and Indians are spending a relatively small proportion of their earning hours on getting sloshed – they’re obviously too busy directing their wealth towards more productive things like starting IT companies and world domination.

At this point, I was having fun and I thought it would be entirely appropriate to pull out the top 5 or 6 booziest countries and the bottom 5 or 6 booziest countries and see how alcohol and overall productivity line up. I dug out the figures on productivity/head from the OECD and a few other sources and racked and stacked booze consumption against productivity (for simplicity, productivity is charted as relative to the average of the group). It turns out that there is basically no correlation between alcohol and productivity. Sure there are some highly boozy countries like Russia and the Ukraine who are a bit weak on labor output, but then there are the Japanese and the Froggies who are not far behind in terms of quaffing power but still have comparatively high productivity.This clearly means that there are manufacturing companies in Japan and Korea that are being run on hangovers – says a lot about the stamina of our Asian friends (i.e. very impressive, dedicated lot). You can chart it both ways…and it’s clear, there isn’t a correlation (note: I have studiously avoided the use of any statistics here – that’s for dorks).

Productivity v alcohol or vice-versa. Either way, there is no correlation. Plenty of productive boozers out there!

Productivity v alcohol or vice-versa. Either way, there is no correlation. Plenty of productive boozers out there!

Therefore, it’s not just the effects of booze at play here. There has to be some other factor that causes the Russians to be far less productive than the almost similarly boozy French – or the Columbians who actually don’t drink that much at all but also don’t crank out anything (legally) useful. Sure we could be all sophisticated and start doing an analysis of political institutions, corruption, comparative freedom, infant mortality as a proxy for human health, etc. But that would be scientific – and this is a blog.

We don’t do science here.

Applying my warped cultural lens again, I note that the countries with the greatest productivity disparity are also countries that are renowned to have beautiful women. This is not just my opinion (or an attempt to elicit brownie points from my Siberian wife), but there have been rigorously conducted and objective scientific studies – we have the data, people. If you add a 3rd variable to booze and productivity – namely the reputed beauty of a nation’s femmes – and sort from the most beautiful to the least … damned if it doesn’t start to iron out the wrinkles in the correlation. It’s not perfect, but it’s (visually) a whole lot better and let’s face it, we’re not controlling for some corruption or poverty index so it’s not bound to be perfect. The curves truly track each other (pardon the pun). What’s more, there is a pretty strong correlation between the beauty of a country’s women and relative booziness.

(LefT) when you control for beauty (sort the data set) productivity and alcoholism start to line up. Interesting... (Right) correlation between the purported beauty of a country's female population v booziness.

(LefT) when you control for beauty (sort the data set) productivity and alcoholism start to line up. Interesting… (Right) correlation between the purported beauty of a country’s female population v booziness.

Now, I am not being misogynistic here. I think we can be honest with each other and agree that beautiful women drive both men and women to drink – men, to develop the courage and women to dull the ire. However this is not about my personal opinion, this is purely and simply about the numbers. This is about science (disregard my earlier comment) and I can only report the facts. No matter how you analyse it, people who live in countries with beautiful women spend more of their earnings getting boozed and have lower productivity. That’s Boozonomics.

It all makes sense really. Slàinte mhath!

Our public servants should be the brightest and best…

I had a beer last night with a good buddy of mine – let’s call him … Viktor (may or may not be his real name but you can see a good likeness here). Viktor is super-smart, he’s got degrees coming out of the gazoo, he’s lived and worked all over the planet, he’s worldly, he’s articulate, and he’s a public servant. He’s also mightily fed up with working for the government.

Viktor fascinates me because he’s one of those guys who believe that if you want to change the world, you have to persist with improving government, making it more efficient and creating innovation from within. Viktor had a corporate life and made good money, he is also extremely entrepreneurial and could easily start a business. But instead he has committed himself to a lifetime of mediocre income, pointless report writing, sub-standard office equipment and a complete dearth of pick-up cachet at cocktail parties (“I’m a government economist” … ho hum).

Yet I am grateful and I admire him. Why? Because our public servants should be our best and brightest and there just aren’t enough bright sparks…

I think it almost doesn’t matter what country you point to at the moment, our political institutions are underwhelming at best and with few exceptions our leaders are mostly a bunch of losers (ok yes… I do admire Obama… and maybe Merkel). So, really, all we can hope for is that the guys actually doing the real work of running our countries behind the scenes are the best possible. You know what I mean … that battle weary team that gets together in a dark oak-panelled room filled with crystal scotch decanters and cigarette smoke after another disastrous day of politics and goes “well, Julia/ Stephen/ Obama/ Angela/ Francois/ David/ Susilo Bambang Yudhoyono (take your pick) really f**ked that up today, now how do we do we fix it?”

Some parts of the world have incredible institutional stagnation. California – disaster. Victoria (Australia) – completely pathetic, verging on impotent. The UK – moving backward at a great pace, including from any kind of truly harmonious future with Europe as per David Cameron’s recent Euroskeptic rant to appease his disgruntled party lines. Yet I still believe that there are smart people in the background, just like Viktor, fighting every day to improve things, become more competitive and try to keep it real.

I think an important question to ask is how do we make sure that our future public servants are the crème-de-la-crème? Some countries, like France … or even the US … have “elite” schools of government that serve as the cherry pick for smart people who want to do good. I suppose government also has a reasonable track record of also poaching from the private sector for key initiatives. Hey, everyone likes a little bit of “government advisor” on their CV, right? That certainly does have cocktail party cachet – “er yeah, I was in DC last week advising some policy wonks on innovation.” Sexy stuff. How could you not pick up that fabulous blonde???

But I think that the real ways to improve things are twofold.

Firstly, I really like the idea (and this is not my own) that a small proportion of government budget is set aside to be internally earned competitively. Sometimes governments seem to think that the best way to invoke innovation is to cut budgets but demand a similar or even higher level of performance at the same time. The “burning platform” or “wall of fire” can certainly motivate short-term productivity improvements and organizational change, but it is probably not the right long-term motivator. We’ve known forever that competitive and prize-based incentives are far more effective at driving innovation and change – why should this not apply to the internal machinations of government? Competitive environments might also attract a different sort of person to have a shot at being a public servant (though it admittedly does run the risk of also attracting ex-management consultants too…sigh).

Secondly, to have the best rank-and-file public servants we need to compensate them properly. Sure it’s great to select people who what to do good, rather than those who want to just make money – but there are many who value both aspects in a career. I look at a country like Singapore where public servants are paid quite well and where it is viewed as reasonably prestigious … in my opinion the quality of brainpower is generally higher. Education, training and career development costs money and very few countries really invest in the development of their public servants. Again, I think Singapore is a model in this regard. I also think that if we had better compensated public servants we’d see less corruption, though perhaps not at the senior ministerial level – clearly a $300k salary didn’t stop Craig Thomson (an Australian MP) from buying hookers with the “company card.”

I suppose my last comment relates to “Big Government.” Tea Party activists will tell you that Big Government is bad. Some of the slightly more left-ist European countries will tell you that Big Government is necessary to address the growing complexity of problems that our nations face. Frankly speaking, I’m ambivalent about the reach of government – let’s face it, in most countries the private/public divide is not very stark anyhow.

What I am more concerned about is effective government (big or small) and therefore our government agencies need to be subjected to the same competitive dynamics as the rest of the marketplace. In particular, this means that the best thing we can hope for is when our public institutions compete for – and even outgun – the market on talent.

With a few more Viktors, the world will be a better place.

Fatherhood Makes Better Executives

Firstly, I’ll apologize to any women reading this. I can only speak from my personal vantage and hence the masculine overtones of this article (starting with the title).

I had my son comparatively late – 37. When Max was born it completely threw my world out of kilter and 2012 was the hardest year of my life, mainly because of him. I didn’t say the worst year of my life, or the most unenjoyable (for there was a lot of joy) but the hardest. The lack of sleep, the disorganization in our household, the need to spontaneously re-prioritize things and the redefinition of my relationship with Zhenya (my wife) were things that I struggled a great deal with.

My life before Max was predominantly about my businesses. Of course, marriage changed things a little bit, but both Zhenya and I had our careers and so finding time to carve out “quality time” was a sufficient goal and I think we were both happy with that. Good holidays, date nights, Crackberry-free weekends. There is no doubt that sometimes we didn’t do enough and that some of those last-minute vacations were scheduled because of a need to find some reconnection when things got a bit strained, but I think we had a fairly conventional DINKY (dual-income, no kids yet) life.

Then Max came along.

Of course, nobody can prepare you for what happens. I went to all the classes (including some with Zhen), I talked to friends and I endured sermons from those who had travelled the enlightened path of parenthood ahead of me. I even did a first aid course. But when Max was born, I remember walking out of the hospital sleep deprived and dazed, and thinking to myself “what the hell just happened???” I will admit that at about 7am that morning I needed a stiff drink and the world has never been the same since.

Max is nearly 9 months old now and although it’s only the beginning of my journey as a Dad, he has profoundly affected my life – including my professional life.

Firstly, working 100 hours a week was something I have generally felt comfortable with for most of my career. This is because I have mostly been “self-employed” or run my own businesses, and therefore I don’t see my working life as a “job” but rather a passion. For me, working is 80+% play and so most of the time I feel that I am chipping away at something I love, rather than something I am just doing for a paycheck (especially since often there has not been a paycheck). In truth, there is a lot that is selfish about being an entrepreneur and my son has made me see just how much time I consume for myself, rather than to the benefit of others.

Somewhat related to this is the idea of true attention. I am well known for having a conversation with someone but tapping away at my smartphone or even hitting the odd key on a laptop at the same time. Not to be rude, and not during a crucial moment of dialog, but still…

I always thought that I was fairly attentive but my son has taught me otherwise. When I am looking at my iPhone while holding him, he is irritated (even at his age) that I am not giving full attention to him and he lets me know it. Moreover, he wants to “play” with what I am “playing with” and so he is fascinated by my laptop. He wants one. I dug out an old wireless keyboard (no cable to strangle him) and he started playing on it “just like me.” As a reflection of myself, it really made my heart sink and it almost wasn’t cute. Well, it was, but it was also sort of sinister at the same time.

Thirdly, aggression. A few years ago I started a small technology company with a few friends (names shall be withheld). As is often the case when doing things with your “pals” a lot can change and friendships can be reshaped pretty dramatically [hmmm… note to self, good future blog topic]. Despite a major dispute about shareholding in this company, I have actually lost my desire to fight over it anymore. It’s not that I don’t care (or that I don’t have a lawyer sitting at the end of a very taut leash) but I am simply no longer willing to stay angry about it.

Why? Because it personally costs me too much. It means that instead of being able to play with Max with all my attention and focus, I’m not really there with him in the room – instead I am lost in my thoughts, wistfully imagining myself bludgeoning some guy to death with a shovel on the other side of the planet. Sometimes after a particularly rough day, or a board meeting that didn’t go the way I would have liked, or exhaustion from meetings in eight countries in five days – just three minutes with my son makes me realize just how unhealthy my emotional composition can become.

… frankly, I’m amazed that my wife has put up with it for as long as she has … and it makes wonder how my son will view me as he grows up and sees what a mess I am sometimes …

Then there is time utilization. Having a little kid in the house makes you realize that while you might feel that you are in a kind of stasis, other people aren’t. Every day he discovers something exciting or demonstrates a new behavior. We go for a walk and he is almost inevitably amazed by some little thing – a new type of flower, or a bug or a puppy … or yesterday’s big excitement, a dried leaf (tasty!). It makes you realize that time is a gift and that it is given to you not just to enact your own narrow vision of life, but to be able respond, enjoy it and to grow continuously. Of course, as an adult, I am still evolving but it is mostly (for me) a temporally disconnected process. I’m not really growing every day, I’m only growing when I bother to take the time to lift my head up from a Microsoft product and process what is going on around me.

I suppose lastly, there is the dramatic change in perception of others. I’ve always had employees with families and I always felt that I was able to be appropriately sympathetic and duly responsive to the needs of those with lives outside of work. I will admit that sometimes I was mildly disdainful of someone who had to leave work early for a sick kid (purely in my thoughts, rather than my actions) but in general I could philosophically accept that not everyone was going to be like me, sitting in my office cranking away long after the sun had set. In fact, part of me felt that not having a family, not having a wife who expected things from me, not having to go home to kids … actually enabled me to have the life that I did. Work hard, play hard, travel the planet, no accountability to anyone.

Nonetheless, in terms of the businesses I have led, I’d like to think that I always did the “right thing.” I like to think that employees felt that they could put their family first if they chose to, that our maternity/paternity leave policies were “best in class” and that we had a team culture that supported the notion of work-life balance. But in fact, until I had a kid of my own, I was probably just giving lip service to this whole idea. The other day a member of my team sent me an email to say she was going home because her little girl had been in an accident in daycare and needed some stitches. I actually felt alarm, not just intellectual empathy. That was a new experience for me and I think I was able to be genuinely supportive and not just give a synthetic reaction.

I ran my first company when I was about 26 and I think if I’d had children then, I would have spent the next decade or so growing comfortably into my entrepreneurial life with children as de rigueur, rather than the jarring event that it has been. But I am grateful because my son is my mid-life crisis and thankfully it doesn’t involve a mistress or a red sports car – just something as harmless as baby poo and drool. I think I needed a change-driver for my personal life (overweight, stressed, destructive emotional repertoire) and I probably needed it for my professional life too. I just never expected it to come from a little boy. Max has not taken the wind out of my sails or diminished my motivation and ambition, but he has reduced my aggression, made me more empathetic and I see things going on around me in way that I didn’t see them before.

It’s still not easy, and I’m still not good at it … but even at this early stage I have experienced the positive impact of Fatherhood.

The Biggest Mistake Entrepreneurs Make

I’m not ashamed of my failures and – with enough time – I’ve even been able to talk about them without getting angry or feeling self-conscious. I’ve had a few humdingers, that’s for sure! I can chock up a failed attempt at building retirement homes and geriatric care in Russia, a microfluidics company for advanced cancer diagnostics and even a nanotech company that almost made it (should have made it, dammit!) but failed to syndicate financing at the 11th hour.

Oh well, at least life isn’t dull…

In truth, there is seldom a single reason why a new venture fails. Clearly, if there were always a single clear reason for lack of success, correcting the situation should be easier. Candidly, I can say that every business disaster I ever embarked upon also had most of the reasons for failure visible at the outset – I just didn’t correctly interpret the signs. Hindsight is 20:20, and so the goal has to be to train yourself to sense the early warning signals for the next time; for example, a co-founder who isn’t really committed, appointing a CEO who doesn’t share your values, questions about IP portfolio robustness, unresolved regulatory risk… there are loads of pitfalls to learn to spot!

Having started, invested in and/or mentored a few dozen companies, I can say with a reasonable degree of confidence that there is one overarching mistake that most entrepreneurs make. No matter how good the business plan, robustness of the technology or calibre of the team, most entrepreneurs get the time horizon to the first big value inflection point for the business wrong. Either the plan isn’t sufficiently conservative or practical… or the most important inflection point isn’t well enough defined for it to be an effective execution target.

I’m not saying this is a trivial mistake – and I mean no flippancy. In fact, in direct contention with this issue of “horizon,” I also believe that one of the most important elements of good start-up DNA is flexibility, the ability and willingness to shift course in response to opportunity… and threats. Therefore, if being amenable to veering off course is a positive thing, dogmatically sticking to a timeline and a goal may actually be a negative attribute.

It’s a very tough balance to get right.

The good news is that I feel strongly that there is a useful “meta” heuristic that depends not on the strength of a start-up’s value proposition, but on the dynamics of the market place. For argument’s sake, let us assume that the first big value inflection point for a new tech start-up is delivering a proof-of-concept to an industrial partner or a collaboration of some kind. Early business development is super important and if you are going to raise serious funding you’re going to need to be able to demonstrate market/industry traction. Getting someone to use – or preferably buy – your technology, even on a small scale, is a beautiful thing.

Knowing how to properly articulate a value proposition, highly connected teams, luminary “gloss” on a board or SAB and strong intellectual property can help with getting traction faster. No doubt about it. But in fact big companies have their own inertia, it takes time for new ideas to bubble up to the surface to become visible and of course markets take time to “accept.” It would be erroneous of me to suggest that all sectors have the same adoption rate – markets where the product “S curves” are very compressed may have a faster uptake, simply by necessity.

However, I’ve played with thin-film electronics, advanced materials, healthcare IT, devices, biotech… and I have observed a fairly segment-agnostic phenomenon … it simply just takes about 3 years to get noticed. This is my key message and that’s my magic number – three years – and I am sticking to it. It’s got to do more with human nature than anything else. It’s about being seen at a major trade show a few years in a row, regular press updates or people incubating a good conference presentation for a while. Frankly, getting initial meaningful data and disseminating it within the “machines” of potential corporate partners takes real time and effort.

Time.

But after about three years, your company is just part of the fabric of your industry. You’ve been around for a while. Everyone knows who you are (at least if you are halfway decent at networking and promoting your idea). In a nutshell, you’ve been accepted. It’s the business equivalent of the new kid on the playground; in the beginning nobody talks to you, then everyone picks on you and after a bit of time, a few bruises and not wimping out, it’s like you were there since the beginning… and soon, someone even wants to be your best friend.

If you are a bit of a quirky kid, that can take about three years too… (I speak with authority on this point as well).

In the past when I presented new ideas to investors, I always got “we’re sceptical that you can pull this off in 18 months” and it used to irritate the crap out of me. But in truth, it’s good to be irritated and you’ll have plenty of opportunity to show that you know your business and your market better than anyone else on the planet. But I would also suggest that it’s a really healthy exercise to ask the question whether the fact that the market doesn’t know you might push things out a wee bit further too.

Nowadays, when I see a business plan that has a market-driven inflection point in less than 3 years, I am immediately sceptical. Not doubting, not suspicious, just sceptical. You should be too…

I would also suggest that when you are writing your business plan, thinking about financial needs or even pitching to investors – you might try a different approach. Instead of believing your own bullshit and telling yourself “I can get there in 18 months” tell yourself “I can do this in 18 months but I am going to plan for it to take 36.” Not only will you do a better job of insulating yourself against a myriad of unknowns, you will also probably engage your sceptics more effectively. Certainly it lowers the risk (in my view) of a down-round where you don’t hit your goals in time and you have to do bike-patch financing under distress.

Trust me on this. You’ll thank me one day…

The Mythology of Airline Loyalty

I consider myself to be the perfect customer to reflect on airline loyalty. I fly at least 250-300,000 miles a year, with a good mix of domestic and international travel. I have a decent budget for travel but I am still price sensitive. Although I am the CEO of a small company, I don’t always purchase business class fares because until our organization has the financial resources to be able to standardize travel more broadly, I choose to travel under the same conditions as my team. Our T&E would skyrocket unsustainably if everyone flew business class and so it’s not an option at present.

Sure, I am the “boss,” I do a lot more travel and I am not saying I never buy a B-class fare – for example if I had to quickly fly to Europe for a make-or-break meeting an hour after landing… but it’s more the exception than the norm. I fly around 150 flight segments a year, half of them international. My target service level is premium economy, but I certainly look for deals.

Like I said, I’m still price sensitive.

I’ll also say from the outset that I do care about my flyer status but I am not a fanatic. I’ve recently read some quite bizarre articles about people who will take a flight on the last day of the calendar year in order to keep an elite status. When standing in a very long security line-up or in a noisy gate lounge with 20 kids running around you after a long day, the attraction of priority lanes and secluded loyalty clubs is undeniable. But I think some people to take it to extreme.

For me, it’s not so much about feeling “special” and not getting stuck with all the “plebs” in the “regular” queue, it’s the fact that in the priority lane people know how to go through security efficiently – and without strollers or a grandmother wearing 19 pieces of gold jewelry. The best place to observe this is in action is somewhere like Washington DC or New York for inter-city commuter shuttles (to Philly or Boston, for example) between about 5pm and 7pm weekdays. Everyone has elite flyer status so the priority queue is twice as long … and four times as fast.

I mostly fly United / Star Alliance, followed by Virgin, and then followed by Delta/Skyteam in #3 position. There are some geographic reasons for why this is the case – for example, when I fly to Japan or Korea, I often get good deals on Skyteam carriers and KLM often has some great deals across the Atlantic via Schiphol. However, I avoid OneWorld (British Airways/ Amercian/ Qantas) like the plague. Not only have service levels lapsed on BA and Qantas in recent years but there is absolutely NO loyalty to customers who are not day-in-day-out business class customers. You get treated like crap and the fare structures are so deconstructed that no value is placed on the fact that you actually chose to spend 7 hours on a Qantas plane – even if you got a discounted ticket. What I can’t work out is why in an era of mostly de-regulated service provision (and hence price competition) where everyone offers low-cost fares that some airlines treat customers who have purchased discounted fares as lesser passengers. Perhaps it is the mistaken belief that if you own a low-cost carrier, that’s where your “low cost” passengers should go.

This leads to the first myth about airline loyalty – namely that it’s about loyalty to the airline. This is bollocks – the dynamics of the airline industry is mostly about airline loyalty to the customer (or lack thereof). Clearly not all customers are equal and most airlines have little loyalty to their average passenger, only really focusing on service if the customer is a big spender. BA and the OneWorld network is the best evidence of this. A few years ago when I was living in the UK, I flew over thirty BA segments in one year and I didn’t get even lifted off “Blue” (the lowest) status because all my flights were mostly discount short-haul EU-UK flights that did not credit mileage. Similarly, if you fly with a OneWorld partner on a competing route (say, American Airlines, trans-Atlantic), BA will not credit your flight to their loyalty program. So much for “One World” (and don’t even get me started on baggage handling between OneWorld carriers…).

It is a combination of what I perceive as mediocre customer service and a lack of airline loyalty to mid-tier passengers that means I avoid, if at all possible, certain carriers.

The second part of my view on airline loyalty relates to carrier quality versus the overall accessibility of their loyalty program. I will admit that I try to fly United whenever I can – mainly because they are fairly “fare class” agnostic. I also perceive (correctly or not) that they truly honor the purpose of the Star Alliance network and appropriately credit flights with partner carriers. I think United understands that although they have good international reach, part of their success in maintaining a relationship with their client base is the effectiveness of being part of a “seamless” network, from the way that baggage is handled across carriers, to mileage accreditation.

But why does United really have a more accessible program? I am sad to say that I think it’s because their service has become one of the worst and it is a compensatory mechanism. This past week I flew United 5 times. EVERY time there was a mechanical or operational problem. Three segments were delayed more than 2 hours and I missed one flight connection. I even had to pay $450 to another carrier to catch a later long-haul segment because of flight delays in DC due to a pilot who was supposed to fly into Washington “dead head” but was almost two hours late. Unless you had some kind of artificial loyalty, you simply wouldn’t put up with it.

In terms of travel experience, United increasingly underwhelms. The food is awful (especially on international segments), the planes on key routes are ancient and compared to a lot of other airlines it is my perception is that United’s ground staff is under-resourced. Every time I book a United flight across the Pacific, I ruminate on the reality that I am going to have a lousy meal in an ageing plane with no decent in-flight entertainment. I’m glad the Dreamliner is stranded because I was getting tired of CEO Jeff Smisek’s pre-flight promotional videos talking about their state-of-the-art fleet when all I could see was circa 1995 décor and “main galley” projection systems.

Understandably the United Dreamliner promotional video seem to have been pulled as part of pre-flight propaganda. Though I must confess, I miss Jeff – he’s appealing in a boyish enthusiasm sort of way (you can tell he loves his toys…).

The middle of the bunch is Delta. Good loyalty program, pretty good service and planes. I have a theory that a bit of Virgin “gloss” has rubbed off on Delta (they code-share on some segments) and I see signs that they are trying to create an image that is about reinstating the passion of air travel and having some fun while doing so. The most recent pre-flight safety video on Delta is dryly hilarious with little bits of humor snuck in, for example the accompanying video to “put away your tray tables and laptops” shows a bookish-looking guy with a vintage clunker of a typewriter cranking away in his seat.

Genius.

I’ve been pretty impressed recently on a number of occasions on how Delta staff has handled challenges with my bookings. Delta/Skyteam has got some reasonable balance – between loyalty, service and overall carrier quality. I will also say that more recently I have purchased Delta over United because generally the flight experience is better – even if it cost me a little more.

In my view, Virgin comes top of the pile. Singapore airlines (also Star Alliance) and Emirates come close behind, but for some similar reasons. These consistently “elite” airlines support the third part of my “thesis” on airline loyalty – that for the most impressive global airlines, true success is achieved through mutual loyalty with their customer base. It’s actually harder to become an elite flyer on Virgin as segments seem to contribute more slowly to status. In my travelling life, I’ve been upgraded to Business Class many times on United (especially when you manage to make 1K status, they treat you really well – though anything less is pretty useless) but never once on Virgin. In fact, I don’t think I’ve ever got any perk out of being Virgin Velocity Gold, except maybe queue/lounge access. But I will fly Virgin even if it is 10-15% more expensive than United or Delta.

I just arrive happier…

Why? Because from the moment I step into the check-in area I am treated as though there is loyalty to me. Doesn’t matter that I am flying economy on a discount fare. Staff are empowered, décor is attractive and clean – in fact [interestingly] I classify Virgin as a feminine airline marque. It’s not just because you are not subjected to an irritating alpha male “CEO message” on takeoff (… sigh… especially Delta CEO Richard Anderson’s awkward and uninspiring diatribe), it’s not the name “Virgin” (hee hee), or the red and purple tailoring … or even that there seems to be a predominance of female ground staff. The whole experience is based on warmth, empathy, sexiness and style. This isn’t just an airline; it’s your girlfriend in the sky for the next 12 hours.

“Wonderful… marvelous… that you should care for me…” (a jazzy extract from the new Virgin ad).

Yup … Virgin, Singapore Airlines, Emirates and a few others have something in common that makes them great. These airlines are successful because they understand that being loyal to customer experience is as important as winning loyalty from customers. The food is better, you get a pillow, you get an eyeshade and set of earplugs (for all of 30c in cost), you’re entertained, the staff go in and clean the toilets regularly and actually can describe what is on the menu when they serve you dinner (I had a staff member on United ask me once if I wanted “yellow or brown” for dinner – I kid you not) … in short the airline works to make the experience as enjoyable as possible. Singapore airlines staff are so thoughtful and courteous that sometimes I am embarrassed by it.

So, where to from here?

Well, when I am able to fly 300,000 miles a year business class on Qantas or British airways, maybe I’ll switch. They love their big spender customers and everyone wants to be loved. Even me. I don’t mind telling you that this past week I have re-evaluated my relationship with United because I don’t think they are loyal to me. I think United expects their customer’s “bought” loyalty to them via an accessible mileage program to compensate for what is essentially an increasingly mediocre service. I just hope it improves once the United/Continental merger really has given the company a competitive leg up (as a friendly, balancing comment, I do love the United iPhone app – it’s awesome).

As for the rest? I am writing this blog entry from a Virgin flight where I have a free pillow and I am drinking a beer that didn’t cost me $6 after spending $2500 on a ticket.

The romance is back…

Japanese Toilets Rock

Japan is quite possibly my favorite nation on Earth (after my beloved Australia).

I think the people are genuine and remarkable, the culture is fascinating and the cuisine is not just delicious, it is pure art. I am intrigued by Japanese social structures and when I think about the [tragic] post-tsunami/Fukushima period with Tokyo barely functioning on something like 40% power (office air conditioning, bright lighting and hand dryers were strictly forbidden), I really had to admire the Japanese people for their commitment to safety and order. Policies were made, placards were posted and everyone just simply made it happen in a no mess, stoic and utterly committed way.

… Can you imagine a disaster situation like that in LA? There would have been riots, the city would have blazed with apocalyptic terror…

My pet theory is that long-term Japanese productivity may have even gained a couple of notches by completely redefining business fashion and etiquette – such as ditching the tie and stuffy business dress, a bit stifling and uncomfortable in a Tokyo summer with no air con. I’ll go so far as to suggest that Tokyo business attire has changed forever because of Fukushima. Perhaps it wasn’t just about being super-sweaty with no climate control, rather the realization that life is too important to be distracted by perfect Windsor knots, starched pocket kerchiefs and spit-polished shoes.

However, above all else I especially appreciate the sophistication and pizazz of Japanese technology. I’m not talking about the sanitized “for export” stuff with a Sony label, but the real, home-grown weird, wild and whacky stuff. As such, my absolute favorite bit of electronics (yep, you heard me correctly … electronics) is, hands down, the Japanese toilet. Apparently Hollywood stars love ‘em too and I am reliably informed that they can fetch as much as $20,000 per loo … plus installation.

Worth every cent in my humble opinion.

Yes folks, I will truly know that I have made it, not when I can afford to hang, say, a basic Dali doodle in charcoal in my living room, but when I can splurge on a piece of advanced Japanese plumbing like the one I am going to share with you today.

As it happens, last week, one of my colleagues at ImaginAb casually mentioned her love of Japanese culture in a project review meeting. I suspect that this particular team member was sending me a subtle a message that I should stop hogging the company’s travel budget with my bi-monthly trips to Japan and start sharing the love around (duly noted…). We have several highly valued Japanese business partners in Tsukuba, Osaka, Kyoto … and even Kagoshima … and I think it is fair to say that the whole team really enjoys working with them.

During that passing discussion I had a recollection that a few years ago I wrote a short position paper on Japanese design aesthetics based on the case study of the Toto toilet. At the time, the company I was running had some development contracts with Toshiba and Hitachi, and in so in an entertaining way I wanted the product development and engineering teams to start thinking about how and why products for the Japanese market might be different than the UK or the US.

Today, I share with you these perspectives for your joy and amusement – it can be downloaded here.

ありがとうございます。