It’s a story about community and collaboration on a scale never seen before. -Lev Grossman, Time Magazine

The Urge to Connect

History shows that that when robust tools serve a powerful human drive, revolutionary changes occur. That’s happening now as social media enable people to satisfy their primal urge to connect with each another. Social media are ubiquitous, cheap, and accessible, and their widespread use is having a profound impact on business.

While the technology is grabbing the headlines, the more interesting story is how people around the world are using social media. They’re fulfilling their desire to connect with each other, forming communities in the process. The communities function like virtual beehives — amorphous, dynamic structures where members coalesce to share information.

Smart companies recognize the commercial value of communities. They treat community members more like stakeholders than consumers. Instead of broadcasting their messages at them, they engage followers in dialogue. In time, followers can be converted to evangelists.  In a hyper-connected world, evangelism carries messages fast and far, boosting the value of the brand.

Follow the Leaders…

I’ve lauded Zappos, Virgin America, and Comcast for their skillful community-building initiatives. Starbucks, WholeFoods, and BestBuy are also out in front with exemplary strategies. But, lately I’ve been impressed with JetBlue’s community-building strategy which can serve as a model for other companies.

The airline (@JetBlue) has been mastering the art of community-building on Twitter and, in the process, has grown its base of followers to almost 1.5 million.

Last August, the airline promoted its All-You-Can-Jet-Pass (for $599) to its community. To the company’s delight, the campaign went “viral” quickly, selling out earlier than expected after creating a buzz.

The campaign succeeded because JetBlue had already built a community of ardent followers where its message reverberated.  How did the company do it? The airline’s staff of rotating community managers engages followers in a manner reflective of the airline’s brand personality. Their tone is informal, conversational and hip — an attitude particularly suited for Twitter that traditional airlines can’t match.

The airline hasn’t been afraid to experiment in this space either. They’re learning about their community based on trying successive low-cost, low-risk campaigns.

To herald its new NYC-Barbados route, the airline announced a contest where participants take a photo in front of a New York landmark that incorporates both Barbados and JetBlue. The top 20 receive tickets to a concert featuring Rihanna, a popular Barbadian-American singer. JetBlue is counting on the community to spread the word.

So far, JetBlue’s social media strategy seems to be resonating with its followers. The size and influence of their community is substantial and growing rapidly. And, they’re harnessing the power of the hive.

Three Lessons from JetBlue

What can we learn from JetBlue’s success? Here are three things:

1) “Engage with” rather than “broadcast to” followers

2) Experiment to find out what works

3) Above all, stay focused on community-building

For me, social media stories always raise more questions: What can be done with new tools that couldn’t be done before? What else can we learn from leaders? And, how are they dealing with the new set of challenges that come with the territory?

One thing seems certain: for companies with the curiosity, imagination and the good sense to ease up on the reins-of-control, this is an interesting and promising space.

What do you think?  As always, I’d love to get your take on this post. What community-building “masters” would you cite and why?

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Want to learn more about this subject?

Read Clay Shirky’s book, Here Comes Everybody, about which he writes:  “… one of the things I most hope readers get out of it, is an excitement about how much experimentation is still possible, and how many new uses of our social tools are waiting to be invented.”

The book explores the broader context of communities including the sociological drivers. Here is a brief excerpt:

Human beings are social creatures—not occasionally or by accident but always. Sociability is one of our lives as both cause and effect. Society is not just the product of its individual members; it is also the product of its constituent groups.

The aggregate relations among individuals and groups, among individuals within groups, and among groups forms a network of astonishing complexity. We have always relied on group effort for survival; even before the invention of agriculture, hunting and gathering required coordinate work and division of labor. You can see an echo of our talent for sociability in the language we have for groups; like a real-world version of the mythical seventeen Eskimo words for snow, we use incredibly rich language in describing human association.

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You never know with these things when you’re trying something new what can happen. This is all experimental. ~Richard Branson

Over the years, there have been surprisingly few breakthroughs in the airline customer experience - until recently. Sir Richard Branson’s venture into the U.S. market, Virgin America, (VX) is redefining air travel by providing passengers with a fresh, distinctive on-board experience. The carrier is less than two years old but it’s quickly becoming a template for what’s possible in the future.

The choices VX is making demonstrate a “customer experience mindset” that’s all too rare in the industry. It’s evident that the VX team devoted their attention to passenger comfort and convenience. Features “baked in” to the customer experience include seats with power-outlets and USB ports. Cabins in their new A320s have soft mood lighting.

Healthy, appetizing meals designed by star-chef Luke Mangan show that the company knows what their customers prefer.  Features like these aren’t found on any domestic airline, let alone a low-cost one.

Last week, VX announced that its fleet is 100% WiFi-equipped (Gogo). They only have 28 planes, but they can boast that they’re the world’s first airline to reach that coveted milestone.

What’s most impressive is VX’s touch-screen, interactive entertainment system. The platform, known as Red, enables passengers to watch movies and live TV, play games, chat on-line with other passengers, and sample or even download MP3s from a massive digital library. Passengers can also use Red to order and pay for food and beverages which they receive “on-demand”.  For the digitally-inclined traveler, this is the way to fly.

Given the prohibitive cost of installing systems like Red on their existing fleets, it’s doubtful that any of the major network carriers will soon match VX’s “at-seat” amenities. But, the toughest feature for VX’s rivals to co-opt is its “customer experience mindset”.  These advantages could give the carrier a strong lead in the service innovation race for years to come if it stays healthy during this slowdown.

The airline serves only a handful of markets (New York, Boston, DC and the West Coast).  But, they’re big league markets where VX is attracting a cadre of loyal, well-heeled fans.  As an industry guy, I’m tipping my hat to Sir Richard Branson and VX’s San Francisco-based team for rethinking the in-flight experience, and for executing it well.

What do you think?  Have you sampled Virgin America?  I appreciate your perspective.

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Want more on this subject?

Richard Branson (Reuters, 6-2-09): “It’s unlikely all the big U.S. airlines will survive.”

Read Red Orbit’s piece (10-16-08), “Virgin America Wins Best Domestic Airline in Conde Nast Traveler’s (’08) Readers’ Choice Awards”.

Check out SimpliFlying’s series on Richard Branson and Virgin America.

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It is with the heart that one sees rightly; what is essential  is invisible to the eye. ~Antoine De Saint-Exupery, The Little Prince

Business stories about “empathy” are springing up again. BusinessWeek ran one (Empathy = Growth) last week.  Fast Company covers the subject periodically. Authors are urging readers to consider the merits of empathy despite the need to cut operating costs as demand for services declines. It makes sense for businesses to re-evaluate their customer relationships in this environment. I think empathy remains widely misunderstood and its role is undervalued in the business community.

Simply put, empathy is rooted in the capacity to see the world through the eyes of another person.  Empathy enables a provider of service to recognize the buyer’s feelings, needs, and wants in order to fulfill these drivers through various means.

I’m interested in a broad spectrum of “relational competencies,” including empathy, and how they are used in business. Skillful practitioners use these competencies to show their understanding, respect and appreciation for others.  These skills include self-awareness and various social competencies that enable the practitioner to listen to and validate customers which forms the basis of relationships.

I admit to a strong bias on this subject that stems from my work and research in this area: I’m convinced that an organization’s relational skills — meaning its collective capacity to engage customers — can be improved, and that it pays to do so.

Success depends on the company’s cultural climate among other factors. Leadership is essential. Organizations need robust, efficient service systems and analytical tools for gauging their performance. Traditional service training programs have been disappointing.  But research shows that effective learning solutions are helpful if they are properly designed, delivered and supported.

Why do so many companies struggle with this? Many suffer from a form of relational deficit disorder. They’re not facile with the “people” part of the business. They describe relational competencies as “soft skills,” implying that they aren’t essential — a message that undermines their relationship-building efforts.

Smart companies know better.  They recognize the link between relational skillfulness and customer retention, net promoter index, spend rates and other relationship metrics. They’re explicit and concrete about relational skills as a criterion for hiring, rewards and advancement.

Since its early days, Southwest Airlines’ approach has been “Hire for Attitude, Train for Skill”. The motto is now old hat. But the first time I heard that, it hit me like a sledgehammer:  Here was a company — a rival at the time — that could distill its talent management strategy in six words.

It’s no surprise that Southwest has flourished through every business cycle. During lean times, they grow stronger  than their rivals. They’ve run a tight ship, no doubt about it, but they do know how to relate to people. What’s amazing is that they operate 3,400 flights a day, yet they don’t let the noise of running an operation get in the way of serving the customer.  Their culture is “casual” and even “whimsical,” but there’s no doubt that it’s about the people.

It sounds cliché but forging stronger relationships is a winning strategy, and it works across industries and markets. It’s as true for the Belgian bank as it is for the UAE mobile operator, or the Singaporean airport. It applies to the South African resort, the British retailer, and the U.S. airline.  Relating to people is at the heart of what we do whether we sell handcrafted rugs in an Uzbeki bazaar or design luxury cars in a German high rise.

Observing service encounters around the world convinces me that people everywhere crave understanding, respect, and appreciation.  How people demonstrate that varies from place to place, but the need for feeling valued is deep-seated and universal.  If your company’s culture and infrastructure don’t support delivering your offerings with relational competency on a consistent basis, there’s work to be done.

Engaging people is necessary but not sufficient to delivering an exceptional customer experience.  Companies must deliver their products and services efficiently. Firms like Southwest Airlines that can balance relational competency with process rigor and execution have a powerful advantage over their rivals.

As more companies bring customers into the product and service design process, relational skills will become more coveted.  Collaboration with customers requires that we relate to people more skillfully.  The challenge in working with people shoulder-to-shoulder or across the globe is to understand and relate to them as we pursue common goals.  Tapping the power of collaboration requires high-level relational skillfulness.

As the world grows smaller, our ability to capacity to relate to others becomes a strategic advantage. Psychologist Daniel Goleman wrote, “The ever-pressing need to serve customers and clients well and to work smoothly and creatively with an ever more diverse range of people makes empathic capabilities all the more essential.”

Some organizations have a lot to learn about relational competency. What are the business implications? How can these skills be developed to retain customers and influence their behavior? No two companies face the same challenges and opportunities.  Firms are well served to re-evaluate their approach to relationships as demand for services declines.

As businesses focus on surviving in lean cycles, they tend to cut spending in areas that impact the customer — that’s understandable. The smart ones manage to find a balance between restructuring costs and building relational mastery. I’m betting on them to win.

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Want more on this subject?

For my money, the “go-to” resource on this subject remains Daniel Goleman. His ’98 book, Working with Emotional Intelligence (which followed his ground breaking work, Emotional Intelligence) looks at the skills people need to relate to others in the work place.  Goleman explains that emotional competencies are crucial to building successful relationships.  He supports his recommendations with findings from cognitive and behavioral research.  Goleman was among the first social scientists to discuss the correlation between emotional intelligence and success in the workplace.

Goleman offers an Emotional Competence Framework upon which his recommendations are based. His model is divided into two sections, personal competence and social competence is found below.

PERSONAL COMPETENCE

How we manage ourselves

Self awareness

Knowing one’s internal states, preferences, resources, and intuitions

• Emotional awareness: Recognizing one’s emotions and their effects
• Accurate self-assessment: Knowing one’s strengths and limits
• Self-confidence: A strong sense of one’s self worth and capabilities.

Self-regulation

Managing one’s internal states, impulses and resources

• Self-Control: Keeping disruptive emotions and impulses in check
• Trustworthiness: maintaining standards of honesty and integrity
• Conscientiousness: Taking responsibility for personal performance
• Adaptability: Flexibility in handling change

Innovation:  being comfortable with novel ideas, approaches, and new information

Motivation

Emotional tendencies that guide or facilitate reaching goals

• Achievement drive: striving to improve or meet the standard of excellence
• Commitment: Aligning with the goals of the group or organization
• Initiative: Readiness to act on opportunities
• Optimism: Persistence in pursuing goals despite obstacles and setbacks

SOCIAL COMPETENCE

These competencies determine how we handle relationships.

Empathy

Awareness of others’ feelings, needs, and concerns

• Understanding others: Sensing others’ feelings and perspectives, and taking an active interest in their concerns
• Developing others: Sensing others’ development needs and bolstering their abilities
• Service orientation: Anticipating, recognizing, and meeting customers’ needs
• Leveraging diversity: Cultivating opportunities through different kinds of people
• Political awareness: Reading a group’s emotional currents and power relationships

Social skills

Adeptness in inducing desirable responses in others

• Influence: Wielding effective tactics for persuasion
• Communication: Listening openly and sending convincing messages
• Conflict management: Negotiating and resolving disagreements
• Leadership: Inspiring and guiding individuals and groups
• Change catalyst: Initiating or managing change
• Building bonds: Nurturing instrumental relationships
• Collaboration and cooperation: Working with others toward shared goals
• Team capabilities: creating group synergy in pursuing collective goals

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The other carriers are reeling too. The industry is acting swiftly to remove capacity – cutting routes and frequencies – in anticipation of reduced traffic in the coming months. And the U.S., industry isn’t alone.

Europe’s biggest carrier, Air France-KLM, warned of a profound “reshaping” of the global industry amid record fuel prices.  The European carriers aren’t nearly as exposed as their U.S. counterparts, but they’re certainly feeling the pain.

The International Herald Tribune notes, “With its bleak outlook for the airline industry, Air France-KLM joined American Airlines, the world’s largest carrier, which said Wednesday that it was adding fees, cutting hundreds of flights in the United States, and eliminating thousands of jobs to cope with the crisis.”

Asian carriers are reeling, too. Australian carrier Qantas hiked its fares for the second time in a month while Japan Airlines said it would increase its fuel surcharge along with its competitor, All Nippon.

Among the Middle Eastern carriers, Emirates looks to be in the best shape due to its healthy cash position. In fact, this may be their opportunity to take advantage of the worldwide economic downturn to fortify its position as a global player.

As other carriers cut back, Emirates can accelerate its plan to connect European and Asian traffic through growing Dubai hub. But this begs a question about its hungry rivals, Etihad and Qatar Airways: Can the region sustain three major carriers if there is a worldwide economic downturn?

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Klein says, “When I think of air travel, there is a conditioned response that it is going to be bad,” and adds, “We’ve forgotten it is a social occasion. I can’t think of any acknowledgement of that by the airlines today.”

He’s so right.  He’s probably someone the industry should tap to help redesign on-board service programs.  In fact, bringing experts from analogous fields like hospitality is a great place to start when rethinking services.  Successful restauranteurs can also bring a lot of practical insight.  Of course, we’d have to bring designers and artists to the party.

I like the concept of tapping experts from a variety of fields and disciplines outside the industry – along with customers – to come with distinctive alternatives that make the on-board experience more enjoyable.

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VA’s success stems from their attitude that the customer is at the center of their universe.  They relied on service design – the art and science of devising an environment that enables the customer to enjoy a rich, satisfying experience.  Unfortunately, it’s an approach that has been largely ignored by the industry.

Design-minded managers relentlessly ask: Who is the person we’re serving, and how can we make their service experience better?  That thinking encourages listening intently to what the customer says along with what isn’t said, but is felt.

Design-mindedness is uncommon in a traditional, operations-centric industry where running an efficient operation is prized above all other endeavors.  That mindset inhibits innovativeness, and too often, the customer is left out of the equation.

As a result, commercial air travel, with some notable exceptions, is perceived as a commodity, i.e. competitors’ services are virtually indistinguishable from each other, and customers tend to buy on price or schedule-convenience alone.

Historically, the major airlines have viewed their central challenge as getting passengers from point A to B as safely and efficiently as possible.  Their organizing principles arise from a linear manufacturing model which hasn’t changed much over time.

The University of Toronto’s Roger Martin observes, “The dominant attitude in traditional firms is to see constraints as the enemy and budgets as the driver of decisions… The traditionalist belief is, “We can only do what we have the budget to do.”

By contrast, design thinkers view their central challenge as solving ”unsolvable” problems. Design-thinkers venerate the customer, and relentlessly seek novel novel ways of overcoming constraints.

VA’s corporate culture – clearly influenced by Richard Branson’s intense creativity and drive – is customer-driven, encouraging design-inspired choices.  Branson’s mission for the Virgin group is to make flying fun again.

Recognizing that they’d have to look outside the industry – to Silicon Valley – VA hired software engineers rather than airline vendors. The mix of engineers and process owners led to some interesting choices.

For one thing, they came up with the novel idea of using an open-source (Linux) platform, named Red, to power a range of nifty features, like touch-screen food and beverage ordering, on-demand media on a high-resultion monitor, and even in-seat chat. Internet connectivity will be available soon. Moreover, Red affords VA the flexibility to support future low, cost innovation.

There are bugs to be worked out. Customers have reported re-boots and other glitches. But, I think VA is well ahead of the innovation curve, and their service platform gives them a clear competitive edge.

How will the industry respond?  Carriers are taking a beating from record fuel prices and reduced demand, and in this cycle, the carriers will be treading water for some time. Under the circumstances, will the U.S. airlines open the door to design-minded, customer-centric thinking? What’s next is anybody’s guess.

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The forecast for airlines is gloomy and getting darker by the day. Network carriers in the U.S. are facing high costs for aircraft ownership, fuel, labor and maintenance. With rising fixed costs, no pricing power and negligible profit margins, reducing capacity to relieve pricing pressure seems to be mission imperative.  But network carriers are reluctant to reduce their inventories much further.

Due to their low credit ratings, airlines can’t borrow money at reasonable rates to invest in more fuel efficient planes and more efficient facilities.

All this means that the industry will have to consolidate – out of sheer necessity – despite the thorny challenges of integrating large, people-intensive organizations and fragmented legacy systems.

Can consolidation fix the ailing economics of the airline industry?

It’s too early to tell, but it probably won’t be enough.  In the end, new and innovative airline business models are needed to solve the industry’s deep, structural problems.

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He pointed out how the Southwest Airlines model is “disruptive” because their low-cost strategy targeted customers who had been using trains and buses and or those who used out of the way airports.

But, Christensen believes that low cost carriers have a limited shelf life, because the incumbents can ultimately match them on the cost side, whereas the incumbents can’t climb the value chain.

I wonder what comes next in the evolution of airline service models – few of which are working well in mature markets, particularly in the U.S. and Europe.  Carriers suffer from overcapacity during down cycles like this while customers receive less than stellar service.

Just when we figured there’s nothing new and interesting in the industry comes Virgin America’s innovative business model. Their planes feature custom-designed leather seats, mood-lighting, and the best in-flight entertainment (IFE) system in the industry with on-demand TV and movies, high end games, music and even online chats with other customers.

The IFE is a great example of how the airline got it right.  As a practical matter, customers can plug their devices into USB ports.  The real genius is that the system runs on twin Linux servers–meaning an “open source” platform that is equipped to handle a range of new software and harware add-ons down the road.  This innovation occurred because the company had the wisdom to recruit forward-thinking, Silicon valley engineers – not airline entertainment vendors – to design it.

And, the airline managed all of this using a surprisingly lean, yet scalable operations model.  By allocating costs on non-perishable components that customers value, Virgin has come up with an effective airline model that will alter the way we think about flying.

While the legacy carriers fight it out using conventional warfare, Virgin America is rolling out new, novel features that today’s high value customer desires.  That’s what’s next – along with more mergers among the majors.

P.S. [April 18, 2008], Notice Time magazine’s 4-17 article, “Richard Branson’s Flight Plan”.

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The Dubai air show — one of the most prestigious commercial trade shows — is regarded as a bell weather of Gulf region carriers who are racing to expand their fleets, and convert the region into a major global hub. Emirates’ regional rivals are Doha-based Qatar Airways and Abu Dhabi-based Etihad, and three have been reporting record growth.

Emirates Airline, the largest airline in the region, is already the world’s 10th largest carrier, and it’s gaining altitude rapidly. It already serves 99 cities in 62 countries and, on average, is adding a new city every couple months.

Despite its aggressive growth strategy, the carrier says its keeping its focus on delivering a highly differentiated service product.  The company offers customers a 200-channel in-flight entertainment system and a responsive, well-trained customer-facing staff.

Emirates is entirely government owned, but its chairman, Sheik Ahmed Bin Saeed Al Maktoum, said recently that 30 percent of the company may be sold in public markets.

Operationally, Emirates is a sleek machine. Its operating costs are significantly lower than those of its European or U.S. rivals, and the carrier continually seeks business process and supply chain efficiencies.

We’re betting that Emirates, like its regional competitors, will maintain its staffing and service levels, even as competitors outside the region begin tightening their belts. At a time when many carriers are battling both record fuel prices and a declining U.S. dollar, Emirates should realize $1 billion in profit in the fiscal year ending March 31 on total revenue of $8.1 billion, an 18.5 percent increase over the last year.

The carrier is ahead on the currency front because it’s pegged between the UAE’s dirham and the U.S. dollar. (Emirates reports results in dirhams, but a big chunk of its earnings is in euros and pounds sterling, and the dollar’s slide is helping the carrier.)

Emirates is benefiting from the Gulf region’s unprecedented economic growth.  This boom, fueled by high oil prices and a nascent tourism industry, is expected to continue despite a world-wide economic slump on the horizon that is being predicted my many economists.

Dubai is well-situated to capture European customers en route to Asia and about half its traffic moves through Dubai International Airport.  Over the past 15 years Dubai International Airport has developed into one of the largest hubs in world aviation.

A new airport, Dubai World Central Al Maktoum International Airport, the world’s largest, is under construction 12 miles from the city center.  It will be ten times the size of the current airport and will entail a port, hotels, residential areas, as well as a free-trade zone.

The only major ripples in the pond are concerns about regional political instability and, as other carriers acquire longer-range aircraft, Dubai’s draw as a hub may be reduced.  But, for now, the picture looks rosy.  If the carrier makes the same prudent business choices as it has recently, the airline should be a force to reckon with for a long time to come.

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