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British Airways: a brilliant example of how cost-cutting increases costs
#1
In the 1990s, Sir Colin – later Lord – Marshall, Chief Executive of British Airways was being interviewed by a journalist. The latter asked him, as leader of a famous brand, what he feared most. Sir Colin said something along these lines: “the pilots can be ill, the food can taste bad, the plane may be late and we lose the passengers’ baggage. I know I can fix these things and I will. But the thing I fear most is our Information Systems going down. We are critically dependent on our IT people for delivering our customer experience and for our survival. Our IT is of strategic importance and I keep my Chief Information Officer really close to me. Our IT is so important we would never outsource it.”

Sir Colin was a deeply experienced leader who had invested very heavily in creating the unique British Airways’ customer experience for the “world's favourite airline”. He made mandatory attendance at a training program called Putting People First and attended in person at the end of every program to take employees’ questions. All those in leadership positions went through its sister program Managing People First and he attended that one too. A charismatic forthright, rigorous and determined leader, he made British Airways a customer driven company.
 
Sadly, none of his successors have had the IQ or the EQ (nor the training he had as a Purser in P&O) to understand the world's favourite airline customer experience or to keep it going. Since the Marshall days the British Airways’ customer experience has been progressively eroded by a succession of cost cutters. We have had Ayling, Eddington, Walsh and now Alex Cruz who has just had what is probably the most catastrophic meltdown of any information systems in modern times. As a public relations disaster, it is up there with United’s Dr David Dao event.

https://www.linkedin.com/pulse/british-a...cNXHCjK7Q1
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#2
Once you've gotten the low-hanging fruit, cost cutting should always be secondary to growing revenue. Getting more customers, not figuring out how you can cut a few pennies out of what it costs you to serve each of your current ones.
Guns don't kill people, the government does.
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#3
(07-25-2017, 10:56 PM)Herring Wrote: Once you've gotten the low-hanging fruit, cost cutting should always be secondary to growing revenue.  Getting more customers, not figuring out how you can cut a few pennies out of what it costs you to serve each of your current ones.


very true and important

(and hard to do when one is desperate - but a Corporation should know better)
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#4
(07-26-2017, 01:21 AM)DaveGillie Wrote:
(07-25-2017, 10:56 PM)Herring Wrote: Once you've gotten the low-hanging fruit, cost cutting should always be secondary to growing revenue.  Getting more customers, not figuring out how you can cut a few pennies out of what it costs you to serve each of your current ones.


very true and important

(and hard to do when one is desperate - but a Corporation should know better)

Usually, in personal finance, it is easier and faster to cut expenditures that to increase income.  The same is true for corporations.
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#5
(07-26-2017, 07:37 AM)ModestProposals Wrote: Usually, in personal finance, it is easier and faster to cut expenditures that to increase income.  The same is true for corporations.

That is true on the personal level, at least for most people who are wage-earners.
But businesses are supposed to be out there looking for new customers all the time (it's called the sales department).  If it is genuinely hard to find new business, it's a sign you're in a stagnant or declining industry--maybe time to evaluate the company's direction.
Guns don't kill people, the government does.
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#6
With airlines I always worry about the cost cutting in maintenance and pilot training

They can cut the food and the entertainment ANYTHING but the above.
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