“You don’t drive a truck that weighs 9,900 pounds across a bridge that says ‘Limit 10,000 pounds’ because you can’t be that sure.”
Warren Buffett likes to quote Ben Graham as saying that, regarding the margin of safety you need to have in investing (“don’t try to buy businesses worth $83 million for $80 million”). But the other day it occurred to me that it also applies to operating a business. Namely an airline:
A couple of weeks back, I was in South Bend, Indiana, after seeing the Notre Dame-Michigan game with my son. The next morning, I had a 7 AM flight to Chicago, where I was attending a conference. I got to the airport on time, but not on time enough, because the airline had overbooked – at the gate, I was #67 on a 66-person flight.
No one was volunteering to get off the flight, so I was ____ out of luck. And if that wasn’t bad enough, the guy at the gate wasn’t the least bit sorry when he told me the next flight with an open seat wasn’t until 5 PM.
He just said: “Airlines always overbook.” Apparently!
The day after a huge Notre Dame game, the airline overbooks existing flights but schedule any additional flights to take care of the inevitable increase in demand that day?
I’m all for pushing the envelope and taking risk, but this just seemed foolish to me. Foolish and uncaring.
My whole day was basically ruined. Operating like that doesn’t sit well with people in the long run. Is it a wonder we’ve all become fed up with flying?
When you have a chance to take care of people and provide a service to them, do you just take a cold look at the margins and operate accordingly?
Do you treat people like widgets you’re looking to roll off an assembly line and sell?
Or do you treat them like people?
And which strategy do you think will lead to more success in the long run?