Penny-Wise and Pound Foolish, Eh?

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There is an old (obviously) English saying, warning people not to be "penny-wise and pound foolish." As the main British currency is the pound, 1/100 of which is a penny, someone who is penny-wise and pound-foolish is someone who refuses to invest a small amount now, leading to a much greater cost later.

No matter how often I come across companies being penny-wise and pound-foolish, I never cease to be surprised by it.  In the last two weeks, Air Canada was the penny-wise and CAD-foolish company of choice.

I have flown Air Canada quite a few times over the last several years. I have noticed two contrasting elements:

  1. Their service has gotten quite good. Airplane food, especially kosher food, tends to be abysmal, so I always am pleased when I get decent food on-board.
  2. Their IT is cutting-edge... for 1980.

The Agent's Job

A few weeks ago, I arrived at Montreal airport early for a flight since the weather was hovering at around -37C with wind chill, and many flights had been delayed or cancelled. I watched the desk agent struggle to check me in, then clear my check in, then add me to an earlier flight. After about 5 minutes she gave up and had to ask a more experienced agent for help. Eventually, they did succeed.

But it shouldn't have been that hard for them.

The major activities performed by check-in agents are:

  • Check-in
  • Change flight
  • Add luggage
  • Sell an upgrade

There are a few more minor and less-frequent activities, but those are the major ones. It doesn't take much product management to realize that each of these should be intuitive and simple, whatever system the agents use.

It wasn't.

Fortunately, they had a patient and understanding passenger (me), with no one else waiting behind me online.

The Customer's Service

Earlier, after I had first made my reservation, I went to www.aircanada.com to check my reservation, ensure my special meal request, and select my seats. Except that I couldn't. One only can manage their reservations on aircanada.com if the reservation was made on aircanada.com. If you reserved on Priceline, Orbitz, a partner like United or Lufthansa, an agent, or anywhere else, you cannot manage your reservation.

I was surprised by both of these inefficiencies in 2016, so I asked the experienced agent, who kindly explained it.

Apparently, a few years ago Air Canada was suffering some losses. In order to grow, they had to decide where to invest and where to hold back. They chose to let technology wither on the vine (for a while).

As a technologist, I admit a bias towards investing in technology; as a businessman, I am admit a bias towards high return investments.

Air travel has two key characteristics:

  1. High-customer-volume: Some businesses sell to a few large customers. GE Aircraft Engines sells to a few dozen airlines around the world, plus some smaller private companies. If a particular request comes in once a month per customer, that is only a few dozen requests per month. If it takes an extra 15 minutes to answer because it requires an employee to check an Excel spreadsheet, it matters little. Singapore Airlines, on the other hand, is a high-customer-volume business. They served 4.3MM passengers last year. If every one of them had just one request per year, yet had to be answered by an employee looking it up in an internal system taking 15 minutes each, it would be overwhelming. In a high-customer-volume business, technology for self-service is a major force multiplier.
  2. High-touch: Some businesses have almost no interactions with their customers. Bauer Hockey sells equipment and, with the exception of a few warranty exchanges and some pre-sales requests, almost never interacts with customers. The typical air traveler, on the other hand, checks flights multiple times, makes a reservation, checks their seat, their food request, flight status, pre-check in, check in, boarding, delays, luggage retrieval, luggage delays, mileage credit, the list is almost infinite. A single typical passenger flight can have dozens of customer touch points. In a high touch business, technology for self-service is a major force multiplier.

The travel business is both high-touch and high-customer-volume.

Thus, cutting investing in technology that enables employees to work more quickly and customers to perform their activities quickly and easily without requiring an expensive employee would have improved their image and saved them a lot of money.

I grew up in Canada; I always have liked Air Canada, and I love that the pilot shares the hockey scores. It is my hope that they make the right investments quickly.

Summary

Not every technology investment has high and immediate returns. For businesses that are high-touch or high-volume, and especially those that are both, the right technology investments returns itself in spades, leaving you with:

  • Happier customers
  • Better brand image
  • Faster employees
  • Lower costs

Have you made the right technology investments? Do you know where you can get the most "bang for the buck"? Ask us. Be penny wise and pound wise.