Why it's Great to be an Expert - or is it?
really enjoyed the recent TV programme covering the easyGroup's venture into cinema.
The most interesting thing for me was the short section where the philosophy of
new ventures was explained. Don't use experts. Just get your people together and
work out what customers want. Find out why the existing business model isn't giving
customers what they want. Then set up a completer business to do it your way,
not the existing way. Make sure it's one where customers, managers and staff can
feel that they are working in the same direction - getting/providing more value
to all, more profitably to the owners.
In this case, the
problem was stated as "Why do cinemas only sell 20% of their seats?"
The answer: "They don't use the low cost airline model of aggressive yield
management, web booking and radical simplification of the service process".
The easyGroup answer - sell seats cheap to early bookers, expensively to late
bookers. Don't sell popcorn. Tell the customers to tidy up after themselves to
accelerate turn-round time. I love the sheer chutzpah of the approach, and as
a regular user of easyJet (not always at lowest fares - last time I could have
done it cheaper on BA), I had a lot of sympathy for it.
But then I caught
myself thinking - has the easyGroup fallen into the very trap which it claims
to avoid? It reminded me of my favourite joke - the one about the difference between
an ordinary doctor and a medical consultant. The doctor treats what he thinks
you have, the consultant thinks you have what he treats. I'm sure that the easyGroup
was partly right in its diagnosis. Yield management combined with web booking
must be a better answer. However, at least in the programme - two bits seemed
to be missing. One was the demand analysis - are there enough people in Milton
Keynes who want to go to the cinema more often, at off-peak times, who are deterred
by the price, and who are prepared to use web-booking. In the case of air travel
and car hire, nobody would have doubted the effect of poor yield management on
deterring customers. The other was the supply side - could easyGroup get the right
- most recent - films to show them? For if you can't get them (which was a problem
for easyGroup), then you are not in competition with other cinemas, but with DVDs.
I guess if it had
been my business (and the reason it isn't is that I am an expert and Stelios is
a great businessman!), I might have tried the consolidation model - selling seats
of other providers. The easyGroup model is a great one, but I'd love to see it
taken to its extreme, where easyGroup just provides the model, and helps other
companies simplify their offer so that they can sell a lot more of it, with both
sides making more profit. Putting it another way, perhaps easyGroup should move
from selling products to selling solutions - the subject of our latest book (1).
Stelios could certainly bring a breath of fresh air into many more industries.
Perhaps the world is looking for a Stelios Branson - as Richard Branson seems
to have learnt the essential art of partnering. I'd love to see Stelios let loose
on public services, particularly education, health and even the combined health/financial
services problem of our ageing population. Fresh thinking which is tightly focused
on the real problem is all too rare, and even if it does exist, rarely followed
through. However, Stelios might ask, "Do you want to kill me with the poisoned
chalice of public sector services?" Meanwhile, I can dream of easyUni, where
students teach themselves, managed by easySolve.
Solutions on Demand, by Mark Cerasale and Merlin Stone, Kogan Page 2004
Merlin Stone is IBM's Business Research Leader
and Director of QCi Ltd and The Database Group
Ltd. He is currently moving his professorship
back to Bristol Business School.