Rob and Larry

I must say today was a satisfying day for me. I attended two presentations, one as a part of International Business course and another as a part of Game Theory course.    

Rob Britton: He came. He made fun of everyone including the current MD of American Airlines. He handled even the embarrassing questions with smile (haha..i asked him about airlines colluding and screwing the customers :D). But at the end of the 2 hour class he had delivered his message - How tough his business is. That is Rob Britton for you. Rob is the Adviser to the Chairman of American Airlines. He retired as the MD of American Airlines in 2006. He had come to deliver a talk on “Airlines Alliances” as a part of my International Business Course.

While delivering Rob’s knowledge through this post would take years for me (:D), I will try to explain things with a simple example. Suppose you are trying to go from NY to Mumbai via London. You go to the travel agent and book a ticket. And the agent issues a ticket. Since the airlines have entered into various alliances (STAR alliance, ONEWorld etc) to achieve economies of scale, you, as a passenger would travel from NY to London in American Airlines flight  and from London to Mumbai in a BA flight.  But you would get a single "American Airline ticket" with a little note that your flight from London to Mumbai would be on BA (code sharing). 

Now, for this entire system to work smoothly and effectively, internal and external factors play important role. The predominant internal factor being the alignment of the IT systems of the two alliance airlines. With most of the airlines running mainframes or their own software packages, integrating between two different airlines become a daunting task. Revamping your entire system costs you TONS of dollars. But the passenger doesn’t care all these.  He or she wants only one thing. A smoother transit between the planes without going through the immigration hassles again. This gets complex if you are moving from some small city in USA to some interior small town with airport in Bulgaria. You might need to fly 6 different airlines.The external factors are predominantly governmental regulations (there are still government carriers who when bankrupt go and shovel money from treasury again), anti law suits for price colluding and different alliances competing with each other on price. 

Kudos Rob. Airlines is a really really tough business to be in.   

Larry Burns: First you think that this guy is like any other Strategy and R&D head of a big multi-national. Next when he comes closer to you when you talk, you think that he is little too curious in taking your questions. But when Larry discloses that he lost his hearing ability and that he replies you based on your lip movement, he sits at the top of your heart.  Given my past experiences with “bossy” bosses, I thought that “top management” and “sense of humor” are disjoint. Larry disproved that notion with his amazingly witty jokes.  A sample – “ Two lawyers are hanging at the end of a cliff fighting for life. You can save only one of them. Given that situation what would you do? Go for lunch or read newspaper ?” 

He talked about GM-Chrysler merger possibility, GM’s investment in alternate energy, Chevy Volt, Tata Nano, GM-Toyota alliance, Obama, McCain, Chinese government, Indian automobile market and above all how he hearts game theory  and uses it in his daily strategic decision making process.  Some interesting facts from Larry's presentation: 

• 1% of reduction in US automobile market share means 700000 less vehicles 
• Despite all the branding efforts of Toyota, it still has only 13% market share
• 1 out of every 7 person in the US is employed with the automobile industry, either directly or indirectly
• GM is one of the top purchaser of Viagra in US (haha..that explains the higher healthcare costs of GM and is joked as a pharma company making cars!!) 
• GM introduced EV1 in 1997 ( a failed electric car) with the aim of launching Chevy-Volt in 2010. (wow!!) 

Thanks for the wonderful presentation Larry. We now REALLY hope US govt helps GM and bails it out from the current crisis. Good Luck!!