I pass quite some time watching videos on YouTube, mostly TED talks, VICE short videos and “algorithm suggested” stuff. A few days ago I watched to this video https://www.youtube.com/watch?v=6A4pA7XlDI8&feature=youtu.be where Michael O’Leary (the CEO of Ryanair) holds a 50 min conference on Ryanair at RCSI in Dublin in November 2015 as part of the Annual RCSI Millin Meeting.
I suggest everybody to watch the video, mister O’Leary is a successful businessman that revolutionized the airline industry. He is very fun to listen hereafter some quotes from the speech as a motivational:
- “People are not your biggest asset: they are your biggest cost” – Michael O’Leary
- Q (Auditor): “How do you motivate employees?” A (Michael O’Leary): “With fear, fear works very well!”
- “It is not difficult to be cheaper than Lufthansa on the days they are actually flying and are not on strike again” – Michael O’Leary
The main point that you get from the speech is that politeness matters and that nobody can remain forever a guerrilla -style start – up: even Ryanair in the last few years has changed its strategy and one of the new goals is “being nice to customers” after years of growth pushed by aggressive cost cutting and zero tolerance internal policies. This shift in strategy has boosted sales and profit (profit after tax in fiscal year ending 31/03/2016 was up 43% compared to the year before).
I find this change in strategy quite interesting and I would have never thought it would have worked when I first read in March 2016 this article on the Wall Street Journal. Ryanair is known for being a very low price carrier, that offers very low fares but therefore charges an extra price for anything the passenger might want (quite famous is a quote by O’Leary that says: “Anyone who thinks Ryanair flights are some sort of bastion of sanctity where you can contemplate your navel is wrong. We already bombard you with as many in-flight announcements and trolleys as we can. Anyone who looks like sleeping, we wake them up to sell them things”): forget about drinks, free luggage, help at check-in, etc.. Shifting to a more customer friendly approach surely involves more costs and if passengers don’t accept slightly higher prices the overall balance would have led to lower profits. However, customers appreciated the move and showed that people are actually ready to pay a bit more for some politeness and friendliness.
I think this is an important point for anybody starting a company, at the beginning a “guerriglieros” approach might work quite well (Uber has grown also by using some strategies that are not the best example of commercial correctness although not illegal, for example they were booking and unbooking rides on the app of their competitor Lyft in order to create long waiting times for real customers) but after some time it is important to shift to more polite and friendly operations since people do care about how they are treated.
Ryanair new strategy: https://www.wsj.com/articles/ryanairs-new-strategy-being-nice-1457862512
Ryanair investor report: https://investor.ryanair.com/wp-content/uploads/2016/05/Ryanair-Results-FY2016.pdf
Lyft cancelled rides: http://money.cnn.com/2014/08/11/technology/uber-fake-ride-requests-lyft/index.html