Tag Archives: management effectiveness

August 1, 2022 · 8:54 am

The Complacent Management and Organization: Avoiding the Inherent Flaw Which Sabotages Businesses

By James D. Roumeliotis

According to the Oxford dictionary, the noun “complacency” is defined as “A feeling of smug or uncritical satisfaction with oneself or one’s achievements.” It happens in some people’s lives, as well as in organizations, whether for profit or not. In the former case, complacency in one’s personal life includes fear of failure, remaining in the comfort zone, and being concerned about what others think. These can inhibit our potential, happiness, relationships, and fulfillment. In business, complacency includes low overall performance expectations, insufficient performance feedback along with unclear operational objectives for each employee, disengagement, lack of passion, and lack of investment in the operation and/or others. In both cases, uncritically satisfied with oneself or one’s achievements, smug, and apathetic with regard to an apparent need or problem.

Status Quo: The Silent Disease

Complacency is the quiet business killer that strikes without notice and has the power to destroy even the most successful businesses. The problem with many businesses, regardless of the sector they are in, is they are content with the status quo. A status quo bias minimizes the risks associated with change, but it also causes people to miss out on potential benefits that might even outweigh the risks. Consider the flawed proverb, “If it ain’t broken, don’t fix it.” It denotes to leave something alone and refrain from correcting or improving what is already working because any attempt of improvement may be risky and backfire. It has been used in the context of everything from social reform to business operations, as well as for personal mottoes. For many, it is an ingrained rule ─ a tendency to be lazy.

However, by rewording it slightly we can in-turn rephrase it as, “Just because something isn’t broken, doesn’t mean it can’t be improved.” Now, this! The automobiles we produce are excellent but we can make them even better, more technologically advanced, and more fuel efficient. My bed is not broken but that doesn’t mean I can’t find one that’s more comfortable. The educational system is not broken does not imply that it cannot be improved.

Continuous Improvements are Key to Sustainable Success

Continuous improvement is the continual process of making incremental and meaningful changes to products, services, or processes. It’s what keeps a business on the leading edge, retain customer loyalty and remains competitive. In Japan, a popular word used in many organizations and spread in many other industrial countries is “Kaizen.” It is a compound of two Japanese words that together translate as “good change” or “improvement.” However, Kaizen has come to mean “continuous improvement” through its association with lean methodology and principles. The five elements of the Kaizen approach are:

  • teamwork,
  • personal discipline,
  • improved morale,
  • quality circles,
  • suggestions for improvement.

Even when an organization is enjoying success, it should always be ready for the worst-case scenario of a disruption.

Actions are Either Proactive or Reactive

Sooner or later, most companies fall into adopting a reactive approach out of laziness, complacency, or the assumption that it cuts costs. It stems from the old-school mentality of “If it’s not broken, why fix it?”

When there is a culture of complacency, new initiatives struggle to get traction, the competition is not actively monitored, and market shifts are not looked at for potential new strategies. Without initiative and drive, resistance to change will only grow over time. Any form of business should be flexible and adapt to new techniques and technologies. It ought to endeavor to be proactive rather than reactive. The offense is critically important to success in business. Having goals and taking steps to reach them is what leads to business growth and, in many cases, the survival of the business. Business leaders must understand how to protect their operations not only in the short run but in the long run.  Being proactive can prevent imprudent mistakes from ruining your business. Unfortunately, most business owners tend to think of fixing the problem which strikes without warning as a reactive thought process. Changing your thinking from reactive to proactive will take the burden of stress and make you better prepared for the inevitable.

Avoiding Business Complacency

Here are some recommendations to keep you and your organization from being complacent.

  1. Practice Urgency Every Day: Begin the day looking for something to fix or improve. Nothing is perfect and neither will anything remain static.
  2. Find Opportunity in a Crisis: Eventually, a true crisis will come. However, once a crisis is in motion, turning it into an opportunity often requires new ways of thinking and responding.
  3. Correct Bad Habits: Sometimes employees do not recognize that they have developed a bad habit. In order to spot and address these poor behaviours, managers and coworkers should observe and mentor other employees.
  4. Talk About Change: When an individual is complacent, he or she will have a difficult time recognizing when change has occurred. It is important to talk about change often in an attempt to engage the mind. 
  5. Change the Routine: Rotate employees’ job tasks so they are not performing the exact same function day-to-day. This will help keep the employee thinking about what they are doing and prevent the slide into complacency.
  6. Encourage Employees to Build Value: Once employees have mastered their jobs, find ways they can bring more value to the company and their job. This keeps the employee engaged and thinking about what they are doing and how they can do it better.
  7. Recognize and reward strong performance: Competent employees will become more engaged if they feel valued for the work they are doing.
  8. Encourage open, honest communication: Provide employees with an efficient means of communicating with each other and with management. Foster a culture that allows for questions and differing points of view. Involve employees in discussions surrounding organizational changes.

_____________________________________________________

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April 3, 2022 · 10:17 am

The Dysfunctional Organization: Weak Company Culture and Negligent Leadership as the Culprits

By James D. Roumeliotis

How often do you come across a company, either as a consumer or at a business relationship level, and realize how frustrating it is to deal with?

To understand and penetrate the corporate governing structure and “culture”, you need to look no further than the upper echelon of the hierarchical tree. It is here that procedural decisions are shaped and executed. An entity’s leadership is expected to head the enterprise by governing its long-term growth and sustained wealth.

Moreover, there is a constant search for the “right” human resources. Recruited and fresh talent must resemble the leadership in tone and style. Call it the organization’s DNA. Exceptional organizations are good at these types of corporate strategies, thus strengthening performance effectively.

We notice that in certain types of B2B transactions, there can be scope for unscrupulous behavior. One or both parties are tempted by “disservice” during their business exchange. Shortsightedness might lend itself to making this underhanded approach appear “profitable” on paper. Such relationships inevitably end badly because they are not conceived with trust or respect.

Success Breeds Success

Companies that foster the right attitudes and strategies put themselves on track for success. Examining their corporate histories, you can witness a trajectory of growth. They have a tendency to dominate their markets and “win” through competent talent, innovation, and an entrepreneurial mindset within the leadership at the executive level. These choices underscore the prosperity and rapid growth of the institution. An examination of Alphabet (Google) or (Meta) Facebook shows this quite nicely. They are not built like “traditional” corporations nor do they act like them.

Organizational leadership is accountable for creating value for customers, employees, and its owners/investors. When Bill Gates conceived Microsoft, he put the firm on track for providing constituent audiences with what nobody else could provide. Understanding “asset” management in an expanded meaning of the term guaranteed that Microsoft would succeed under, co-founder, Gates’s stewardship.

The opposite is equally true. When top executives lack knowledge or experience for board positions, they should not be promoted to these leadership roles. Some family-owned businesses run afoul here and this brings up the issues of sustainability and corporate governance. Another weakness in running an organization, in my view, is pushing for short-term profitability at the expense of solid planning. For example, in large organizations, competence is not the primary value but rather connections, politics, and clever tactics. Such “benefits” can usually compensate for incompetence.

No business can continue to prosper unless it attracts fresh and eager talent. Despite the dilemmas within the financial world, top organizations consistently lure new talent with lucrative compensation packages. It is easier for a firm such as Goldman to tap the “best” because of its reputation, size, and success than a small local financial player. When Goldman recruits they know where to look, whether it is Harvard or the London Business School. Prospects will already contain the seeds of the corporate culture in their past. Given the “right” conditions, new talent blossoms. Qualifications are never enough. They are a starting point reinforced by attitude and values. The selection and screening process is designed by HR to weed out inappropriate candidates.

Established software companies’ interview process includes quizzing candidates with challenging technical questions. This practice not only assesses problem-solving and knowledgeability but also explores the ability to perform under pressure, which is a key skill required for software engineers to succeed in their intense work environment.

One thing is firmly certain ─ the best-managed companies have “one” factor in common:
They are constant achievers in their respective industries. These companies exude managerial excellence. Financial performance is the result of this style of management. Consider companies such as Microsoft, Amazon, and Apple, among others, which thrive and ranked in 2021 by the Drucker Institute Company Ranking, as America’s largest publicly traded companies according to Peter Drucker’s principles of effectiveness—“doing the right things well.”

Deeds Not Slogans

Companies with inept leadership usually fail in the first year or two, but even established companies can stumble badly when they outgrow the capabilities of the founding team. Research by the U.S. Bureau of Labor Statistics demonstrates that nearly 6/10 businesses shut down within the first 4 years of operation.

To be a successful entrepreneur is not an effortless task. It takes plenty of sacrifices. A new generation of young entrepreneurs thinks the road is smooth and a fast track to easy wealth. Not everyone will become Jeff Bezos. Obstacles and sacrifice are part of the deal. Harnessing opportunities and overcoming challenges daily to top the competition is constant work. These conditions are true no matter what the sector of a business engagement or company size.

Telltale signs of weak organizations can be traced to inept leadership. The following points highlight the deficiencies:
• Poor customer service – slow or no customer inquiry replies – abysmal handling of sales and service complaints. Service is portrayed as a reward, not a right or benefit.
• No Unique Selling/Value Proposition – Companies need to define and articulate their unique value proposition and deliver on it consistently. Create a platform for sustainable and competitive advantage.
• Operational deficiencies – various ailments and no structure
• Absence of or very little communication among staff and management – Divisions aren’t well-coordinated and do not function as a team.
• No transparency – There is hardly any openness from management.
• Unethical practices – short-term selfish objectives in search of market share. Top executives should promote social norms and principles as moral agents.
• Lack of proper execution of decisions and new products/services.
• Productivity incentives should be implemented to boost results and employee morale. People must be given a reason to work hard and be efficient.
• Creativity is practically non-existent – An absence of innovation and employee empowerment will hurt progress and stifle new ideas.
• No clear vision/strategy – there needs to be a strategic vision that reflects a truly unmet need and has the commitment of a dedicated CEO. That means that there is a well-defined target audience with a distinct value position that is differentiated, meaningful, and deliverable.
• A weak sales force along with an unattractive compensation plan.
• Favoring nepotism and bias – promoting family members over other qualified employees often leads to resentment or, worse, prompts valuable non-family employees to leave the company.
• Poor hiring practices – should hire for attitude and train for skills.
• Slow/delayed decision-making process – too many layers – overwhelming bureaucratic structure.
• High turnover, which leads to poor employee morale, reduced intellectual capital, lower service levels, higher operational costs, and decreased productivity.
• Management in a state of denial about their organization’s shortcomings – remaining with the dysfunctional status quo
• No specific and/or stable channel strategy – Some companies focus on building a product but don’t think through how to get it into the hands of customers. Even if your product is great, unless you can sell directly, you may be dead in the water without strong channel partners.
• The hidden game – corporate politics – power plays by a handful of individuals for their own benefit to the detriment of their colleagues and the company.
• Misrepresentation of the brand(s) – too much hype – empty promises – not delivering on expectations – leads to dissatisfied clients who will alienate the brand.
• Weak financial controls – cash flow dilemmas – over leveraged/undercapitalized (high debt-to-capital ratio) – not reinvesting a certain percentage of profits for future growth.
• Absence of sound marketing program(s) and/or brand strategy – A brand is defined by how it behaves, from the products it builds to how it treats its customers, to the suppliers with whom it works.
• Growing too fast and not staying on course as the company grows.
• Lack or very little employee training & development.
• Deficient in control systems – reactive rather than pro-active.
• Lack of continuous improvements or complacent.

Top executives need to be accountable to the ownership or Board of Directors – whichever applies, or at least to an outside arm’s length and neutral party such as an adviser who can also play “devil’s advocate” when necessary.

Good Organizations Matter

The way to solve an organizational problem is to confront the structural issues with a moral sense of purpose and ethics. For its clients to receive stellar service, the firm must have its house in order. Besides structure and an efficient operation, employees should be trained and empowered to do their jobs efficiently.

Seth Godin, a renowned marketing strategist, stated succinctly: “If you want to build a caring organization, you need to fill it with caring people and then get out of their way. When your organization punishes people for caring, don’t be surprised when people stop caring. When you free your employees to act like people (as opposed to cogs in a profit-maximizing efficient machine) then the caring can’t help but happen.”

Companies that disrespect their employees and shut-out clients get willfully isolated and have a short life span through erosion of market share and significant loss of revenue. A company’s goal should place emphasis on serving its people properly and fairly. Higher morale generates higher profits – though occasionally other priorities hinder that objective, for example, self-serving behavior by certain executives.

Enterprises spanning a wide array of industries have earned distinction as “well-” or “best-” managed” by demonstrating business excellence through a meticulous and independent process that evaluates their management abilities and practices – by focusing on innovation, continuous training, brainstorming and caring for their employees’ well-being – as well as investing in meeting the needs of their clients.

In a nutshell: Well-run companies thrive no matter what by hiring the right people, taking good care of them, listening to customers, and never ceasing to innovate and improve.

___________________________________________________

Request your TWO FREE chapters of this popular book with no obligation.

EntrepreneurialEssentials - FrontCover Final

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Filed under Business, business management, Business success, business transparency, business vitality, crisis management, decision making management, effective leadership, inept leadership, leadership, organization leadership, poor leadership, preventing business problems

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October 4, 2020 · 11:02 am

The Inept Organization: Weak Leadership as the Culprit

by James D. Roumeliotis

Embarrasing Moment Photo - Pants down

How often do you come across a company, either as a consumer or at a business relationship level, and realize how frustrating it is to deal with?

To understand and penetrate the corporate governing structure and “culture”, you need look no further than the upper echelon of the hierarchical tree. It is here that procedural decisions are shaped and executed. An entity’s leadership is expected to head the enterprise by governing its long-term growth and sustained wealth.
Moreover, there is a constant search for the “right” human resources. Recruited and fresh talent must resemble the leadership in tone and style. Call it the organization’s DNA. Exceptional organizations are good at these types of corporate strategies, thus strengthening performance effectively.

We notice that in certain types of B2B transactions, there can be scope for unscrupulous behavior. One or both parties are tempted by “disservice” during their business exchange. Shortsightedness might lend itself to make this underhanded approach appear “profitable” on paper. Such relationships inevitably end badly because they are not conceived with trust or respect.

Success Breeds Success

Companies that foster the right attitudes and strategies put the firm on track for success. Examining their corporate histories, you can witness a trajectory of growth. They have a tendency to dominate their markets and “win” through competent talent, innovation, and an entrepreneurial mindset within the leadership at the executive level. These choices underscore the prosperity and rapid growth of the institution. An examination of Alphabet (Google) or Facebook shows this quite nicely. They are not built like “traditional” corporations nor do they act like them.

Organizational leadership is accountable for creating value for customers, employees and its owners/investors. When Bill Gates conceived Microsoft, he put the firm on track for providing constituent audiences with what nobody else could provide. Understanding “asset” management in an expanded meaning of the term guaranteed that Microsoft would succeed under Gates stewardship.

The opposite is equally true. When top executives lack knowledge or experience for board positions, they should not be promoted to these leadership roles. Some family owned firms run afoul here and this brings up the issues of sustainability and corporate governance. Another weakness in running an organization, in my view, is pushing for short-term profitability at the expense of solid planning. For example, with large organizations, competence is not the primary value but rather connections, politics, and clever tactics. Such “benefits” can usually compensate for incompetence.

No business can continue to prosper unless it attracts fresh and eager talent. Despite the dilemmas within the financial world, top organizations consistently lure new talent with lucrative compensation packages. It is easier for a firm such as Goldman to tap the “best” because of its reputation, size and success than a small local financial player. When Goldman recruits they know where to look, whether it is Harvard or the London Business School. Prospects will already contain the seeds of the corporate culture in their past. Given the “right” conditions, new talent blossoms. Qualifications are never enough. They are a starting point reinforced by attitude and values. The selection and screening process is designed by HR to weed out inappropriate candidates.

Established software companies’ interview process include quizzing candidates with challenging technical questions. This practice not only assesses problem-solving and knowledge ability, but also explores the ability to perform under pressure, which is a key skill required for software engineers to succeed in their intense work environment.

One thing is firmly certain ─ the best-managed companies have “one” factor in common:
They are constant achievers in their respective industries. These companies exude managerial excellence. Financial performance is the result of this style of management. Consider companies such as Amazon, Apple and Cisco, among others, which thrive and ranked in 2019 by the Drucker Institute as America’s largest publicly traded companies according to Peter Drucker’s principles of effectiveness—“doing the right things well.”

Deeds Not Slogans

Companies with inept leadership usually fail in the first year or two, but even established companies can stumble badly when they outgrow the capabilities of the founding team. Research by the U.S. Bureau of Labor Statistics demonstrates that nearly 6/10 businesses shut down within the first 4 years of operation.

To be a successful entrepreneur is not an effortless task. It takes plenty of sacrifice. A new generation of young entrepreneurs think the road is smooth and a fast track to easy wealth. Not everyone will become Jeff Bezos. Obstacles and sacrifice are part of the deal. Harnessing opportunity and overcoming challenges daily to top the competition is constant work. These conditions are true no matter what the sector of business engagement or company size.

Telltale signs of weak organizations can be traced to inept leadership. The following points highlight the deficiencies:
• Poor customer service – slow or no customer inquiry replies – abysmal handling of sales and service complaints. Service is portrayed as a reward, not a right or benefit.
• No Unique Selling/Value Proposition – Companies need to define and articulate their unique value proposition and deliver on it consistently. Create the platform for sustainable and competitive advantage.
• Operational deficiencies – various ailments and no structure
• Absence of or very little communication among staff and management – Divisions aren’t well-coordinated and do not function as a team.
• No transparency – There is hardly any openness from management.
• Unethical practices – short-term selfish objectives in search of market share. Top executives should promote social norms and principles as moral agents.
• Lack of proper execution of decisions and with new products/services.
• Productivity incentives should be implemented to boost results and employee morale. People must be given a reason to work hard and be efficient.
• Creativity is practically non-existent – An absence of innovation and employee empowerment will hurt progress and stifle new ideas.
• No clear vision/strategy – there needs to be a strategic vision that reflects a truly unmet need and has the commitment of a dedicated CEO. That means that there is a well-defined target audience with a distinct value position that is differentiated, meaningful, and deliverable.
• A weak sales force along with an unattractive compensation plan.
• Favoring nepotism and bias – promoting family members over other qualified employees often leads to resentment or, worse, prompts valuable non-family employees to leave the company.
• Poor hiring practices – should hire for attitude and train for skills.
• Slow/delayed decision-making process – too many layers – overwhelming bureaucratic structure.
• High turnover, which leads to poor employee morale, reduced intellectual capital, lower service levels, higher operational costs and decreased productivity.
• Management in a state of denial about their organization’s shortcomings – remaining with the dysfunctional status quo
• No specific and/or stable channel strategy – Some companies focus on building a product, but don’t think through how to get it into the hands of customers. Even if your product is great, unless you can sell directly, you may be dead in the water without strong channel partners.
• The hidden game – corporate politics – power plays by a handful of individuals for their own benefit to the detriment of their colleagues and the company.
• Misrepresentation of brand(s) – too much hype – empty promises – not delivering on expectations – leads to dissatisfied clients who will alienate the brand.
• Weak financial controls – cash flow dilemmas – over leveraged/undercapitalized (high debt-to-capital ratio) – not reinvesting a certain percentage of profits for future growth.
• Absence of sound marketing program(s) and/or brand strategy – A brand is defined by how it behaves, from the products it builds to how it treats its customers, to the suppliers with whom it works.
• Growing too fast and not staying on course as the company grows.
• Lack or very little employee training & development.
• Deficient in control systems – reactive rather than pro-active.
• Lack of continuous improvements or complacent.

Top executives need to be accountable to the ownership or Board of Directors – whichever applies, or at least to an outside arm’s length and neutral party such as an adviser who can also play “devil’s advocate” when necessary.

Good Organizations Matter

The way to solve an organizational problem is to confront the structural issues with a moral sense of purpose and ethics. For its clients to receive stellar service, the firm must have its house in order. Besides structure and an efficient operation, employees should be trained and empowered to do their jobs efficiently.

Seth Godin, a renowned marketing strategist, stated succinctly: “If you want to build a caring organization, you need to fill it with caring people and then get out of their way. When your organization punishes people for caring, don’t be surprised when people stop caring. When you free your employees to act like people (as opposed to cogs in a profit-maximizing efficient machine) then the caring can’t help but happen.”

Companies that disrespect their employees and shut-out clients get willfully isolated and have a short life span through an erosion of market share and significant loss of revenue. A company’s goal should place emphasis on serving its people properly and fairly. Higher morale generates higher profits – though occasionally other priorities hinder that objective, for example, self-serving behavior by certain executives.

Enterprises spanning a wide array of industries, have earned distinction as “well-” or “best-” managed” by demonstrating business excellence through a meticulous and independent process that evaluates their management abilities and practices – by focusing on innovation, continuous training, brainstorming and caring for their employees’ well-being – as well as investing in meeting the needs of their clients.

In a nutshell: Well-run companies thrive no matter what by hiring the right people, taking good care of them, listening to customers and never ceasing to innovate and improve.

___________________________________________________

Request your TWO FREE chapters of this popular book with no obligation.

EntrepreneurialEssentials - FrontCover Final

Leave a comment

Filed under 1, Business, business management, Business success, business transparency, business vitality, crisis management, decision making management, effective leadership, entrepreneurship success, inept leadership, leadership, poor leadership, starting a business success

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April 3, 2020 · 12:47 pm

The Notorious Cruise Industry: A Glorified and Reckless Offshore Business

By James D. Roumeliotis

Hiding from the Cruise ship

According to the Cruise Lines International Association (CLIA), the world’s largest cruise industry trade organization, the industry transported and hosted 30 million passengers in 2019 worth upwards of $117 billion in 2017. Traffic, since 2009, grew from 17.8 million with an annual growth rate of 5.4%.

Cruise ships, prior to the recent coronavirus pandemic, maintained a degree of glamour and opulence. Slick advertising and marketing projected images of fun and carefree times with a glorified onboard experience ─ a floating and carefree hotel resort. However, the dark side is best described as an industry which is rogue, careless along with insensitive behavior in international waters. According to a Conde Nast Traveler article, despite a relatively good safety record, the four most common cruise ship mishaps (icebergs is not one of them) are: Rough waves, storms, fires and collisions.

For the record, as a former yacht and passenger ship broker, who chartered entire ships to VIPs and for corporate events, this author possesses first-hand experience in the industry.

The Good…

To be fair, the safety aspect of passenger ships (specifically for those carrying more than 12  passengers) is regulated by the IMO (International Maritime Organization) and its convention known as SOLAS (Safety of Life at Sea). It regulates basic safety aspects for ships on international voyages such as stability, machinery, electrical installations, fire protection and lifesaving appliances. The main objective of the SOLAS Convention is to specify minimum standards for the construction, equipment and operation of ships. In addition, cruise ships are required to adhere to:

  • MARPOL (short for Maritime Pollution): It is the main international convention aimed at the prevention of pollution from ships caused by operational or accidental causes. It was also adopted at the IMO (International Maritime Organization). For cruise ships it includes pollution by sewage pollution by garbage.
  • Classification Society:  It is a non-governmental organization that establishes and maintains technical standards for the construction and operation of all categories of ships, as well as offshore structures such as an oil platform and offshore platform… in accordance with the published standards. Classification Societies certify that the construction of a ship complies with pertinent standards and perform regular surveys in service to ensure continuing compliance with the mandatory standards. A classification society’s workforce comprises of ship surveyors, mechanical engineers, material engineers, piping engineers, and electrical engineers.

Cruise ship good-ugly montage clips

…The Bad and the Ugly

The best way to describe the typical cruise experience is: cruise ship passengers (or guests as they are normally referred to) get ferried from port-to-port on a floating amusement park. However, as recent events have indicated, cruise ships with their confined spaces and close living quarters are ideal for various diseases including novel viruses such as Covid-19 as they may increase the amount of group contact. In addition, people joining the ship may bring the virus to other passengers and crew. ‘Stranded at sea’: cruise ships around the world are adrift as ports turn them away, read the unflattering headline (March 27, 2020) at The Guardian, an established British daily newspaper.

Passenger ships can also be categorized as high-risk, with excessive sexual assault rates, frequent poisonings, and the ever-present possibility of falling overboard. Cruise ships are also infamous for the environment through their deliberate and/or careless disposal of sewage ─ and air pollution caused by their engines and generators burning away tons of heavy diesel fuel.

Although their head-offices are based in countries such as the U.S., the U.K. and other countries in Europe, cruise lines typically register their ships under so-called “flags of convenience.” The most popular countries with shipping registries include the Bahamas, Panama, Bermuda, Liberia and Malta. Those are chosen for their cheap registration fees, low wages, loose regulations and to take advantage of a taxation loophole that essentially shields them from paying any income tax in the countries the cruise liners are actually based and operate. Although the IMO (International Maritime Organization) makes the international rules that govern shipping, including the sea cruising sector, it has no enforcement power.

As for wages, the stark reality for many cruise ship workers is far from glamour work and pay to match. While the working conditions for officers such as the captain and his lower ranking bridge staff, as well as those working in the shops and casinos are adequate, if not better, the experience of those working in the dining room, in the galley, cleaning rooms, and below deck describes a different story. Those workers are often paid substandard wages, survive on inadequate food, have marginal accommodations ─ and basic medical care for injuries can be scant. Those employees also live under a system that is widespread with abuse and uncertainty. Cruise lines can get away with treating their lowest-paid workers poorly because they recruit them from countries with limited economic opportunities. In other words, people who either don’t know any better and/or see a cruise ship job as a better employment opportunity than what is available in their country.

In March 2019 the cruise ship Viking Sky, with More than 890 people onboard, experienced a loss of engine power off the coast of Norway near Molde. Unable to steer without power, the ship kept getting slammed by extreme waves. Consequently, passengers’ belongings were scattered everywhere in their cabins. The captain declared an emergency. Passengers put on life jackets and went to the muster stations. Eventually, evacuation began. Rescuers worked all night to airlift more than 400 passengers (about half the total) to shore by a fleet of five helicopters flying in the dark, slowly winching people up one-by-one from the heaving ship as the waves crashed and the winds shrieked.  The ship, aided by tow vessels, eventually wobbled into the Norwegian port of Molde freeing the remaining 436 passengers and crew of 458.

In 2013, an engine fire aboard the “Carnival Triumph” left its 4,000 passengers adrift with neither any power, nor running water and scarce food. A year later, Royal Caribbean International was bestowed with the unflattering distinction of breaking the record for the largest number of passengers ill onboard its ship from a norovirus plague — nearly 700 people.

In 2019, the behemoth cruise line Carnival Corporation and its Princess Cruise Lines subsidiary agreed to pay a criminal penalty of $20 million for environmental violations such as dumping plastic waste into the ocean. Princess had previously paid $40 million over other deliberate acts of pollution. Royal Caribbean Cruises, the world’s second largest cruise line, has paid an $18 million fine for illegally dumping a great deal of waste oil and chemicals into U.S. waters from its dry cleaning shops and its printing and photo processing equipment.  Moreover, the crew lied to the U.S. coast guard when asked about the slicks trailing its ships. Other companies have also paid high fines for causing environmental damage.

ONE TIME USE - DO NOT USE

Cruise ships also leave a tremendous amount of environmental footprint. In a year, 100 million gallons of petroleum products from the ships seep into the oceans. Then there’s the air pollution they create. They burn as much fuel as entire small towns and operate on low Sulphur fuel which is 100 times worse than road vehicle diesel.

In June 2019, the 13-deck MSC Opera cruise ship with over 2600 passengers onboard, crashed into a tourist boat and then into a dock in Venice, Italy, due to an engine failure. Video posted to social media showed passengers escaping from the tourist boat and frantically rushing down the dock as the cruise ship swiftly approached them.

Bailout Expectations

Sadly, cruise liners with no obvious plan in place were taken by surprise (reactive vs. proactive). As a result, they mishandled the coronavirus onboard their ships ─ beginning with the outbreak on the Diamond Princess in Yokohama, Japan. Seven hundred people on board were infected with COVID-19 spreading through the ship’s corridors during its two weeks of quarantine, leading to seven deaths. According to passengers aboard the vessels, as well as outcry from health experts, in the weeks following the outbreak major cruise lines missed several opportunities to mitigate the crisis. Furthermore, according to one cruise line spokesperson, to avoid a panic that might collapse the industry, the cruise lines continued to mislead their passengers.

As expected, the news of the Covid-19, especially with many more cruise ships involved, caused a wave of cancellations and stock prices dropped significantly. Shares in Carnival, the world’s largest cruise line with several subsidiary brands in its portfolio, as well as its major competitors Royal Caribbean and Norwegian, have lost more than half of their value thus far this year. To reassure passengers, the Cruise Lines International Association (CLIA), which represents 90 percent of cruise liners worldwide, has issued sweeping restrictions and safety measures to be followed on ships. That reactive approach is too little too late and won’t make much of a difference in terms of reassuring booked passengers and potential ones.

The mere talk to inject billions to prop-up the cruise sector devastated by the pandemic, governments need to take this opportunity to come with strings attached such as implementing provisions, and by creating and enforcing legislation on the cruise ship industry to change its intolerable practices. If the industry along with its annoying lobbyists and greedy executives begin to balk, it will be time to take a hatchet and push the repulsive cruise line operators out to sea. Peter DeFazio, a Democrat in the State of Oregon and chairman of the Transportation Committee, firmly declared that he has no desire to bail-out the cruise industry. “They aren’t American,” he said. “They don’t pay taxes in the United States of America. If they want to re-flag their ships and pay U.S. wages and pay U.S. taxes, then maybe.” Other U.S. House Representatives echoed similar sentiments.

Alas, the mischievous cruise industry (the major ones are Royal Caribbean, Carnival Cruise Lines, and Norwegian Cruise Line Holdings) which insists on self-policing yet retains many holes in regulation and insulates itself by registering its ships in foreign countries (i.e. “Flags of convenience”).  Add to that its powerful lobby (spend approximately $3 M annually on lobbying) in the nation’s capital along with strong influence mainly in the tourism-dependent state of Florida.

In the End

The cruise industry has few fans at this time with many more losing interest. In addition, the elderly, are especially steering away of such voyages ─ perhaps for good. According to the Cruise Lines International Association (CLIA) Global Passenger Report, the median age has been between 60 and 69-year-olds, with a full 19% of cruisers falling under this demographic.

The only exception to the cruise industry worth applauding, with its premium ships, sustainable and exceptional consistent experiences, are the small luxury cruise vessels or boutique ships ─ many which resemble a yacht-like intimate atmosphere with accommodations for between 50 and 600 or so passengers along with a one-to-one ratio of crew members to passengers. Some top rated examples include Ponant Yacht Cruises & Expeditions, Variety Cruises, Seadream Yacht Club, Windstar Cruises, Silversea, Seabourn, and the recent newcomer Ritz–Carlton with its first-ever yacht christened Evrima accommodating up to 289 guests.

Disappointing pictures of what the mainstream massive cruise ships actually look like in the real world (glamour vs. reality) can be viewed at this link.

For all known illness outbreaks and additional unique news on cruise ships, refer to Cruise Junkie, an online information resource which tracks disasters at sea on the website based on news, passenger, and official accounts.

A full documentary of the cruise ship industry gone awry is linked here.

Finally, for some satire about the cruise industry by HBO comedian Bill Maher, click here for the link to the segment.

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July 1, 2019 · 7:35 pm

Business Vitality presentation: Preventing adversities before they occur

Business Vitality Presentation

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July 3, 2018 · 11:13 pm

Small Brands vs Big Brands in the CPG Space: How to Cleverly Outdo the Complacent Mammoth

By James D. Roumeliotis

Sumo wrestler being pushed.

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Using the CPG (Consumer Packaged Goods) brands as the main topic for reference in this editorial, we dig into the dilemmas of the leading consumer brands such as Kellogg’s, Nestle and General Mills to name a few in the food sector.

Small, nimble and niche brands, most notably start-ups, are beginning to chip away at the market share of many leading consumer goods firms. As a result, these small companies are growing rapidly to the detriment of the big brands but to the benefit of the consumers. This has to do with big brand complacency, bullying and arrogance along with the desperate need for short-term results to satisfy the insatiable expectation their shareholders’ have for quick profit and stock price increases – but with little regard for today’s consumer. As such, it is no surprise that shoppers have become more savvy, see through much of the nonsense and have helped turn this tide whereby. Consumers trust and are more confident with the small brands over the traditional ones their parents were accustomed to.

Welcome to the new generation of CPG choices and mentality.

Big ship vs Fast Craft

Large well-established companies have several advantages over smaller ones mainly due to their imposing size, their brand recognition as well as for their plethora of cash and human capital. However, despite their deep pockets and plethora of resources, they are risk adverse, bureaucratic in their decision-making process and to some extent, disengaged from their customers. Moreover, if they are a public company, their initial allegiance is to their shareholders.

Start-ups and smaller businesses, on the other hand, have less money and resources at their disposal to grow or even compete in the unapologetic and competitive landscape. Yet, the small business is agile, nimble and creative and possess several advantages such as a clean slate, rather than the baggage many large corporations have been carrying over the years, as well as perceived as more trusting by consumers, further engaged with their customers, and a refreshing alternative to the established brands – provided the products offer unique and attractive characteristics.

Be First, Different & Daring

It takes methodical strategic maneuvers and innovation to outdo the established ones. The good news is that many small companies seem to be doing a good job at both. As a result, they are becoming quite appealing by both consumers and the large brands respectively. At some point and under certain criteria, the latter are keen to purchase the small niche companies.

A case in point is the state of the exploding snack bars health food category. According to Euromonitor International, a market research and analysis firm, renowned food companies such as Kellogg’s and General Mills are experiencing declining market share as compared to previous years. Meantime, privately held Clif Bar, gained a one percentage point during the same period, while another small competitor, Kind LLC, increased its share by 2.1 points. Not idly standing by, last year, Kellogg’s purchased seven-year-old RXBar for a whopping $600 Million, while Mondelez International, the food conglomerate, which owns the Oreo brand of cookies and Cadbury chocolate, purchased Enjoy Life, a consumer packaged goods upstart which performed three years of 40 percent consistent annual growth. A 2015 report from Fortune magazine found that in 2014, in a single year alone, major CPG brands lost $4 billion in market share.

Reputation seems to be the culprit for this significant market share loss. Consumers perceive products from large brands as unsustainable, as well as less healthy with inferior and artificial ingredients along with a high content of sugar and salt. Younger generations of consumers are also suspicious of major corporations. For example, a 2015 study, conducted by the research firm Mintel, indicates that 43 percent of millennials do not trust traditional food companies.

The single most important advice here is that newly established brands should focus on their unique strengths to win over their large and deep pocketed competition rather than trying to go head-to-head with them. Newcomers to the CPG market are in a better position than large brands in catering to emerging consumer trends such as “clean label”, “free from” and organic/non-GMO foods.

  • Agility

Being a small company give you the benefit of being nimble and efficient in areas large ship like companies are not able to do so. This makes them slower to respond. In fact, there are times that they don’t even return calls or email inquiries. Strat-ups can implement a business model which provides value to customers while simultaneously building a lean operation which will yield a consistent profit. This can be accomplished with a limited financial capacity.

  • USP with a Niche Focus

Unlike the big companies, smaller ones can develop products which meet an unmet need. A niche market can demand a premium price which can yield respect along with a handsome profit. For large companies to offer niche product may risk cannibalizing their own existing products.

Increasingly, mass-market retailers are seeking niche brands that their clients consider as healthier. This will keep their customers from purchasing products in this category elsewhere as these large mainstream food retailers face rising competition from natural food and specialty chains such as Whole Foods Market and Trader Joe’s.

  • Trust and Transparency

Regrettably, established food companies do not practice what they state over their PR megaphones. A recent Forbes article contends, those large brands mislead consumers by giving an impression of a healthy product through their misleading labels. Consumers today are well informed and can recognize inauthentic brands, but it seems that short-cuts and short-term thinking, in the name of profit margins and increasing share prices, take precedence. According to AdAge, consumers are increasingly switching to smaller CPG companies as they are perceived as healthier and more authentic.

  • Media Spend on a Budget: Creative vs. Outspending

With a limited marketing budget, the most effective methods of reaching your target audience and to out-create your large corporate competitors is through social media, including reaching out to influential bloggers with a large audience, coupled with a select number of sponsorships and the use exposure of marketing posters, brochures etc. for maximum exposure.  The key to compelling content is to make it about your niche and  your story. If you sell good quality products and have managed to build a good online network of brand supporters, you can leverage your goodwill to bring in sizeable sales.

In a Nutshell

As change is and should be constant, the small brands should not only learn from all the mistakes made by the big brands but also offer what the consumer demands…clean ingredients, transparency and personality along with a story and an emotional connection. These elements exude confidence and trust. Moreover, smaller companies should remain nimble, use plenty of experiential marketing and continuously offer timely improvements including environmental sustainability.

Established brands please take note as you are on notice.

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