What Do The Airlines Have in Common with Your DNA?
The airlines have an interesting policy. Unofficially, it’s called the 1% Defection Rule, and it goes something like this. Imagine that you’re the head of an airline and you want to maximize profit. Your strategy might include offering uncompromising service to guarantee customers will always fly with you. The problem with this strategy is it begins to get expensive; more service = more money (don’t kid yourself, those little bags of peanuts add up). This cuts into corporate revenue, making your shareholders grumpy, and putting your very livelihood in jeopardy. So instead, being the genius you are, you come up with another strategy: provide just enough services to keep your customers from defecting to the other guy’s airline. It’s just like your buddy the hunter, who takes you into the forest and tells you the old joke about outrunning a Grizzly Bear. He doesn’t have to be faster than the bear, just faster than you . This kind of thinking can be seen in the evolution of the airp...