Poor Agents: They Just Drive Up our Prices
The Market asks us for innovation, and innovation is like my grandmother’s cooking: questioning, tasting, and scrapping it if things turn out bad. I propose the 1x4 method: answer five questions, advance as you do it, and repeat four times a year.
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Afew days ago, at EGADE Business School Graduation ceremony, I had a nice chat with Mario Vela –guest speaker and Managing Director of GNP, the insurance company– about innovation and macrotrends. Walking down memory lane, we got to Mexicana de Aviación during the 90s, when Sergio Allard was Commercial Director and used to say something like “travel agents don't add any value and just drive up the tickets' price; we are looking at ways to take their commission out of the equation”.

It's 20 years later, and we are at that point: In 2016, Aeroméxico reported that “tickets sales through our website represented 19.4% of our passengers and 14.7% of our overall sales”. In other words, one in every five passengers bought his/her ticket online, without any help from a travel agent.

Getting back to our time, I let him know my opinion about that tattoo the insurance industry needs so badly, and how are own insurance broker presented us with three quotations, recommending a specific one because of its lower price, since the three companies' offer was "the same". It seems our agent is selling commodities and competes solely on price. Naturally, it started a juicy discussion on the subject, concluding the insurance industry brokers are "the" channel, but forget about innovation while the vast majority of them is competing merely on price, limiting their job to producing a menu of options, all equal in the eye of their customer.

It is pure 20th century sales style: facing equal conditions, a customer will always choose the cheapest offer.

The 1x4 Innovation Method

This error can be corrected through innovative spirit and a good method, because innovation needs method, similar to my grandmother’s style of cooking: she questioned, she tried, she scraped the bad bits, she made it better and she eventually produced a sublime dish, like that wonderful pork tinga served on a corn tortilla… Sorry, i got carried away!

As I was saying, innovation requires method and I propose one in particular: 1x4It is about making quarterly innovation efforts, so that at the end of the year there's innovation in up to four areas of the organization; a good way to keep a company alive and well, a the top of its game. 

To do it, ask yourself five questions:

  1. What do our customers need? What pains do they have, what would they change in their lives?
  2. What if…?
  3. Which proposal wows our customers?
  4. Does it make business sense?
  5. How can we turn it into a reality?

Innovation should not be complicated; as Tim Brown says in “Change by Design” –a book I loved– there is no need for expensive resources, you just need to be enthusiastic. You can even learn as you go.

You have nothing to loose. It's only five questions and trying them out is free.

Start by asking “why not?” to yourself and your colleagues. By answering this basic question you will tear down a lot of mental barriers.

#FuerzaMéxico

An extra bit.

I am amazed, and not in a good way, of what is happening with Uber. Just as it has done, many entrepreneurs forget that they are not just creating an app, but a company which must repeatedly deliver quality products and services to benefit them and their market. 

An extra, extra bit.

It is always good to talk about innovation, bounce-off ideas and concepts and create analogies among different industries. How often do you do it? Find yourself a trusted person to do it with, and follow just one rule: ideas have no limits.

An extra, extra, extra bit.

Do you see Mexico as a country where our thing is to create?  Wait for news on January 31st. You'll love them.