Sunday Reads #156: Using a bazooka to fight a hamster.
How Southwest Airlines solved its million dollar problem.
Sorry I didn’t send out the newsletter last weekend. I was on a long flight, and my laptop ran out of charge before I could start on the email.
But I’m back now, and back in your inbox too.
This week, let’s talk about Southwest Airlines. And how it solved a particularly thorny problem.
1. Southwest Airlines and its Million Dollar Problem.
I read this great anecdote on twitter, about Southwest Airlines:
It's a story from a couple of decades ago. Back when you still got paper receipts for purchases, and needed printed tickets to fly.
Southwest Airlines wanted to reduce ticketing costs, so they decided that passengers could use receipts as tickets.
Should be simple, right?
In theory, yes. Customers got these printed receipts anyway. You don't need an additional document to prove you bought the ticket.
In practice though, it didn't quite work. Because customers would often throw the receipts away.
So Southwest's strategy team did what they did best - they strategized. They decided to create a new ticketing system, with seamless integration to the point of sale.
Cost of implementation: only $2million.
They went to the CEO for approval. They tabulated all the different options, and showed how this was the cheapest, yet most effective solution.
The CEO rejected it.
He offered a different solution. He said: "Just write 'THIS IS A TICKET. DO NOT THROW AWAY.' at the top of each receipt, in giant red letters."
I loved reading this story. It's a great example of what I call:
Using a bazooka to fight a hamster.
It reminds me of this engineering parable I shared in How to Gain Super Powers. Quoting it in its entirety (it is that useful):
A toothpaste factory had a problem: Due to the way the production line was set up, sometimes empty boxes were shipped without the tube inside. People with experience in designing production lines will tell you how difficult it is to have everything happen with timings so precise that every single unit coming off of it is perfect 100% of the time. Small variations in the environment (which cannot be controlled in a cost-effective fashion) mean quality assurance checks must be smartly distributed across the production line so that customers all the way down to the supermarket won’t get frustrated and purchase another product instead.
Understanding how important that was, the CEO of the toothpaste factory gathered the top people in the company together. Since their own engineering department was already stretched too thin, they decided to hire an external engineering company to solve their empty boxes problem.
The project followed the usual process: budget and project sponsor allocated, RFP (request for proposal), third-parties selected, and six months (and $8 million) later a fantastic solution was delivered — on time, on budget, high quality and everyone in the project had a great time. The problem was solved by using high-tech precision scales that would sound a bell and flash lights whenever a toothpaste box would weigh less than it should. The line would stop, and someone had to walk over and yank the defective box off the line, then press another button to re-start the line.
A short time later, the CEO decided to have a look at the ROI (return on investment) of the project: amazing results! No empty boxes ever shipped out of the factory after the scales were put in place. There were very few customer complaints, and they were gaining market share. “That was some money well spent!” he said, before looking closely at the other statistics in the report.
The number of defects picked up by the scales was 0 after three weeks of production use. How could that be? It should have been picking up at least a dozen a day, so maybe there was something wrong with the report. He filed a bug against it, and after some investigation, the engineers indicated the statistics were indeed correct. The scales were NOT picking up any defects, because all boxes that got to that point in the conveyor belt were good.
Perplexed, the CEO traveled down to the factory and walked up to the part of the line where the precision scales were installed. A few feet before the scale, a $20 desk fan was blowing any empty boxes off the belt and into a bin. Puzzled, the CEO turned to one of the workers who stated, “Oh, that…One of the guys put it there ’cause he was tired of walking over every time the bell rang!”
$8 million to solve a problem, when $20 could have done it.
Hilarious, right? We all love a good laugh at the expense of big companies doing stupid things.
But here's the thing - we ALL do this.
Ask senior team members to do admin tasks, because you "can't trust the juniors".
Run a 1000 person survey and 10 focus groups to find out whether your value proposition works. (I’ve done this often in my past life as a consultant).
Create a state-of-the-art productivity system with three different paid apps, on web and mobile, to keep track of to-dos. (this is me as well 🙋♂️).
I find this mental model - of using a bazooka to fight a hamster - helpful in two ways:
#1: Don't over-engineer a solution:
Don't complicate things more than you need to. Find the shortest path to your desired outcome.
The story of Juicero is instructive, as I also mentioned in How to Gain Super Powers:
… the story of Juicero, a Silicon Valley juicer startup that raised $120M from top-tier investors including Google Ventures and Kleiner Perkins, and shut down 16 months later.
Juicero built a high-tech juicing machine with 400 custom parts and juice press plates that wielded four tons of force (“enough to lift two Teslas”). The juicer retailed at an introductory price of $700 (!), later brought down to $400.
But as Bloomberg showed in a funny video in Silicon Valley’s $400 Juicer May Be Feeling the Squeeze, it turned out users could squeeze Juicero's proprietary juice packets just as easily… with their two hands 🤦♂️. No Tesla-lifting press plates needed.
Now, Juicero is extreme. But I hear a more moderate version of this quite often.
All founders have read Elon Musk's Secret Tesla Motors Master Plan. And they have a secret plan too.
"I want to solve this incredibly major pain point, let's call it A.
I will solve this by solving this other pain point X, which will cause Y, which I will tackle by doing Z.
And ultimately that will solve A".
No! You are not Elon Musk! (and if you are Elon Musk - I must say, it's an honor! 🙏).
If you want to solve A, solve A. Don't work on problems that you don't need to solve!
I love this passage from Eliezer Yudkowsky's Harry Potter and the Methods of Rationality (and I quote it often):
Father had told Draco about the Rule of Three, which was that any plot which required more than three different things to happen would never work in real life. Father had further explained that since only a fool would attempt a plot that was as complicated as possible, the real limit was two.
And, how can I resist my favorite Matrix GIF:
#2: Don't assume that the scale of the solution will match the scale of the problem.
This is the other fake assumption here.
Let's say we're facing a problem that causes a loss of $5M every year. We assume that the solution will be at a similar order of magnitude.
We'll celebrate if the solution costs us $1M. The ROI is 500%! Huzzah! 🥳
But there's actually no reason to assume the solution will cost even a hundred dollars!
Just like the solution to Southwest's million dollar problem was a simple header on the receipt.
Just like the toothpaste company's quality control problem cost $20 to solve.
You don't need a bazooka to fight a hamster.
But sometimes, you can disable a bazooka by stuffing a hamster (poor thing!) into it.
[NB. I didn't coin this term. Got it from this comic.]
Hi, I’m Jitha. Every Sunday I share ONE key learning from my work in business development and with startups; and ONE (or more) golden nuggets. Subscribe (if you haven’t) and try it out for free 👇
2. Golden Nugget of the week.
I posted this on twitter a few days ago.
I got a very gratifying response 😇.
It really works, guys!
Always remember: Closed mouths don't get fed!
3. This blew my mind 🤯.
This kid solved three Rubik's Cubes in less than 5 minutes. While juggling them!
It's amazing what stupendous feats you can perform, with sustained practice. (but I'm sure he's a genius too).
4. Sci-fi book recommendations!
I had two transcontinental flights last week, so I got a lot of reading time (5 books - thanks Singapore National Library!). So, you get a book reco this week.
Ender's Game is a great introduction to Science Fiction. If you want to explore the genre and don't know where to start: Start with this one.
It's a breezy read, and has some of the best qualities of good sci-fi. Plus it has three kids plotting world domination - what's not to like?
Oh and if you're already into sci-fi and have read Ender's Game, let me recommend something you haven't read:
Swarm, a short novella (18 pages) by Bruce Sterling set in his Shaper/Mechanist universe.
It's a stunning story, which begs the question: "Is sentience a mistake in our evolution"?
That’s it for this week. Hope you enjoyed it.
Travel has ramped up here in South East Asia. I’m enjoying the feeling of meeting folks in person again. Hope things continue moving back to normal.
As always, stay safe, healthy and sane.
I’ll see you next week.