Ryanair and the risk of the race to the bottom

Our previous observations on the benefit of having a clear strategy, using Ryanair as an example of clarity and the way that drives choices, had one predictable outcome: a number of comments on individuals perception of the service provided by Ryanair.

This does highlight one of the challenges of using a clear and easy to understand direction as a means of driving other decisions. When an absolute becomes the driving guide (the cheapest, the largest, the fastest..) then that can be used to override other considerations. Where it works well ( such as driving an adoption of lower cost airports) then it makes sense. When it breaches customer sensibilities, then there can be issues. Even Michael O’Leary has been heard to suggest stepping back from some of the more extreme elements of their approach.

The largest parallel example of this in procurement strategies is where cheap is allowed to overpower other requirements. There are a number of examples where excess zeal in price reduction has led to operational challenges in a number of sectors (names withheld to protect the guilty). This underlines the need for sophistication in the development of strategies,  where a clear balance of approaches is well developed and understood.

This takes us back to the need to be absolutely ruthless in defining and agreeing what the balance of business requirements really are. Disaster awaits where one requirement is assumed to take precedence over others without having tested and agreed that assumption with the owners of the other, and balancing requirements. To do this, there needs to be an established mechanism whereby the various parties involved can discuss and debate the priorities and record the way in which the balance of requirements is worked out. Of course, it’s still open to debate and discussion – this is a fallible and subjective set of concepts, involving organisational politics, rather than a structured scientific process. However, having an agreed approach is far better than having nothing.

On occasion, it is clear where a policy or values driven approach has taken precedent over other areas; often evident in industries where there is a high level of physical risk, then there is an acceptance that Health and Safety will always have priority. Even here it is necessary to reiterate the reasons why this precedence exists to ensure that the underlying issues are both understood and addressed.

So, what can we take away from this?

  1. A clear strategy does help, because it provides some fundamentals against which we can test a variety of possible solutions.
  2. It is likely that we will be dealing with a more complex mix of requirements, even when there is a clear strategy
  3. We need to make sure our understanding of the various business requirements is both clear, and agreed with others involved
  4. It is better to have a structure in which this is done.

None of this is news; however, the thoughtful use of these approaches is less well embedded than we need it to be. Working in this area and getting to excellent outcomes is a fundamental of good delivery.

Mark Hubbard thinks about sales and procurement at www.smartbrowndog.com



About Mark Hubbard

I set up a specialist purchasing consultancy and a business focussing on seeking innovation. I work all over the world with clients, helping purchasing teams develop new ways of delivering value for their businesses. I love thinking about how purchasing works, and how it can be better, and I'd love to share some of those thoughts with you
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