The Trajectory of Disliked Companies in Disrupted Businesses: A Visual Guide

I was recently impressed by the full page ad placed by Time Warner Cable in the Sunday New York Times. They write:

We get it.  We know how you feel about cable companies…. We hear you loud and clear…. So we’ve made some changes for the better.  Changes that we hope add up to more respect for your time, better value for your money and the kind of experience you expect from a leading entertainment and technology company…

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It was the latest mea culpa from a cable company; it follows on the heels of a similar customer service initiative announced by Comcast last year.    Both companies are struggling as they lose market share to streaming video and mifi among others.

The decades of rampant inflation and customer abuse seem to have caught up. The BGR blog writes:

The FCC… found that cable prices have been growing much more quickly than inflation for a very long time now, as the compound average annual rate for expanded basic cable services between 1995 and 2013 was 6.1% while the compound average annual growth rate for the CPI over that same period was 2.4%.

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The industry’s net promoter scores meanwhile, according to the Temkin group are the lowest of any industry (trailing only health plans).

Here’s my somewhat glib assessment of how disliked companies in disrupted industries fare.  The trajectory looks something like this:

Screen Shot 2015-10-14 at 12.54.52 PMAn oligopoly neglects its customers for years.   One day executives wake up to see that their industry is being disrupted by smaller, more nimble, and more customer focused companies.

Somebody hires a consultant who recommends that the company issue a customer service pledge and apologize for the decades of underperformance.

It seems inevitable that the promised customer service changes never come through: the company is too big, the culture too entrenched for any meaningful change to take place.

I’me not sure that the parallels to big healthcare are exact.  But there are a lot of overpriced, inefficient healthcare systems out there that are deaf to the needs of their customers– and are tolerated because consumers have no other choice.  They are fixing to be disrupted.  I’ve written a lot about the challenges facing large, expensive and underperforming health systems herehere, here and here.  Can we expect full-page mea culpas from the big systems as they regret their overcharging and underperforming while promising to do better going forward?


Along these lines, here’s a (not really) funny example of a disliked company in disrupted businesses opacifying prices to eek out their margin:

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I was recently in the Tucson Airport when I came across a bank of pay telephones.   The baby Bell logo had been scratched off, and was replaced by the logo of a small company, WiMac Tel, a Canadian company that must have bought the phones and licenses from the big phone companies.

You can see that a sticker on the phone offers four minutes of talk time for one dollar.

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The trick was that  this rate only applied to coin operated calls.    If you use a credit card, or place a collect call, the rates are much, much higher.   The Tucson Airport Authority was good enough to post the following sign.

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Online, consumers had discovered this for themselves.

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I was amused to see the Win Mac Tel representative’s response to the caller who was charged $17 for a 30 second call (presumably thinking it would coast a dollar according to the sticker on the phone).

Public Pay Phones are an option of convenience, but admittedly more costly than the wireless phone call. The cost of service for a public access payphone includes the cost of payphone equipment, location rent, lease or fees, technicians to maintain and collect coins…..   Some call this progress, others believe the cost of service is too much, but in the end, you at least had a choice….  We take these comments seriously and appreciate your time to let us know what occurred for you.

I wonder if the customer service letters sent to hospital patients complaining of inflated bills and opaque pricing read the same way.  At least you had a choice.  Sort of.