Capon's Blog

Blog posts by our own Chair Noel Capon
  • Economy Boosters, Economy Busters

    The American public’s frustration with stay-at-home orders continues to grow. Spurred by demonstrations across the country, government bodies at federal, state, and local levels are easing restrictions, just as the numbers of Covid-19 cases increases, and the U.S. death toll marches inexorably towards 100,000. And estimates of U.S. pandemic deaths are continually revised upwards.

    The core rallying cry driving the easing of restrictions is -- Open-up the Economy. Economy Boosters want to reopen factories, retail establishments – stores, restaurants, gyms, nail salons, beauty parlors – and get supply-chains moving. By these means, the argument goes, economic activity will start returning to normal, and U.S. citizens will retrieve their traditional ways of life. Economy Boosters do not ignore Covid-19; rather, many are supportive of, if not insistent on, sensible measures to avoid virus transmission – social distancing , face masks, hand sanitizers.

    The problem: These boosters do not seem to understand the nature of a business! Nor, indeed, do they understand the constituent elements of a functioning economy. They seem to think that well-equipped factories, well-managed supply chains, and adequately-stocked retail stores, along with appropriate personnel, are the critical ingredients of a successful economy. This perspective is incorrect. Economy Boosters ignore the critical component of a successful business, and hence of a successful economy.

    The fundamental requirement for any successful enterprise is customers. Only by securing customers does any type of firm earn revenues and make profits. No matter how effective the factory, how efficient the supply chain; or how well-stocked the retail store, if customers do not show up, there is no business.

    So the critical question is not: How can we get the factories, supply chains, and retail establishments up and running? The critical question is: How can we get consumers out and bout, and making purchases of products and services in high streets, malls, and other retail outlets? Factories, supply chains, and retail establishment are irrelevant if there are no customers. Of course, some consumers will purchase some goods online, but that activity will not be effective in substantially moving the economic needle.

    Question: What is the probability that American consumers en masse will patronize retail establishments as the number of Covid-19 cases rises, and the death toll mounts? I suspect the percent of the population that will return to normal activity is relatively low. Most people will opt for safety over shopping. 

    To achieve the goal of economic revitalization, the impact of Covid-19 must be reduced. No matter what positive actions retail establishments take in the near-term, a large percentage of the population is unlikely to engage these enterprises if Covid-19 cases and deaths continue to rise. The answer is pretty clear: The core focus for revitalizing the economy should be to mitigate the virus. Actions currently being taken to open-up the economy will, as Dr. Fauchi suggests, likely turn Economy Boosters into Economy Busters.

  • A Volkswagen Apology to the Human Race?

    As the Federal Government rolls-back vehicle emission standards, we must nor forget that both standards and enforcement are critical. Though we should decry the  attack on public health caused by President Trump’s recent actions, we should not focus so much on standards that we give  short shrift to the monitor-and-control function, wherever that may take us

    Indeed, in recent months, Volkswagen, the world’s largest automobile company, has been found guilty on criminal charges, and forced to pay billions of dollars in fines, for fraudulent emissions tests on several models of its diesel-powered cars. Essentially, Volkswagen used software -- defeat device -- such that tail-pipe emissions in laboratory tests were able to pass environmental standards. But in actual driving conditions, emission of noxious nitrogen oxide gases, and particulate matter, were up to 40-times greater than approved levels. Volkswagen has paid a heavy price, both for its test-taking actions, and its stubborn attempts at cover-up.

    Egregious as this behavior was, it pales in the light of related actions by Volkswagen. During its cover-up phase, Volkswagen directed a research study in New Mexico, designed to show that new diesel-powered models posed no health threats. The original design proposed placing human subjects in a chamber into which tail-pipe emissions were pumped. Facing some internal resistance, humans were replaced by ten monkeys. The monkeys’ organs were subsequently analyzed to identify the effects of these emissions. Animal rights activists were outraged by this experimental design.

    What seems to have eluded Volkswagen, regulators, animal-rights activists, and the press is the symbolism of this experimental procedure. The history of the Holocaust and the death of six million Jews was a defining event in the history of the human race. Most people know of Nazi death camps, but fewer, it seems, are familiar with the Nazi’s drive for murder efficiency.

    In the early 1940s, the Nazi’s designed, manufactured, and deployed, mainly in Eastern Europe and the Soviet Union, S-trucks. These vehicles comprised a sealed container into which up to 100 persons could be packed. As the truck set off for a burial pit, engine emissions were pumped into the container, ensuring death by the time the truck arrived at its destination.

    Volkswagen’s use of similar technology to conduct emission experiments is abhorrent, outrageous, and inexcusable. Given the history of its founding, championed by Adolf Hitler,  Volkswagen should be especially concerned to distance itself from that fateful era, for the sake of its customers, employees, shareholders, and the German nation.

    Volkswagen’s leaders should truly demonstrate that the company has put its past behind it by offering yet another, but much more deeply felt, apology, for the awful symbolism of its actions.

    Noel Capon, R.C. Kopf of International Marketing, Columbia Business School, New York, NY 

  • The Man Behind The Case

    During the past 35 years, FedEx (formerly Federal Express) has grown from the U.S.’s largest venture capital start-up to a global leader in shipping and logistics. Under CEO Fred Smith, many people have contributed to FedEx’s success, but few are aware of the role played by someone who was not even employed by the company.
  • The C4I: Capon’s Customer-Centric CEO Index

    The Net Promoter Score (NPS) is a valuable tool for companies seeking to understand the degree of customer loyalty they enjoy. In part, NPS's appeal is its simplicity; customers answer just one question. NPS is simply the percent of customers that actively promote your product less the percent of customers that are active detractors. In a similar spirit, Capon's Customer-Centric CEO Index (C4I) is a simple measure of your firm's degree of customer orientation.