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    Garbage In, Garbage Out: The Challenge Of C-Suite America

    There’s no doubt we’re in the throes of the Technology Age.

    Some people find themselves stuck somewhere between the bygone days of secretaries and Selectric typewriters and the reality of the smart phones and social media optimization of today. They have a problem: They are being left behind in in today’s technologically savvy workplace.

    We’re seeing this happen with the global displacement of lower-skilled labor, but it’s also happening up the corporate food chain — even in boardrooms. Companies that don’t oust their technologically ignorant leaders are finding it increasingly difficult to function as they did in the lower-tech world.

    In today’s high-tech world, a leader who cannot interpret certain data or who doesn’t know what to cull from it will not make good decisions.

    Tip-Top Tech Illiterates

    Recently, the Financial Times put out a report that confirms our worst (but begrudgingly accepted) fear: Digitally illiterate C-suites (the corporate suites, the leaders) are damaging business in major corporations.

    The article in FT discusses how ensconced CEOs and their ilk are behind the times and having trouble understanding the new cyber-connected world we’re in.

    One of the most interesting stories I’ve seen on how technology has surpassed the mindset of some of our institutional systems happened recently in England.

    In 2011, Nicholas Webber began serving a five-year sentence for running the Internet crime forum GhostMarket, which allowed motivated readers to create computer viruses and to share stolen IDs and private credit card data.

    Webber had been arrested for using fraudulent credit card details to pay for a penthouse suite at the London Hilton on Park Lane. He ran up a bill of about $20 million before he was caught.

    Once in prison, Webber signed up for a computer class and was allowed to participate. And then he hacked the prison computer system, including payroll. Oops. The computer teacher was fired, but the prison C-suite was in the clear.

    Fly The Unfriendly Skies

    A more recent example happened to me and my family on the way back from vacation last week.

    We had dropped a fair amount of change for airline tickets to Jamaica on USAirways (LCC). On the way out, we had a five-hour layover in Charlotte, N.C. On the way back, however, we had about an hour to get through immigration and customs, recheck our bags, go through security again, and get to the gate.

    We told immigration our issue. (We were hardly alone). They said it wasn’t their issue and that once we were through customs, we should talk to a USAirways representative. Miraculously, we got up to the security checkpoint with 20 minutes to spare. It was next to a USAirways desk that was unoccupied with no sign of an airline representative.

    We ran to the gate (as did another family of four and a pregnant wife and her husband) — at least 10 of the passengers that were to board a turboprop that held 48 passengers. In other words, we were a significant proportion of the plane.

    We made the gate with five minutes to spare, only to be told (for the first time) that the gate closes 10 minutes before the actual departure time and that we were stuck. What’s more, this was Saturday evening, and the airline couldn’t get us out on another plane until Monday.

    Unacceptable, we said. But we had to find an alternative. The airline could get us to an airport 100 miles away from our home. We would have to get a rental car and lodging. (The flight arrived after midnight).

    Annoyed as we were at all that, assuming the airline had the technology and knowledge that about 20 percent of their passengers may get tied up in customs, we bit our tongues and hedged our bets, getting standby on the next flight into our city and also booking on the flight that was headed 100 miles away.

    When we asked the gate attendant what the likelihood of getting standby on the next plane was, she let it slip that the airline actually has a computer program that alerts them to possible connection conflicts. That means they knew 20 percent of their passengers were going to be scrambling to make the connection and that they would be iced out of getting home for two days if they missed the flight.

    The airline’s solution?

    Too bad.

    My point here isn’t to engender sympathy. It’s to point out how the social contract is being poorly managed by big corporations that use technology but use it poorly. Perhaps it’s a management issue, where digitally semi-literate managers make a call without understanding the human implications on the ground or perhaps the same managers side with the data at the expense of their customer base.

    Either way, it’s bad business and one more problem with airline stocks. Why be loyal if you know the airline cares about profits more than passengers? Technology is obviously more a club than a scalpel in most of their hands. And if U.S. Airways (LCC) is this bad, imagine how bad American (AAMRQ) was.

    The Alternatives

    The best way to play airlines is by buying airplane stocks.

    The two that show the most promise globally are Bombardier (TSE: BBD.A, BBD.B) and Embraer (ERJ).

    Both have unique niches beyond the fact that they both make smaller, more fuel-efficient commercial aircraft that all carriers are adding to their fleets.

    Canada-based Bombardier also has a rail division, which means it’s also a play on transport firms upgrading their rail cars and systems. And the company also has a strong business aircraft division as owners for the Learjet brand.

    Brazil-based Embraer has established itself as an international commercial brand, and now it is seeing more business in the South American market both in the commercial division and in defense.

    Brazil is beefing up its military capabilities and using its homegrown defense industry as much as possible; and many neighboring nations are opting for a local producer than getting involved with U.S., Russian or European defense players.

    I like Bombardier a bit more due to its diversification, which confounds analysts; but either is a good choice.

    — GS Early

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