Frankenstein companies – do you know any..?

My previous post retold the message from Bruce Kasanoff regarding “Frankenstein Companies”, that is, companies for which customer value solely means how much money you’ll be able to extract from them.

Do you have any experience of such companies, and more importantly, do you have experience of companies that do not act like Frankenstein’s monster….?

I have experience of both, both professionally as well as privately.

The perhaps best example of a Frankenstein company I’ve encountered in my life, is Arriva, the local transportation company owned by Deutche Bahn.  They took over a huge part of the northern Stockholm public transportation system in January 2013, and since then, customer service and satisfaction have gone down the drain.  As I’ve described elsewhere on this blog, the moment when Arriva took over operations – having won a multi-year contract with the Stockholm County – buses all of sudden did not appear on time, they were late or completely missing, and passengers were left to their own devices to figure out how to get to work, schools or wherever they were heading.  Things got so bad during the past winter that some municipalities had to contract private buses to get the kids to their schools.

Also, as I’ve described in earlier posts, Arriva won the multi-year contract with a bid that was some 25% lower than all competition – that’s simply amazing, considering that the cost of operations is more or less the same for everybody in the local transportation business: after all, fuel costs the same, buses cost the same, and staff should cost the same for all operators, right…?

Turns out that no, the costs are not same for all operators: Arriva, being smart, really smart, had figured out that they could cut costs significantly by getting rid of as many as possible of the staff they inherited from the previous operator, Keolis, and then “insourcing” new staff from the office of unemployment, who committed to pay up to 75% of the costs for these new hires for up to a year.  That is, tax payer money is used to boost the Arriva/Deutche Bahn shareholder profits and Arriva executive bonuses.

That’s really smart, that way, using tax money,  you can beat any competition,and while the clients of the public transportation service still have reason to complain – the buses still arrive late, many of the new hired drivers don’t know how to drive, can’t find their way etc – the bottom line for Arriva is great, despite their low bid.

And of course, since Arriva won a multi-year contract, the consumers of their service have nowhere else to turn, there’s no other company that they can choose, because it’s simply not economically feasible – Arriva got all the county tax payer subsidies when they got the contract –  for any other bus company to serve these lines.

Bottom line: customer value is severely suffering, customers are suffering,  Arriva employees in the trenches are suffering,   the customers don’t have anywhere else to take their business… but the Arriva/DBH shareholders are happpy, as are the Arriva exec’s who are making their bonuses.

Frankenstein at its best.

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About swdevperestroika

High tech industry veteran, avid hacker reluctantly transformed to mgmt consultant.
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One Response to Frankenstein companies – do you know any..?

  1. Thanks for your great information, the contents are quiet interesting.I will be waiting for your next post.
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