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Dec 29, 2022Liked by Andrew Hollo

The first and third scenarios both involve a business's automatic threat of denial of service if the customer's non-compliant behaviour isn't remedied, so it was interesting to see how your question tackles a different aspect in each case. It certainly got me thinking!

It seems to me that in both cases the business is weighing the risk posed by the non-compliant customer (safety of employees and other customers in scenario 1, potential financial loss in scenario 3) against the value of the "offending" customer. Uber values their customer and seeks to steer them towards compliant behaviour; the "TAB" clearly does *not* value their customer and aims to sever the relationship even when the non-compliance has been quickly remedied. What the TAB has overlooked is another key aspect of risk: reputation. Uber enhances its reputation by sending an implicit message to the customer that they can have confidence in the safety and reliability of their service, driven by the customer's cooperation in achieving service-wide compliance. The TAB damages its reputation by being rigidly and unnecessarily punitive, with the implicit message that it sees all non-compliant customers as recidivists.

Strategically, it's useful to remember that risk is defined as "the effect of uncertainty on objectives" – not just negative effects, but also positive ones. Can the uncertainty of a customer's non-compliance be turned to *advantage*? Uber seems to think so: retaining the customer while eliminating the non-compliance is a no-brainer. The TAB's strategic thinking, in contrast, is clearly flawed: they believe it's in their interest to remedy the non-compliance and then encourage the customer to take their improved custom to a competitor. Doh!

Thanks for stimulating some deep thinking during the holidays :-)

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