29 October 2013

Iran Is the Rising Star of the Middle East

I don't know if you have been paying attention but Iran has recently become the rising star of the Middle East. It was partly due to its own astute tactics and partly due to a fortuitous realignment of stars that led to important regional successes and new alliances.

Let's start with their successful moves.

Like some Americans who equate a Southern accent with lack of intelligence or worse, some Westerners equate mullah headgear with stupidity. In recent months, the Supreme Leader Khamenei and his posse proved that they are anything but.

Their brilliant move for the presidential elections is a case in point.

For years, they used Mahmoud Ahmadinejad as a perfect (and powerless) stooge who was basically good at shooting his mouth off. To borrow a phrase from Lenin, he was a useful idiot whose incendiary remarks, and the rebukes they garnered, helped the regime shore up domestic support. It was a classic Us vs Them strategy. Consequently, for these recent presidential elections, everyone expected the Ayatollah and Co. to field a clone of Ahmadinejad.

Instead, they opted for a smart new strategy. With tight sanctions contracting the economy and making life unbearable for ordinary Iranians, the ruling elite realized that, if the economy circles the drain, the Islamic Republic will quickly follow it down that same drain. They badly needed those sanctions lifted. And lifted quickly. Which meant that they had to find a candidate who could start negotiating with the West about Iran's nuclear program without making it look like the mullahs are giving in to the pressure created by the sanctions.

Enter Rouhani

Hassan Rouhani was the perfect dark horse candidate. He is a cleric. He has a reputation for being a moderate even though he has worked for the Islamic Republic all his life. More importantly, he was Iran's chief nuclear negotiator until 2005 so he was and is very familiar with the whole negotiation setup. Once in, it was easy to get the previous moderate presidents (Khatami and Rafsanjani) endorse him, as Rouhani had worked with both of them in recent years.

The whole thing was packaged so well that a week before the elections most observers assumed that Tehran mayor Ghalibaf was likely to win the first round. Rouhani was mentioned as a possible runner up (which would have made him one of the two candidates in the runoff elections) but he was not the obvious number 2.

But even then, if you looked up close, you could see that Rouhani was more than the candidate of the moderates and reformists. During the presidential debates, one of the candidates thought to have Supreme Leader's support, Saeed Jalili (the top nuclear negotiator until the elections) was attacked by Ali Akbar Velayati, one of the closest advisors of Khamenei, for his handling of the nuclear issue. This shocked the Iranian public at the time but it was a clear sign of where the mullahs were going with these elections.

As we now know, Rouhani won with 50% of the vote with no need for runoff elections. Tellingly, he performed very well in conservative rural regions. And we know from the 2009 elections that you need more than charisma to do well in those districts.
Early on in the campaign experts suggested Rouhani was not well enough known to win. But in the end he attracted support not only in Tehran but also in provincial towns where Ahmadinejad performed well in the disputed 2009 race.
Once elected, he immediately put together a very detailed and delicately balanced plan to get the sanctions removed.

First, he chose himself an unusual but brilliant Minister of Foreign Affairs.

The Elegant Mr. Zarif

Rouhani's Minister of Foreign Affairs, Javad Zarif is a well connected, Western educated career diplomat. Zarif means "elegant" in Arabic and by all accounts his diplomatic style is in line with his name.

Zarif studied at San Fransisco State University and holds a Ph.D degree (International Law and Policy) from the University of Denver. Needless to add, he is fluent in English. He was also the Ambassador to UN until 2007. He is very well connected: at the time he privately met with various politicians including (then Senator) Joe Biden and Chuck Hagel to push the Grand Bargain, a comprehensive plan to normalize relations between the US and Iran.

You could say that he is not the kind of minister the conservative Iranian Parliament would confirm easily. They did (even though they rejected Rouhani's choice for Education, Science and Sport). Without the blessing of the Supreme Leader I doubt that Zarif would have made it.

This was in mid-August. On 5 September, Javad Zarif opened a Twitter account outside Iran. The following day, he tweeted "Happy Rosh Hashana" to celebrate the Jewish New Year. When Nancy Pelosi's daughter responded to his tweet with "The New Year would be even sweeter if you would end Iran's Holocaust denial, sir" he countered it with "Iran never denied it. The man who perceived to be denying it is now gone. Happy New Year."

You see what I mean by brilliant?

Then he appeared on ABC's This Week and said that "Holocaust is a heinous crime and a genocide." Very significantly, he dismissed the phrase "the myth of the massacre of Jews" that is on Ayatollah Khamenei's Web site as poor translation. I say significantly because Khamenei and his entourage did not contest his argument. And they would have done so in the past.

A few days earlier, Zarif pulled John Kerry aside to have a talk during a UN event. This may sound trivial to you and me but it was the first such encounter since 1979. Unsurprisingly, Zarif himself announced it to the media and he emphasized the fact that it was more than a casual encounter. He also said that his goal was to get nuclear talks underway and that, sooner rather than later.

Then, Zarif offered to help with Syria's weapons of mass destruction. He stated that Iran would be happy to participate in Geneva talks but would do so only if asked.  He also made it clear that Assad's pledge was not just Putin's victory and without Iran's vigorous push in the same direction things might not have gone as smoothly. (And I, for one, believe him)

While this was going on, Rouhani showed up in New York and gave an interview to Christiane Amanpour (who is of Iranian descent and presumably speaks Farsi). He made a carefully parsed statement about the Holocaust which was immediately hailed as a major turning point. It is true that the statement was a departure from the crude Ahmadinejad denials as it acknowledged that "crimes against humanity, including what the Nazis did to Jews and non-Jews are reprehensible." But it was also rather...what is the word...slippery. Yet, the following day, the headlines read "Iran's Rouhani Calls Holocaust Crimes Against Jews."

Immediately, the Pars News Agency (controlled by the Revolutionary Guards and hardliners) disputed the CNN translation and claimed that Rouhani did not make such a statement. The protest was obviously for domestic consumption but interestingly, all the usual suspects, who would normally pounce on such a vocal denial as proof of Iranian duplicity, were too busy to celebrate the new Iranian leader to notice.

While the back and forth on the meaning of the statement was preoccupying observers, Rouhani did something no other Iranian President did in thirty four years, he called the American President.
White House officials described the 15 minute conversation - apparently initiated by Mr Rouhani - as cordial, the BBC's Bridget Kendall reports from New York.
In the brouhaha that ensued, people began speculating whether Rouhani is the architect of a radically new policy towards the US. But the Supreme Leader intervened right away and put a stop to it:
"We support the diplomatic initiative of the government and attach importance to its activities in this trip," he said on his website.
If you remember that Rouhani was sacked as the top nuclear negotiator by the Supreme Leader for being too accommodating to the US you understand the significance of that simple sentence.

The other crucial Rouhani move was to take ownership of nuclear talks:
Earlier this month Mr Rouhani transferred responsibility for talks on the country's nuclear programme to the foreign ministry. 
Until now they had been conducted by the Supreme National Security Council, which is appointed by and answerable to the Supreme Leader, Ayatollah Khamenei.
If you know anything about Iranian system, you would know that you don't take that kind of office from the Supreme Leader without his acquiescence.

The two-day nuclear talks in Geneva with P5+1 (Permanent members of the Security Council plus Germany) began with low expectations. Yet, at the end of the first day, Iran had already agreed to the most detailed nuclear checks ever, according to Baroness Ashton speaking on behalf of the EU.

On the second day, Iran made a very comprehensive new proposal:
Iran has put forward a new proposal to resolve the nuclear crisis that includes a freeze on production of 20% enriched uranium, a pledge to convert its stockpile to fuel rods and an agreement to relinquish spent fuel for a still-to-be completed heavy water reactor, according to an Iranian source who has proven reliable in the past.
The talks will resume on 7 and 8 November and Javad Zarif made it clear that uranium enrichment freeze and spot checks were on the table.

Obama Administration: Iran's New BFF

In all this, Rouhani was not alone. In fact, you could say that he was actively aided and abetted by the White House.

First proof of that is the reaction to Rouhani's extremely parsed statement on genocide. As I noted above, normally, in mainstream media, such statements are reported with a mixture of indifference and sarcasm. This time, it was branded as "the truth" right away. In the same vein, Glenn Greenwald recently noted how Brian Williams, the NBC News anchor, stated that Iranian leaders "are suddenly claiming they don't want nuclear weapons" and even though (as Greenwald went on to quote) the same leaders were saying the same thing over and over again in recent years.

Clearly, the media narrative has shifted. And that doesn't happen by itself.

An even better sign of that unusual collaboration was how Netanyahu was sidelined in the process. Right after Rouhani, he went on to the UN to denounce Iranian regime:
Netanyahu called Rouhani a "wolf in sheep's clothing" saying his recent "charm offensive" with Western leaders is a "ruse and a ploy" to "fool the world" while Iran continues toward nuclear armament. He maintained that Israel would not permit Iran to develop nuclear weapons, even if it meant taking unilateral military action. He also accused Tehran of supporting terrorist attacks and fostering insecurity in other countries in the Middle East.
And this is how Bibi Netanyahu's UN speech was reported by Reuters:
Israeli Prime Minister Benjamin Netanyahu said this week that Iran's new president was a "wolf in sheep's clothing", but he himself looked increasingly like a lone wolf as his allies seek to bring Tehran into the fold.
Do you ever remember reading such a dismissive line about a sitting Israeli President in mainstream media?
He was not happy.

Israel was not the only regional player getting miffed by the US-Iran rapprochement. Saudi Arabia was furious. So much so that an Israeli analyst suggested that there was now a Israeli-Sunni coalition against Iran:
The recent events as well as America's waning resolve vis-à-vis Iranian President Hassan Rouhani's "charm offensive" have made the ties Israel has fostered with senior states from the Sunni axis much less secretive than they used to be. What we have here, in essence, is a quiet coalition between the Gulf countries and Israel versus America and Europe — with Iran being the only topic on the agenda.
Saudi Arabia also turned down a seat in the Security Council to protest the US handling of Syria's chemical weapons episode.

In fact, Saudi reaction was so public and undisguised that most regional observers were taken aback, especially since the Kingdom has no Plan B.

Why the US Has Become Iran's BFF?

There are three clear reasons.

First, Iran committed itself to serious negotiations over its nuclear facilities. This is very open and clear cut. This is how the chief US negotiator reacted to Javad Zarif's proposals:
Undersecretary of State Wendy Sherman, who is the chief US negotiator with Iran, told Christiane Amanpour of CNN, “Foreign Minister Zarif and his delegation came prepared for detailed, substantive discussion with a candor that I certainly have not heard in the two years I’ve been meeting with Iranians, and my P5+1 colleagues, some of whom have been doing this for quite some time, found quite new and different.”
Essentially, Iran showed its willingness to play a less menacing role in the region by agreeing to freeze its enrichment efforts and to allow extensive checks (potentially including spot checks). That certainly removed the urgency pushed by Israel and diffused the so-called Iranian threat.

Second, if you know the situation in Syria, President Assad has been making some gains on the ground. That is mostly because there were 8,000-10,000 Hezbollah fighters helping the regular Syrian army and the recent gains were all due to their presence.

Out of the blue, Iran has just asked Nasrallah to reduce this massive presence and now there are a "few thousand fighters" left in Syria. That will have a marked impact on the Syrian conflict.

Finally, and it may not seem much to you, Iran has agreed to take Hamas under its wings again.

Remember Meshaal Khaled's departure from Syria to open up office in Qatar? Or his reliance on Mursi and Muslim Brotherhood even though his rival, the West Bank Prime Minister Ismail Haniyeh remained Iran's point man?

When Khaled briefly returned to West Bank I reported it with the title "The Return of the Prodigal Son." Well, Khaled has now announced his decision to visit Iran and the new President, Hassan Rouhani, said that they would greet him with open arms. His visit was reported as "The Return of the Prodigal Son.

Why is this relevant?

That is for another post.

In the meantime, keep an eye on Iran and its President.

03 October 2013

NSA: Keith Alexander as James T. Kirk

Sometimes a picture is worth a thousand words.

I came across these pictures of the NSA Situation Room. When I saw them, the NSA's ambitious grab for information made perfect sense.

The room is called Information Dominance Center.

Yes, Information Dominance.

These are eleven years old boys.

The person who dominates information (Information Dominatrix?) is sitting in the Captain James T. Kirk chair in the middle. Currently, that's General Keith Alexander.

He was not the person who designed the room (one of his predecessors did it but no one knows for sure).

Some Hollywood studios helped out, with Disney producing a custom graphics chip for the 22' screen in front of Kirk, I mean Alexander.

It has been reported that the doors to the Dominance Center open with a Start Trek whoosh. Nice.

While the center was called something else before (Land Information Warfare Activity) the chair has always been known as the Kirk Chair. Apparently, all the Congressmen who visited the facility demanded to sit in it (presumably to pretend shooting Klingons).

This is how the architect who designed the Dominance Center describes it.

I don't know about you but after seeing these pictures, I feel I can trust these people with my private information.

02 October 2013

Air France vs Turkish Airlines: A Primer in Experience Economy

One of my pet peeves is the interminable refrain about the detrimental effects of labor cost for companies. Since the Reagan years (and the accompanying Mergers and Acquisitions (M&A) mania), it became the mantra of top CEOs that jobs are the main source of their economic woes. Business publications always describe corporate titans bravely slashing, cutting and shedding jobs.

The importance of achieving profitability through layoffs has been repeated so many times that, by now, everyone considers it a truism.

I don't. In fact, I believe that, in most cases, this is pure rubbish.

Recently, I came across of a perfect example to illustrate why I consider job slashing a self destructive action for most corporations.

Air France has just announced that, after six consecutive annual losses, they will be cutting 2800 jobs. This is their third round of reductions as they started the trend in 2009 with 2500 layoffs citing the economic crisis. A couple of years later, they followed through with another 5000 jobs. And now 2800 jobs. The most recent layoff plans are also accompanied by drastic fleet cuts.

Air France is not unique. Lufthansa has been in the red for some time and Iberia and British Airways are struggling as well.

The industry experts are offering several explanations for this state of affairs:
  • Economic crisis and low demand environment
  • High fuel cost
  • Competition from low cost airlines like RyanAir, EasyJet and Vueling
  • High labor cost
And they maintain that since the first three elements are beyond their control they have no option but reduce their labor cost.

The problem is that in the same time period, there is another European airline that continued to expand, to hire people and to enlarge its fleet. Moreover, that company managed to remain profitable. In other words, economic crisis, high fuel cost and competition from cheap airlines seemed to have very little effect on that other airline.

How could this be? Either the causes offered by the traditional airlines are invalid or this other company is doing something quite remarkable despite all these adverse elements.

The company in question is the Turkish Airlines. Since the 2008 crisis, its revenues went up, the number of passengers it carried increased and its operating profits soared almost every year:
In 2012, Turkish Airlines saw its operating profit grow almost threefold, with revenues up 26% on passenger capacity growth of 18%. It has the youngest fleet of any significant network carrier in Europe and its 7.0% operating margin puts it behind only Ryanair and easyJet. This financial success is built on one of Europe’s most efficient cost structures and a very productive work force. 
This is their basic statistics:
YearPassengers carriedGrowthRevenue (billion)
200616,947,000US$ 2.23
200719,636,000Increase 15.9%US$ 3.0
200822,597,000Increase 15.1%US$ 4.5
200925,102,000Increase 11.1%US$ 4.0
201029,119,000Increase 16.0%US$ 5.6
201132,648,000Increase 12.1%US$ 7.1
201239,045,000Increase 19.6%US$ 9.0
I will provide two reasons for the failure of Air France and the success of Turkish Airlines.

One is the traditional economics argument about productivity. And the other is a fairly new concept related to the Experience Economy.


Let me put it boldly: the problem for Air France is not that its labor force is expensive. The problem is that Air France's operational and logistics infrastructure is so out of date and so badly designed that to function at a basic level it has to use too much of that expensive labor force.

I am not making this up. Here are the numbers: Take a look at where Air France stands.

Overall labour productivity ranking: 2012
Overall rankAirline/groupTotal points*
6Turkish Airlines44
10Lufthansa Flying Segments58
11Aer Lingus67
12British Airways68
13TAP Portugal76
16Lufthansa Group84
17Air France-KLM Group96
19SAS Group102
Let me illustrate this with some anecdotal evidence.

If you have ever flown with Air France you would know that the average airport check-in time is 10-15 minutes. Sometimes even longer. The uniformed person behind the counter furiously types things only to surface briefly to ask you some inane questions. Then they are gone again, typing away. All that time, you are there thinking why is this taking so long. It is one passenger, one seat. What is the big deal?

Wasting your time is not important from the corporate perspective. But the problem is that, at that pace, the company has to deploy more counter agents if they hope to check-in a 300-passenger flight within two hours.

The same goes for their Web site. It is not well designed. It is not easy to reserve a ticket. And check-ins are a pain. The system crashes all the time. It loses your frequent flyer information sporadically. And infuriatingly, sometimes it refuses to check you in for no apparent reason. In such situations, you have to call a live agent and explain your predicament. And more often than not they cannot help you, as the company has given them no authority to fix things. So you need to call someone else or go to the airport and extend your time at the counter.

The software system behind the Web site and the airport check-in process is simply archaic. Let me explain with an example: Recently, I tried to upgrade an economy ticket to business by paying the difference myself. No frequent flyer miles, just straight credit card transaction, nothing complicated. I couldn't do it on the Web site. I called their number, they told me that it couldn't be done on the phone. I had to go to the main Air France agency at Invalides in Paris. It took 45 minutes to complete the transaction and three agents had to get involved and several calls had to be made.

While sitting there helplessly, I glanced at their in-house screen and it looked like a combination of UNIX and OS2. The agent who was trying to help me kept repeating to herself the key combinations she was supposed to remember for various transactions. To scroll a three page document took her 20 seconds as she had to place her finger on the down arrow key to move the cursor line by line for three pages. It was unbelievable.

Inside the airplanes, it is the same situation. On a recent flight to New York, I was seated in the upper cabin of an Airbus 380. There were only two flight attendants for the entire upper deck. Clearly, labor cost reductions in action. As a result, even though they skipped a number of steps (like offering refreshments before the meal), the whole process took too long and at the end, the attendants were exhausted (I caught one of them napping sitting upright on a stool) and the passengers were unhappy.

Ground services are equally dismal. When you land in Paris, it takes 30 minutes or more for your luggage to arrive. Fortunately for Air France, French border police are set up in such a way that there are rarely more than two agents available for passport control, so the actual waiting time for your suitcase (i.e. by the conveyor belt) is ten to fifteen minutes.

You might think that these are not significant issues (if you are French you might think that this is the best there is) but each of these instances illustrate lack of productivity enhancing tools, techniques and training.

In contrast, let's take a look at that other airline. From the above table you already know that they are the most productive full service airline in Europe. There is a reason for that.

With Turkish Airlines, airport check-ins rarely take more than two minutes (I mean your time at the counter) as they allow all passengers to check-in at the same row of counters, regardless of their flights. They have a state of the art logistics system behind it and it sorts out luggage and destination. Which means that 15-20 counters could check-in the passengers of multiple planes leaving within a five-hour window.

Turkish Airlines Web site won several awards. It is well designed. It is fast. It almost never crashes. It retains your information, including previous multiple searches without you making an effort. It makes price comparisons easy and it gives you the option to reserve a ticket without actually buying it (almost no airline allows this anymore).

Online check-ins are a breeze and the system is advanced enough to let you get your boarding pass in your smart phone (iOS or Android). And you can use it to board the plane by simply showing the screen to the screen reader at the gate. (My French friends shrieked with horror when they heard that notion).

In the planes, the service proceeds at a much faster rate even though they offer you more choices. Flight attendants seem happy to be there. They encourage you to ask for stuff and bring those items to you with a smile.

When you land, your suitcase will be on the conveyor belt within exactly fifteen minutes of landing because the subcontractor who handles luggage will not get paid if they arrive one minute later. I am told that it is in their contract. So when you pass the border police, your suitcase is there waiting for you.

That is the productivity part.

While the company became the fourth largest airline in the process, with 234 destinations in 103 countries, thanks to its high productivity, its cost profile is closer to Low Cost Airlines, as mentioned above. Interestingly, the company is employing some of those expensive labor elements from European airlines with no apparent ill effects:
The airline company currently employs 357 foreign pilots out of which 53 of them are Greek, 43 Spanish and 42 Italian. 
They are followed by 27 German, 17 English, 16 Austrian and 14 French pilots.
The other explanation I will offer is related to the Experience Economy.

Commoditization of Goods and Services

A product or a service becomes commoditized when they begin to be mass produced, contain no real distinguishing features from similar products and compete mainly on the basis of price. Since the Industrial Revolution countless segments of goods and services market became commoditized. What Henry Ford did to manufacturing, Ray Croc did to food. And with the massive corporate move to China in the last three decades, we can confidently maintain that most things we consume nowadays have been commoditized.

In 1999, two management consultants by the name of Joseph Pine and James Gilmore published a book called the Experience Economy. Their main argument was that unless you change your product or service to convey a specific experience to the client and immerse them in it, sooner or later your offering will become commoditized. And somebody will offer it at a lower price point and destroy your margins. If you are curious but do not wish to read about it, here is a short video clip summarizing their argument.

What they mean is better understood through a couple of example.

As you know, coffee beans are fairly cheap. The amount of beans for a cup of coffee is not worth more than 2-3 cents. If you get a cup of coffee in a gas station or a diner, it will never be priced for more 50 cents as it has no distinguishing features. But if you offer it in a specific environment like Starbucks, customers would be willing to pay $2-3 without blinking.

That's because Starbucks is more than a place you buy a cup of coffee, it is a designed experience. It has its own lingo, like Tall, Grande and Venti (which is a made up word, btw), its own interior design and color scheme; it suggests a certain lifestyle blending youthful intellectualism with refined taste and care for the environment. Those elements are insinuated by laptop carrying young clients, free Wi Fi, specially selected music you can download on the spot and signs to let you know that everything you consume comes from a Fair Trade source. There is a barista skillfully making your coffee to your exact speciications.

So having an espresso there is almost an immersion into a distinct culture.

Or they say, look at Apple, its stores and its products. Whereas all the brick and mortar computer stores went belly up (apparently because of low cost competition from Amazon and the likes), Apple stores are thriving. That's because, the authors argue, they offer you more than a product, they offer you an experience. They say that the store environment has been designed to give you the impression of a high end boutique hotel's lobby or bar. Salespeople are not salespeople. They are knowledgeable geeks walking around not pushing products. They are young and happy and pleasantly geeky. They can sell you stuff without taking you to a cash register: their iPhones will process credit cards and will email you your invoice.

Apple products also evoke a strong feeling. Most Apple computers are more expensive than PCs and in terms of specs, they are not as advanced. But they command a significant premium over those grey and black boxes. This is not just because Apple hardware is well designed but it is especially because their use provides the customer with a very special experience.

The point is that unless you redesign your product and service and turn it into a whole new experience, you will end up competing on the basis of price. And sooner or later your margins will erode and you will no longer be profitable.

Let's take a look at what Air France did when Low Cost Airlines commoditized air travel.

They tried cutting their cost by copying the Low Cost tactics. The first thing was to reduce the cost of food and beverages. Now in most short-haul destinations (in Economy) Air France will give you a stale sandwich in a Saran-wrap and water. In long-haul flights, it will offer two equally inedible choices, usually a piece of chicken or some soggy pasta.

This is from the national airline of a country famous for its refined cuisine.

Their in-flight entertainment is dismal. The screens are low resolution and they have terrible viewing angle: if the person in front of you moves slightly your movie becomes invisible.

The seats are cramped as their fleet mainly consists of ageing planes. Even in Business Class they are superseded by most other airlines in the world (their First Class is actually very good but for the price of a small car it should be).

Lately, they have been piloting a new idea: introducing a Low Cost alternative without creating a new brand: they now have flights out of Orly with no Business class and where checked-in luggage is an extra. The seat do not recline and the food is not part of the category of comestible things.

The Air France lounges for Business Class passengers are mediocre. While most of them are reasonably airy, the seating design is awkward, the service is lacking and the food is utterly unappetizing.

When you look at the other airline, things are much different.

In short haul flights (3-4 hours) in Economy class, they offer a choice of two hot meals and in most cases they are both quite good. Their menus have been created by famous Turkish chefs and they use their names to emphasize that even in in the back of the plane things are different.

In long flights, they have actual chefs in the plane with full kitchen outfits, going around in all cabins to check if people are happy with their meal. I went to Hong Kong with them and on the way in I was in Economy and on the way out I was in Premium (the class between Economy and Business) and in both cases, I was offered several choices, a chef asked my opinion about the food, flight attendants were happy to give me more wine with my meal. I felt like I was in a decent restaurant. I would take their Premium over Air France's Business class any day.

The seats were large and comfortable, they reclined quite well and the entertainment system was top-notch. The screens were high resolution and the programming was extensive. Film start times were fast and the sound was decent.

Finally, their lounge in Istanbul is simply spectacular and it is the embodiment of the Experience Economy concept.

It is immense but it is subtly divided using sphere-like structures. It has several live cooking areas, like a pizza oven, a kebab pit, a large pastry island, a salad bar and a huge buffet with various Turkish specialties.

In each case, there are chefs, rolling dough, barbecuing food and generally putting on a show.

There are fresh fruits everywhere, self-service drink carts with a large selection wine and alcohols.

There is movie theater, a flat panel TV wall with 9 screens, a billiard hall, a free locker for your hand luggage.

Google it and the first page will have several people claiming that it is the best lounge in the world.

Basically, the lounge exemplifies everything that Pine and Gilmore recommended that you do if you wish to de-commoditize your business. The whole strategy works.

Besides remaining profitable and expanding rapidly there is also this:
Turkish Airlines has thrice won the Skytrax awards for Europe's Best Airline, Southern Europe's Best Airline, and the World's Best Premium Economy Class Airline Seat for three consecutive years in 2011, 2012 and 2013. 
Additionally, Turkish Airlines has been selected the Airline of the Year by Air Transport News at the 2013 Air Transport News Awards Ceremony.
Next time you hear some company executives complain about their labor cost being too high, tell them to work on their productivity and to de-commoditize their business.