Industry Comment
Simplifying a complex business
Attention to detail is the key to success in the airline industry, says Rob Britton who encourages managers to always accept there’s a problem as the first step to the best solutions
The airline industry, including suppliers who read this magazine, has long been enormously complex. It’s a business of details and every one
of them needs attention in order to deliver a safe, reliable, consistent and humane service. And complexity seems to be increasing; as volumes rise infrastructure is stretched and product offerings multiply.
Simultaneously, airlines in competitive markets – increasingly the norm, as governments privatise carriers and open their domestic and global routes to market forces – face financial pressures from soaring fuel, downward price pressure from new entrants, and other factors. Could comprehensive efforts to simplify be a way
to improve results? At first glance you might think not, but actual recent experience says emphatically ‘yes’.
In order to understand the yes, we must understand how airlines and their suppliers breed complexity. First, leaders fundamentally understand that their decisions will add complexity, but they assume it will be
“A new IFE system or catering design will affect multiple departments and often they are not part of the initial planning”
manageable and, more important, it will be revenue-positive (more precisely, the present value of future benefits minus costs will be positive). Adding an aircraft type is a good example: a different airplane drives maintenance costs, pilot and cabin-crew training, and other expense, but the revenue benefit of the new type (greater capacity, more schedule flexibility, etc.) will exceed additional cost.
Second, most airline organisations are strongly functional (operations,
marketing, finance, and so on) and typically do not communicate well across functions, which compounds complexity cost. Changes to
inflight product are good examples: a new IFE system or catering design will
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affect multiple departments, and often they are not part of the initial planning or decision- making.
Third, some managers will either passively accept preventable complexity or wilfully add to it to seem more self-important or to protect their job. Never underestimate the windbags! During the last years of my long career with a major US airline, good news was rare but major rays of sunshine beamed from an enterprise- wide simplification effort. In a culture not given to questioning, leaders and managers were encouraged to ‘ask why.’ The results were remarkable. For example, reducing fleet types from 13 to six saved hundreds of millions of dollars. Aggregate simplification savings exceeded 5% of total expense.
Whether your business is under siege, as ours was, or just strives to improve, here are basic steps to help simplify: 1. Admit there’s a problem – there almost always is.
2. Build cross-functional communication, especially before big decisions are made.
3. Make sure everyone understands it’s okay – it’s great – to ask why; identify and sanction those who discourage candor.
4. Make clear that simplification is not about job loss – time saved will be more productively used.
5. Create tangible rewards and, more importantly, recognition for champions of simplification.
6. Track financial benefits and communicate them widely.
7. Measure intangibles, too, like greater job satisfaction.
Dr. Rob Britton leads AirLearn (
www.AirLearn. Net), a consultancy that helps people to understand the complex and ever-changing airline industry, and to translate those insights and knowledge into effective business results.
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