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Category Archives: Leadership

Too many managers, too few leaders…

This in one of the most idiotic statements to have come out in management discourse.   I use the word “idiotic” in the same way that Warren Buffet uses it.  When asked in an interview, why did the crash happen,  he  replied, “in any market there are 3 types of people, a: the innovators who pioneer new ways of doing things, b:  the copycats who then learn what the innovators do and follow with full understanding what they are doing and finally c: the idiots who do it just because everyone else is doing it.

Idiots have a special role in the market place as they do things not out of understanding but simply by jumping on the bandwagon. All crisis and accidents can almost be traced back to an idiot who made a decision without understanding the risk and implications of the decisions.

Coming back to the concept of “too many managers, too few leaders.”  The first mistake the idiots (or more politely, the proponents of the above) make is to confuse role with task.  Managing and leading are not enshrined in roles but in tasks.  Every person who has even 1 subordinate has the task to manage and the task to lead. And the biggest idiots in town are the consulting houses and  the peddlers of leadership development.

Today, due to the enormous hype around notion of “leadership” created non other than Jack Welch, the task of managing has taken a complete back seat.  It has gone so ridiculously far that what used to be called “management team” is now being called “leadership team”!

The second mistake that is been made is pouring so much time and effort into Leadership Development and forgetting about Management Development.  With increasing mobility of people across organizations and a penchant for hiring those with “leadership abilities” at the expense of  “management ability,” companies are shooting themselves in their foots.

If anything I will argue that the biggest problems faced by organizations is the lack  people who excel in the task of management. We need to refocus and get back to the fundamentals, that the act of managing and leading are both tasks within the role of one who supervises.

Here is a nice article to read on the matter:

True Leaders Are Also Managers

8:20 AM Wednesday August 11, 2010

by Robert I. Sutton | Comments (39)

Ever have occasion to do an in-depth review of the academic and practical literature on leadership? I have — twice in the past five years. The first time was for a 2006 book with Jeff Pfeffer, Hard Facts, Dangerous Half-Truths, and Total Nonsense. The second time was for my new book, Good Boss, Bad Boss.

It is impossible to read it all.

Tens of thousands of books have been written on leadership and there are several academic journals devoted entirely to the subject, including The Leadership Quarterly and The Journal of Leadership and Organizational Studies. Perhaps the most definitive review and integration of the leadership literature was Bass and Stogdill’s 1,200-page Handbook of Leadership, which was published in 1990 (and still does the best job of making sense of the literature, for my money). And if you really want a long book on leadership, you can get the four-volume Encyclopedia of Leadership, which at 2,120 pages weighs in at 15 pounds, and costs a whopping $800. Clearly, the task of reviewing the leadership literature — and acting on it as leader — isn’t to understand it all (that is impossible), but to develop a point of view on the few themes that matter most.

In my reviews of the writings and research, I kept bumping into an old and popular distinction that has always bugged me: leading versus managing. The brilliant and charming Warren Bennis has likely done more to popularize this distinction than anyone else. He wrote in Learning to Lead: A Workbook on Becoming a Leader that “There is a profound difference between management and leadership, and both are important. To manage means to bring about, to accomplish, to have charge of or responsibility for, to conduct. Leading is influencing, guiding in a direction, course, action, opinion. The distinction is crucial.” And in one of his most famous lines, he added, “Managers are people who do things right and leaders are people who do the right thing.”

Although this distinction is more or less correct, and is useful to a degree (see this recent interview with Randy Komisar for a great discussion of the distinction), it has unintended negative effects on how some leaders view and do their work. Some leaders now see their job as just coming up with big and vague ideas, and they treat implementing them, or even engaging in conversation and planning about the details of them, as mere “management” work.\

Worse still, this distinction seems to be used as a reason for leaders to avoid the hard work of learning about the people that they lead, the technologies their companies use, and the customers they serve. I remember hearing of a cell phone company CEO, for example, who never visited the stores where his phones were sold — because that was a management task that was beneath him — and kept pushing strategies that reflected a complete misunderstanding of customer experiences. (Perhaps he hadn’t heard of how often Steve Jobs drops in at Apple stores.)

That story is typical. “Big picture only” leaders often make decisions without considering the constraints that affect the cost and time required to implement them, and even when evidence begins mounting that it is impossible or unwise to implement their grand ideas, they often choose to push forward anyway .

I am all for dreaming, Some of the most unlikely and impressive things have been done by dreamers. But one characteristic of the dreamers I respect — Francis Ford Coppola, Steve Jobs, folks at Pixar like Ed Catmull and Brad Bird — is that they also have remarkably deep understanding of the industry they work in and the people they lead, and they are willing to get very deep into the weeds. This ability to go back and forth between the little details and the big picture is also evident in the leaders I admire most who aren’t usually thought of as dreamers. Anne Mulcahy’s efforts to turn around Xerox were successful in part because of her in-depth knowledge of the company’s operations; she was very detail-oriented during the crucial early years of her leadership. Bill George, one of Jim Collins’ level 5 leaders, told me that, in his first nine months as CEO of Medtronic (a medical device company), he spent about 75% of his time watching surgeons put Medtronic devices in patients and talking with doctors and nurses, patients, families, and hospital executives to learn the ropes.

I guess this is one of the themes that I have written about before, especially in The Knowing-Doing Gap (with Jeff Pfeffer). But it is bothering me more lately, as I’ve had some conversations with project managers who have been assigned tasks by naive and overconfident leaders — things like implementing IT systems and building software. When they couldn’t succeed because of absurd deadlines, tiny staffs, small budgets, and in some cases, because it simply wasn’t technically possible to do what the leaders wanted, they were blamed. Such sad tales further reinforce my view that thinking about what could exist, and telling people to make it so, is a lot easier than actually getting it done.

I am not rejecting the distinction between leadership and management, but I am saying that the best leaders do something that might properly be called a mix of leadership and management. At a minimum, they lead in a way that constantly takes into account the importance of management. Meanwhile, the worst senior executives use the distinction between leadership and management as an excuse to avoid the details they really have to master to see the big picture and select the right strategies.

Therefore, harking back to the Bennis theorem I quoted above, let me propose a corollary: To do the right thing, a leader needs to understand what it takes to do things right, and to make sure they actually get done.”

When we glorify leadership too much, and management too little, there is great risk of failing to act on this obvious but powerful message.

 
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Posted by on November 15, 2010 in Business, Leadership, Transformation

 

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A Three Step Approach to Accelerating Business Performance

Over the past few years I have been asking CEO’s the same question, “over the last 10 years, has your organization consistently: A) exceeded its promises to shareholders B) kept its promises to shareholders or C) did not achieve its promises to shareholders.  Not surprisingly, the majority were in the C category,  a few B’s and maybe one A.


So the question is: why are most organization mediocre , some average and  only a few truly outstanding? What it is that makes the difference?  The consistent answer I get is that the difference is “people” both at the Board and in Management. The conceptual leap of faith that is made is, because it is people, the solution must be leadership development.

As a result there has been  no end to the amount of time and money we are spending on leadership development but are we truly getting back our returns?  Ultimately, leadership development must translate into an order of magnitude difference in business performance.  Is leadership development delivering its promise?

To help get around the conceptual leap of faith, I have developed a simple 3 part framework to help organizations understand the drivers of performance in much clearer terms.

Drivers of Performance
1. Acumen – this is simply defined as the mental capacity to convert resources into results.  The dictionary defines acumen as “the ability to make good judgments and quick decisions, typically in a particular domain.”   If you want to run a business, your organization must be permeated with people of acumen .  Acumen is needed to be a street vendor, a small business owner or CEO of a large organization.  Acumen is about the know-how to use money  in order to make money.  This may sound crude but it is reality. Without acumen, you will lose your business, sooner or later. Acumen is prerequisite to business viability.

2. Leadership –  Having acumen doesn’t not mean having a productive business.  It just means producing results.  The next step after being able to produce results, is to be able to drive productivity, more specifically – people productivity. This is where “leadership” capabilities come in. Leadership is the ability to set the direction, engage people, institutionalize values and behaviors and bring the best out of others.  Leadership is about leveraging people, talent in order to get the order of magnitude impact into performance.  However, leadership can only stand if it is underpinned by acumen.

3. Infrastructure – Once one has the acumen and the leadership in place then one needs to think of scalability and this is where infrastructure comes in.  It is the systems, policies, processes that allow an organization to scale up revenue faster than cost be it domestically, regionally or globally. All of the CEO’s I have spoken to have in place talent management, performance management systems, incentive pay, leadership development to varying degrees. They  have the infrastructure but not the results.

Where we have gone off track is that we have invested heavily in infrastructure ahead of leadership, and leadership ahead of acumen. It is easy enough to understand why.  Infrastructure is easier to understand than leadership, and leadership is easier to understand that acumen.

For the next 10 years, the economic crisis of the west will present unprecedented opportunity for organizations in the east to gain dominance, but it will require acumen to do. This may be a good time and reason for CEO’s to take stock of the “available acumen” in their organizations and if it is insufficient, this is the time to develop it.

 
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Posted by on June 21, 2010 in Articles, Leadership

 

What is Leadership?

Firstly let me wish you a spectacular 2010.

I have been pondering this question over the last 6 months or so and as I go through all the available research 3 things keep jumping out clearly;

a: There seems to be general agreement on the “Purpose of Leadership”: that is to produce outstanding results through people.

b: For the question “What is Leadership,” most of the research defines leadership through its purpose but there is no real specific answer.

c: And the third thing that pops up is “What Makes a Leader?” and for this the opinions are as divided as can be.  The research seems to tell us what Leaders do and through their actions the make up of leadership is defined but that is not the same as answering the question of “what makes a leader?”

Let me share with you my responses to the three above:

Starting with the “Purpose of Leadership:”  I have summarized the definition as: the ability  to produce outstanding results through people.  My key departure from the literature is my insertion of the word outstanding.  I think anyone can produce some results, thus the act of producing results in itself is insufficient evidence for leadership.  To me leadership is a position of differentiation. Leaders are like the “summa cum laude”of managers. And to be summa cum laude you have to produce outstanding results relative to all your competitors.

So if that is the Purpose, then “What is Leadership?”  I found the answer in the scriptures. Leadership is a trust. It is a trust placed on the person chosen, to lead  his/her  people to the “promised land.”   Failure of leadership is betrayal of a trust and the current financial crisis really demonstrates what betrayal of trust is all about.

So that leaves us with the third question,”What makes a Leader?” What makes a person able to carry the burden of trust in leading his/her people to outstanding results?

I distill the making of Leadership  down to 6 key characteristics as follows:

1. The openness of the mind to learn and unlearn, construct and deconstruct. I think the very first attribute of a leader is in the pursuit of knowledge which creates the foundation for courage and  wisdom.

2. An incredible level of self awareness combined with a strong ability to understand others from which emerges humility and temperance.

3. The ability to connect the dots on the one hand and  seeking closure on the other. It is a powerful combination when you can make sense of seemingly unrelated information or events and at the same time having the drive to act on it , to complete, to getting closure.

4. Without a doubt is strong business acumen.  I used to tell my managers, the income statement and balance sheet to a manager must be like sheet music to a musician.You must be able to not only understand it, but interpret it in a way that produces beautiful music, or in the case of business – outstanding results. Most people can’t see beyond the numbers in the financials. Leaders have the ability to teach the followers how to make music out of an income statement. Out of this acumen comes communications that is  short, simple and precise.

5.They excel at building great teams and coalitions. They know the secret of getting people to work together. They know how to build bridges and alliances.  They know its not about them. Like the orchestra, the conductor doesn’t make a single sound but has the ability to get the musicians to collectively make beautiful music.

6. Leaders have  massive capacity for self regulation. The ego is kept well in check.  They do not allow personal desires and habits to derail them.  And that can only happen if there is a willingness to accept feedback and work on it. Its the recognition of self imperfection in the quest for perfection. Leadership is incompatible with behaviors of hypocrisy,  slander, envy and avarice.   Leadership is an act of elegance, in behavior, in manner, and in tone. Leadership is about justice.

 
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Posted by on February 3, 2010 in Leadership

 

Maximizing Organizational Potential

Here is a must see video on Managing the “non-high flyers” and why you need to focus on them.

 
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Posted by on November 6, 2009 in Leadership

 

Growing Enterprise Value in turbulent times

If you are thinking of how to grow the value of your enterprise especially in these difficut times, then you must read this article. I will share with you the 2 things that if your organizations does very well – you will grow.

The first is “Managing of the Strategic Agenda” and
The second is “Managing the Execution of the Strategic Agenda”

Before we dive into the discussion, we need to first understand the phrase “strategic agenda” and the key  is to understand the word ‘Strategy.’ It is unfortunate that the word ‘strategy’ which is a simple yet profound word has been so misused simply because it is sexy. Therefore for the purpose of this discussion we will use the word strategy defined as follows:

Strategy in itself simply means establishing clear differentiation that gves rise to sustainable competitive advantage. The goal of strategy is to maximize the firms share of profit within its industry.

Therefore the phrase strategic agenda simply means the plans that will allow you to realize the strategy”

The next 2 word that need to be differentiated are “manage” and “execute” and in this case , manage means the act of ensuring that the strategic agenda the point of convergence of all plans, initiatives, actions etc. Execution is the ensuring that there are indeed plans, initiatives, actions and that they are all been acted on.

The accountability for “managing the strategic agenda” rests with the Board and it includes ensuring that there is a well articulated strategy that will achieve differentiation and sustainable advantage. And to ensure that progress is being made toward that realization of that strategy.  It can take years of actions and many many steps before one is  able to say that the strategy has been realized, and hence managing the strategic agenda, ensuring that the organization doesn’t lose sight or get distracted from the strategic agenda is crucial for long term success.  It also means that Boards must ensure that they are, in heart and in soul, aligned and committed to that agenda and are prepared to provide the resource for management to realize that agenda.

The accountability for the “execution of the strategic agenda” rest on the shoulders of the CEO and his management team.  CEO’s must  be committed and must commit all their resources to ensuring that the strategic agenda is realized. Beyond People, Systems, Structure, Processes – the CEO must ensure that  the culture and shared values of the organization are in sync with what is required of the strategy.

The biggest benefit of focusing on the strategy is alignment, that it creates a clearly defined common goal for both the Board and Management to have constructive engagements and allow for the productive use of scarce capital and resources.   It removes the focus away short term-ism which in every instance has given rise to crisis or crime.  Revenue and profitability, margins, customer satisfaction, etc are all measures of how well the strategy is being executed and are inputs to the discussion and not conclusions of the discussions.

Again the goal of strategy is to maximize the firms share of profits within the industry. Therefore it is implicit in the management of the strategic agenda and the execution of the strategic agenda that there is profitable growth, but all encompassing objective is to build differentiation that leads to   sustainable competitive advantage.

So, here are a few questions in poll form for you to respond to and to see how similar or different you are from all other organizations:

Should you wish to discuss the matter more please feel free to use the comments section by clicking the comment button at the top of this post or send us an email – see side bar.

 
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Posted by on June 4, 2009 in Business, Leadership

 

Leadership Delusion – why we must learn to listen and accept feedback

Having worked with 3 Groups of Senior Executives from very different industries over the last 3 weeks, it is interesting to note that they all asked the same question:

When getting feedback about our own behavior, why can’t we explain to  the giver; why we behaved in that way? After all there is a good reason to it….

To help set context for the above question, one of the things that I remind senior leaders is that the faster and the higher we climb the corporate ladder, the poorer our listening skills become.  And a leader who doesn’t listen, doesn’t lead.

All leaders swear that they listen, and I agree 100% – all leaders are phenomenal listeners. The real problem  is that most people who claim to be leaders often times are not real leaders.  The carry the title, they take the paycheck, but they don’t behave like it.

It is very unfortunate for us that we have little or no capacity to see ourselves.  If the mirror was never invented we would never know how we looked like.  Likewise we have very little capacity to really see how we behave, and more importantly how our behavior affects others.  It is not surprising therefore to hear people say “I don’t know why s/he is upset with me?”

Most of the time, so called leaders are living in delusion.  Because we have a mental image of ourself – we think that that image of ourself is real. We believe in our perceptions of ourself.  The minute we get feedback that is contrary to our perception –  we get emotionally stressed.

As an example:  We all see our kids as angles, and when a friend says “I saw your kid smoking,” our first reaction is to  deny the assertion,  that it is impossible for my kid to be smoking. Even worse then that, if we have a low or negative opinion of our kid and we told our kid was seen doing something good, we also deny it; “that can’t be my kid.”  In all reality we are hostage to our perceptions.

Now with people aspiring to become  leaders, it is critical that they be able to listen and get feedback from others on how their behavior impacts other people.  Where the feedback is inconsistent with the self perception – the brain goes into a state of cognitive dissonance. Because dissonance is uncomfortable, we immediately try to justify our behavior  – by explaining why we behaved in that manner and what was the real intention of the behavior.  In doing so, we immediately cut short our reflective loop and absolve our self from our responsibility for that behavior and therefore the need to change it in order to become a more effective leader.

As a result of this process of giving reason and justification – we continue to live in delusion.

 
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Posted by on April 5, 2009 in Leadership

 

Idris Jala in the McKinsey Quarterly

I think it is fantastic that Idris and MAS are now so positively covered in global publications.  This is hot of the press….

I invite comments on the article and on the MAS turnaround especially from MAS employees or ex employess.

 

Turning around a struggling airline: An interview with the CEO of Malaysia Airlines

Idris Jala led the state-controlled carrier from the brink of bankruptcy to record-breaking profits. Now he wants it to become what he calls a “five-star value carrier.”

NOVEMBER 2008 • Alex Dichter, Fredrik Lind, and Seelan Singham

When Idris Jala became CEO at Malaysia Airlines, his goal was to keep the carrier flying. Now he wants to create a new breed of air service. Much has happened in the intervening three years.

Malaysia Airlines, the Southeast Asian country’s national carrier, was less than four months away from running out of cash when Jala took charge, in December 2005. The state-controlled airline had been struggling for some time, but inadequate yield management, an inefficient network, and poor cost control finally brought it to its knees that year, when it posted a 1.7 billion ringgit ($500 million) loss.

Yet in 2007, the airline earned record annual profits of 851 million ringgit. Such a swing would be remarkable for any company, much less one facing the hurdles common with state ownership: a large number of stakeholders, intense public scrutiny, competing priorities, insufficient freedom to operate commercially, and a host of legacy personnel challenges. Now Jala aspires to turn Malaysia Airlines into a “five-star value carrier.”

Jala came to Malaysia Airlines with no experience in the aviation industry or state-run companies. But he had won a reputation for engineering business turnarounds during his 23 years at the oil giant Shell, whose Sri Lankan and Malaysian units he rescued from years of chronic losses. In Sri Lanka, he says, “The Shell leadership told me if I couldn’t fix it in two years, just tell them and they would shut it down. I’d be the last person to switch off the lights.”

In this interview at his office, at Sultan Abdul Aziz Shah Airport, near Kuala Lumpur, Jala discussed the lessons he brought from Shell and how he met the urgent need for change when he arrived at Malaysia Airlines.

The Quarterly: What were your first impressions when you took over Malaysia Airlines, in 2005?

Idris Jala: The company was in a financial crisis—the worst in its entire 50-year history. At the time, we just had enough cash to last three-and-a-half months.

Before I joined, I looked at ten years of financial data. When you’re brought into a problem, you should first ask what’s wrong with the profit-and-loss statement. It’s crucially important to frame the problem in the context of the P&L rather than something nebulous, like the culture, the structure, the processes, and all these other things. You must anchor everything on the profit and loss. I’m boringly consistent on that point.

Here, it was clear that there were three problems with the P&L statement. The first was a very low yield. Average fares were unable to cover the cost of running the airline. The second problem was a very inefficient network. For a long time, we were asked to fly routes that didn’t make any commercial sense. The government wanted those routes, and we flew them. The third problem was high costs linked to low productivity—too many people. In the year when I joined, costs went up by more than 50 percent.

But I didn’t need to tell anyone that there were these three problems. Every analyst report about Malaysia Airlines talked about the same problems. The question was what would we do about them.

The Quarterly: How did you begin?

Idris Jala: When most CEOs try to turn around a business, they will say let’s change the organization or the structure. Or they’ll say let’s change the culture. Or let’s change the systems and processes. They do business-process mapping or make organizational changes that take a few years to finish.

But we had three-and-a-half months to fix the problem, and if we didn’t fix it by then we’d be bankrupt—we’d have no money for salaries, no money for fuel. So I told everyone we had no time to reorganize, to rearrange the deck chairs on the Titanic.

At a board meeting on my first day, I announced our business-turnaround blueprint. I’d never worked a single day at an airline before, but looking at the P&L it didn’t take more than an hour to figure out the solution. If you have to control costs, you just go and cut the costs. If your network’s inefficient, get rid of the routes that are bleeding cash. And if you have a problem with low yield, fix the yield. What else are you going to say?

The Quarterly: Were you given free rein to tackle these problems?

Idris Jala: When the government approached me about this job, I said I would need freedom to act. Of course, they promised I would have it, but I discounted 50 percent of what they said. I wouldn’t say I have 100 percent freedom to act, but I have more than 50 percent. And, more importantly, the freedom was granted in areas really relevant to fixing the business.

For example, nobody disturbed us as we improved the yield, which often meant increasing fares. We could change flight frequencies, get rid of routes, cut costs. These were things that were virtually impossible for my predecessors to do, because they didn’t have such freedom. When I started, our headquarters was in downtown Kuala Lumpur. We sold it for 130 million ringgit, which gave us enough cash to operate for 20 more days. A lot of people, especially a few politicians and long serving Malaysia Airlines employees, said the building’s an icon—it’s our brand in the city—but we were given the freedom to act.

The Quarterly: Were there other factors that helped you push your plans forward?

Idris Jala: Once the government agreed on what needed to be done, we made our business turnaround plan available publicly. At Shell, I never needed to do that. But Malaysia Airlines is a government-linked company and the national flagship. Publishing helped us build a winning coalition not only with the government but also with other stakeholders, like the unions, the staff, and the public. Being upfront about the P&L and making it all transparent were very important to bringing the coalition together.

The Quarterly: How did this translate into action?

Idris Jala: In a business turnaround plan, you need to identify the key business activities that impact the P&L. These activities are candidates for transitional vehicles that I call laboratories. Essentially, we’d create groups of 10 to 15 people from various functions and backgrounds—all people who had a direct stake in a given activity—and tell them they had to tell us how to fix the problem or else. The people inside the labs were fully accountable. The motto behind the labs is “big results fast.” We had no interest in slow and incremental results. We focused these laboratories on routes and many other parts of the business but never, never on minor activities. If you run a lab on something that has nothing to do with key business activities, don’t be surprised when there are no results. And when you put people in labs, you had better put the best and the brightest.

It is also important to think of the laboratories as a nursery for ideas. We grow the seedlings of innovation in the nursery, and once they are big enough they are implemented. But we really keep control over them—and the CEO has to protect them—so that nobody can kill them when they are transplanted into the operating jungle of the organization.

The one item with the biggest P&L impact was yield, so we set up laboratories to examine the profitability of various routes, with a focus on yield. The members of these labs knew that if they didn’t fix a route, we’d close it and they’d have no jobs. It was as simple as that. We had a team looking at the Kuala Lumpur–Manchester route. The team couldn’t fix it. To be profitable, we needed 40 percent more passengers than we had capacity for. What would we do? Tie the passengers on the wings? After we went through a full analysis, everyone on the team knew that the route couldn’t be fixed. They all knew that they were out of a job.

In the first three months, we got rid of a lot of routes that were bleeding cash and not contributing to the P&L. Within another six months or so, we got rid of most of the ones that were unsalvageable. But we rescued a lot of routes, too. The thing that really catalyzed the new way we did these things was that there was real accountability.

Today, we have individual P&Ls for each route—by day, by month, and by flight number. Altogether 160,000 P&Ls. These are grouped into regional P&Ls, and every day at 5 pm sharp I get all these on my Blackberry. So do all the route managers.

The Quarterly: Did transplanting and protecting these innovations require organizational changes?

Idris Jala: I prefer to keep the current setup and change the responsibilities. For instance, our laboratories developed a new job—route profitability manager—that didn’t exist in our structure. Instead of adding a new player, we told people to double up on their responsibilities. The person taking on the responsibility might not be a regional manager; it could be a subordinate. But someone was now responsible for profitability on that route. The structure remained the same, but we gave people a new vocabulary, new responsibilities. Once we were sure that the new thinking works, we got rid of the transitional role. With route profitability managers, we did that after one year.

The Quarterly: Looking back, you make your effort sound very straightforward. How confident were you when you started?

Idris Jala: I gave myself a 50/50 chance of success. First, I had never worked in an airline before, and, second, I had never worked in a company that’s government linked. So there was a tremendous chance of failure, and it was very important for me to conquer that fear. My wife and I had a lot of discussions about that. If I hadn’t conquered the fear of failure, I would never have stepped out of Shell to take this job.

To conquer that kind of fear, it is important to have serious conversations with the people who matter. First of all, I’d share with them targets that are seemingly impossible, such as turning around the company within a year and making huge profits within three. Everyone said it couldn’t be done. The conversation must end with the stakeholders saying, “It’s OK to fail.” That takes out a lot of the fear before the journey begins.

But the key word is seemingly impossible. You must believe deep inside that it can be done. If the leader doesn’t believe in the journey, then it cannot begin. The leader is like someone who cuts a clearing in a very dense tropical jungle. Everyone else is under the canopy, where they can’t see the sky and it’s very depressing. The leader has to bring people over to that clearing, into the space where innovation begins. The single biggest thing a leader brings to a turnaround is hope.

The Quarterly: With the initial turnaround complete, you’ve begun a transformation program. What does that entail?

Idris Jala: We originally wanted to do the business turnaround in three years, but we completed it in two. We targeted profits of 500 million ringgit in 2008, but in 2007 our profits had already reached a record 851 million ringgit.

We’ve already talked about some of the principles embedded in any change program: the game of the impossible, anchoring everything on the P&L, and building a winning coalition. Two others that I brought from my time with Shell are discipline of action—which means that when we commit to doing something, we monitor results relentlessly and make sure it’s done—and situational leadership. At the start of a turnaround journey, a company is not a democracy. You can’t empower people or ask everybody what they think. You have to be directive, brave enough to set the course. How many generals do you need to win a battle? One. But once results begin to appear and new leaders begin to learn, you must be ready to let go and empower them.

The corporate graveyard is full of people who thought they were indispensable. After every turnaround I’ve done, my successors have gone on to earn even higher profits and greater achievements. These leaders have been developed by putting individuals in the right situations when they’re ready to take control.

The final principle is a subject people don’t talk about in the corporate world: divine intervention. More than 50 percent of what happens to you in life, and in my case probably more than 60 percent, is outside your control. It is important for everyone in an organization, particularly the top leaders, to understand that. I can’t, for example, control oil prices—the single largest thing that impacts our industry—or SARS, or other things like that.

If you are a spiritual person, you’d better pray. If you believe in feng shui, go consult a feng shui master. Everyone must come to realize that we only control a small component, so you do the best you can with that and relax about the rest. It gives you peace of mind. You know, when you run a really hard race, like what we did here, you put yourself under tremendous pressure—and others around you, too. You want to go home every single day knowing you’ve done your best, and if you fail it’s OK because we all recognize that you can fail. It has a calming effect on the organization.

The Quarterly: Does talking about divine intervention give people a handy excuse to fail?

Idris Jala: No, because the other five principles provide balance. When you look at our plans, there are reams and reams of detailed activities that must be completed. For example, we have a service campaign called Malaysian Hospitality—MH—which is also our airline code. We have 500 initiatives underpinning it. These are spread throughout the organization, and you can’t run away from them, because of the principle of discipline of action. If you follow all six principles, there’s no way you can run away.

The Quarterly: Have you set new impossible goals for the current phase of your transformation?

Idris Jala: Our new target is to reach profits of 2 billion to 3 billion ringgit within three years, but the more exciting aspiration is that we want to become the world’s five-star value carrier. Such a thing doesn’t exist in today’s vocabulary; what we mean is an airline that provides top-quality products and services at the most affordable prices. We want to be the Toyota of the airline industry.

Is it impossible? Yes. Can it be done? It can. The key is to find the sweet spots. There will always be trade-offs between the quality of products and services and their costs, but there are many, many sweet spots.

One example: for a time, we were serving lamb biryani on our flights to China. But customers didn’t really like it, and it was very expensive. We looked at different meals. When we starting serving fried rice with some satay chicken, which is half the cost, the customers loved it. Why were we giving them something that was expensive and that they didn’t like? But customers flying to Delhi would love lamb biryani.

You have to customize to find the sweet spot, and this is painful. The mantra for bringing down costs says you have to standardize, but standardization really requires you to migrate to the highest common cost denominator, and that’s expensive. Instead, by finding these sweet spots, we can continue playing the game of the impossible and reach our goal.

The Quarterly: In the initial transformation and this ongoing effort, how have you handled talent?

Idris Jala: I believe that everybody can contribute more than they are currently. In my old job at Shell, we turned around Shell MDS, a gas-to-liquids plant in Malaysia, and not a single person was employed from the outside. The people in the company were the same guys who had been losing money for ten years. Help is abundantly available from within, but you must channel the energy to the right business activities.

How do you do that? You make sure people have the right priorities. You say, “I know you like to do this or that, but that’s not what we are going to do now.” When you reward people for doing things differently, like linking pay increases and bonuses to their performance and contribution to the P&L, you find that they deliver results that impact the P&L. They get out from the complacency of not delivering. They discover that they can do a lot more than they ever dreamed possible.

The Quarterly: Beyond the financials, what changes have you noticed at Malaysia Airlines since your program began?

Idris Jala: Number one, this organization is now very good at rigorous analysis. When I joined, that was sadly missing. People did cursory analysis, and I mean cursory. Today, people really get into the analysis and bring back fact-based work.

Second, a cultural change has taken place. This is no longer a culture where if you don’t agree with someone, you keep quiet about it. We now have a culture where people will speak up and disagree.

Also, people are more prepared to step up. Recently, one of my general managers who is in charge of strategic procurement held a session with the top management team to generate cost-cutting ideas for next year. I didn’t even know about it. He asked me at the last minute to speak briefly at the meeting. He gave me five minutes.

The Quarterly: What would you like your legacy to be at Malaysia Airlines?

Idris Jala: I would like to see us achieve our vision of becoming a five-star value carrier. I’m inspired by creating a kind of airline that doesn’t exist today. If we can do it, it will be fascinating. This will be one of the most attractive places to work in Malaysia. In fact, we have the chance to make this one of the best places to work not just in Malaysia but in the world. That’s the legacy I hope for. 

 
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Posted by on December 9, 2008 in Business, Leadership

 

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