Joshua Jampol. Journalist
26 March 2003
Here’s a business case you’d be hard put to find a label for. It’s part turnaround, part startup, part organic growth. Perhaps “start-through” would fit, explains Joshua Jampol.
Startup, because it’s a new company, beginning from scratch. But this startup is starting up in turnaround conditions, since it’s in a sector in crisis – the airline industry, which is currently reinventing itself. And turnaround, since the new company reformed on the ashes of its predecessor, which went bankrupt, and is now operating with the same people - a situation which calls for turnaround tactics.
Unique circumstances like these demand startup reflexes, like thinking on your feet. But they also require a vision of a changing sector, and considerable people-management skills.
The company is SN Brussels Airlines – ex-Sabena, one of two European air transport outfits – Swissair being the other – that crashed, economically speaking, last year. When Sabena went bust, part of its fleet, routes and 1,800 employees were inherited by its successor. Headquartered in the Belgian capital, Brussels Airlines has been ever since desperately seeking a business plan that will reposition itself on the market and set it apart from the competition in this cutthroat sector, whose playing field has sent other airlines into receivership – United, US Airlines and France’s Air Lib among them.
It may have found that plan. Eight months ago, a new CEO, Peter Davies, rugby back row and former COO of DHL International, Americas, was brought in by Ron Kjuipers, Brussels Airlines’ executive chairman and his CEO at DHL. For the better part of a year, Welshman Davies has been laboring to create original approaches and a fresh corporate culture in his new vineyard. His style: lighting fires under top management, urging them on what he sees as the proper flight path for the fledgling firm. “Don’t be inhibited by traditional thinking or conservative experience”, he tells them.
“Traditional thinking” is the downside of the Sabena-Belgian heritage. For that legacy has been both good and bad. Recalls Davies, “We got the kinetic energy and momentum. Sabena is still known as providing good service, despite the fact it died a bankrupt. We inherited its home base, staff, market, point-to-point routes and fleet – what I call the ‘low-hanging fruit’”.
But Brussels Airlines likewise inherited limited cash. And it needs a new business plan – and fast. “Our main challenge,” Davies reckons, “is changing what we’ve inherited and turning it into a startup. We have to reinvent”. When a major client suggested changing flight times on the Brussels-Goteborg route, Brussels Airlines managed it during the course of the season – an innovation, Davies says, only possible at a small, flexible airline. “A larger one would take two years to do it”, he says.
In the black just once in 80 years, Sabena and its business model got it wrong. The successor doesn’t want to duplicate that, and looks as though it won’t. Davies has announced the company will post €5 million in profits by the end of the year. “Yet the late Sabena could be one of our fiercest competitors – back from the dead”, he muses. “We need to exorcise the ghost, and must be seen as a different airline”.
[*D Right structure, right organization, right people *]
Companies in turnaround need plenty of people time and must add new talent. This is why the new CEO is lavishing, by his own estimate, 60 to 70 percent of his hours with them. “I consider that number correct”, he says. “You can’t do anything till you’ve got the right structure, the right organization, the right people in it, and the right leadership” This, he believes, is the formula for creating the company’s own identity, values and beliefs. “There’s nothing else but people - they should be my priority. A CEO has got to create the right environment in which others can work to the best of their abilities. I probably have the easiest job of all!”.
Startup and turnaround are only two-thirds of the tale. The third is about organic growth in action.
Organic growth is no mere buzzword for Davies, who contributed to the recently published Organic Growth: cost-effective business expansion from within (Wiley, 300 pages, €30). Written by Jean-Frederic Mognetti, professor at Hautes Etudes Commerciales outside Paris, the book reveals the secrets of organic growth, showing that people who work wonders in business aren’t necessarily magicians; they get unusual results by using the same tools everyone has, they just use them more effectively.
In this context, Davies’ statements to staff, like “Don’t believe in your own marketing – it opens the door to complacency”, which could seem paradoxical, become perfectly clear.
Both Davies and author Mognetti are firm believers that weak signals from the market can fuel internal growth – so long as these signals are collected, treated and shared. To avoid complacency, and to instill a listen-to-the-customer perspective within Brussels Airlines, Davies did something that had never been done before: he sent his staff out in front of companies. All 34 senior executives, from all disciplines and in teams of two, went on 100 interviews late last year, visiting travel-policy makers from corporate clients like 3M, Toyota, Tractabel, Volvo, Carrefour and the European Commission. To insure a trickle-down effect, results of these field surveys were shared among top management in a January workshop at company headquarters. Knowledge of the airline’s challenges, strengths and weaknesses was thus spread throughout. A second survey report is planned for mid-June, focusing on outstation clients.
Doing things differently, or for the first time, has become a reflex. Another came when this permanent relationship-marketing approach unearthed a missing link in tracing travelers’ experiences. Instead of investing in new customer-survey support for cabin use, Davies mobilized a part of the staff not normally seen on this side of the business: volunteer crew members now meet customers, in flight, and in offices, querying them on service. This goes beyond distributing questionnaires.
Brussels Airlines began business modestly, dropping all Sabena’s long-haul flights, focusing on linking Brussels to Europe, offering a 360-degree platform from the Belgian capital. It claims to have 50 percent of all flights out of Brussels and 35 percent of incoming flights, a total of 43 European, plus 13 African destinations.
Today, after one year of operation, a marketing challenge still remains: SN Brussels Airlines’ name and positioning still appear somewhat blurred. Product innovation can only follow corporate-name visibility. Yet Davies did not opt for a massive communication drive, which he cannot afford. Instead, he convinced a leading investigative journalist to leave his old job and come join the new firm.
“A lot was done in 2002. But a lot more has to be done in 2003”, executive chairman Kjuipers told top management at the January workshop. Peter Davies – a pilot himself – knows he will not be driving this company throughout 2003 in perfectly clear skies. But like all fliers, he knows that when at the controls, he can only look forward, and even beyond his range of vision.