5 Lessons from a trail blazing CEO
The airline industry is regarded as being one of the toughest in the world. The cost of the core asset – a metallic tube that is identical to the ones all the competitors have – gets more expensive every year and devalues immediately. Volatility in fuel prices and hedging options means having a PhD in Mathematics is almost a pre requisite for management. And then… a chicken sneezes in Bangkok or a volcano erupts in Indonesia and the whole industry just stops flying over night. In 2013, shares in Chinese airlines overnight dropped 15% on the outbreak of Bird Flu!
So, how does one CEO, in under 5 years, positively turn around an organisation to a position of a 40% increase in staff; a doubling of the aircraft fleet; a 25% market share (from a standing start) of the valuable business class market and, most importantly, winning the coveted Ranstad award for being “the business where most people in the country want to work”?
On Monday night John Borghetti, CEO of Virgin Australia Group, spoke at a Business School event where he outlined his way of leading an organisation. The audience made up of students, staff and Alumni of the MBA program were treated to a candid insight into this story. Here are five insights I noted.
The role of leadership is to create “Hope”.
Borghetti believes leaders need to create a sense of hope and optimism so the organisation is confident that these leaders are doing the right things for the business and people.
Hope theory was defined by Synder in 2000 as being “a positive motivational state that is based on an interactively derived sense of successful (a) agency (goal-directed energy) and (b) pathways (planning to meet goals)”. Therefore, leaders who offer hope do so by painting a clear goal and the pathways on how this will be achieved.
Borghetti shared stories of winning over employees in his first few days as CEO by asking lots of questions about “what was a problem for them in the business?” Each time he asked he found issues that could be fixed relatively easy but had been ignored in the past. By fixing them quickly he was able to illustrate that this new boss was someone who listened and acted upon their concerns. In our PALDER framework we talk about this as being an essential part of the sequence for new leaders. Listen well, take notice and then swift action. Create hope.
Be most concerned about volatility you can impact.
Every week in some business article there is mention of fuel shortages, hedging prices increasing, price wars in domestic airline markets, even about tragedies with aircraft falling out of the sky or worse, being shot down.
The airline industry is generally regarded as a tough one. When asked by an audience member which volatility he found to be the most concerning, Borghetti had an unexpected answer. He said he found the prospect of volatile staff morale to be the most disturbing as the CEO. Rationally, he understands that fuel issues will affect every airline, extreme crises such as bird flu and lost airplanes are rare but also affect the industry at large. What affects customers every day is the consistency of staff delivery. When this becomes volatile, customers leave. Therefore, the key focus for him as a CEO is people first, strategy second. This had led Virgin to actively hiring staff from the caring industries such as nursing, teaching, hospitality as they want to ensure customers are cared for in a consistent manner.
The product life cycle is accelerating so access front line feedback
Historically the product life cycle in the premium end of airlines i.e. the business or pointy end of the planes, took up to 12 years to evolve from one level of offering to another. Today that is down to 4 years. In digital industries this is down to 4 minutes.
His point is to either be a “great disrupter” to gain the fast mover advantage or focus on being a really “fast follower” so as to gazump the trail blazer. Given that his industry is effectively a hospitality service in the sky, Borghetti believes that running customer focus groups to analyse new services is a waste of time. Instead, Virgin actively surveys staff on what seems to be annoying or pleasing customers and how could the airline improve on those ideas.
What advice would he give to a younger version of him?
Given this was a talk in a Business School many of the audience will be in the job market in the upcoming months and therefore were interested in his career advice. Where should I network? How many events should I go to? How long should I stay in my job before I go to my next one? Those types of questions! I personally loved his replies.
- Do your best every day in your current job, irrespective how low down the value chain it might be. Being the best you can be today will guarantee your future roles. Many people have networked successfully and speedily through several jobs only to come crashing down from a high a few years later as they had not taken time to master particular roles.
- Every night take time to reflect on what stuff ups happened today under your watch and how you might do that differently tomorrow.
- As a leader do not rely on email or powerpoint presentations to create an organisational culture. Walk the floors and talk to staff.
- Take care of the car park attendants- they have loads of power even if no authority! Today that might apply to the Barista!
Finally, how does he continue to think long term in a short term focused society?
Many people turn to quotes to help guide them in their quest as leaders or in many aspects of their lives. Borghetti is no different. He shared an important quote that has guided him to think long term in his strategic decisions and not to be swayed by short term analysts, bankers or journalists.
“Today’s headlines and history’s judgment are rarely the same. If you are too attentive to the former you will most certainly not do the hard work of securing the latter”
― Condoleezza Rice in her memoir No Higher Honour
If you would like to talk to us about how you can translate these lessons into your leadership please contact us.