Over the period of the past twenty or so years, Indian economic liberalization has allowed the entry of other participants into the airline business, experiencing various degrees of success. At the same time, the Indian government and its states are building airline/airport infrastructure to accommodate the industry.  What is interesting to note is that unlike the United States, where the airline industry developed in sync with aviation technology, in India, the problem is very different. Since airline technology already exists so the aviation industry is being built in a very different manner. Some would say this gives the industry an advantage in that many technological problems have already been solved by the aviation industry in Europe or the United States and can be transferred. That is in fact partially true…and the existence of a Boeing or Airbus series of passenger aircraft does negate the requirement to go through that process of indigenously building and developing commercial aircraft. So, in effect, one might say the learning curve is much steeper in a country like India and therefore progress can be achieved much faster.

However, from a leadership perspective, the issues are much more complex. India does not have a ready reserve of aviation industry people who have grown with the industry. Rather, in many cases its leadership has come from other economic sectors, and is replete with entrepreneurs who are attracted to the idea of flight but have little real aviation experience. Also, the leadership must deal with consumers who are not aviation savvy and an intensely bureaucratic government apparatus which has historically governed all aspects of the industry in a very controlling manner, not to mention global competition. As a result, the Indian aviation industry lacks a solid base of experienced leadership and finds itself in the middle of a highly complex fluid environment. As we all know, aviation is not always a forgiving enterprise, so Indian aviation leaders have much to be cognizant of as they move forward. The best news was that we found these leaders to be highly enthusiastic and motivated to succeed despite the difficult circumstances they find themselves in!

But in a way I am talking about our country’s future, because if we don’t think long-term within our organizations, we won’t have well-functioning, profitable companies with jobs to employ our people.

Our society tends to have a short-term mindset, in ignorance of the distant consequences of today’s decisions.  Short-term thinking is too entrenched in our society and corporations and often, institutional rigidities add to this myopia.

It has become apparent that many of the problems we face today share one common theme: a lack of foresight. We continue to pursue short-term gains at the expense of our long-term well-being.  According to a study from Columbia University, when presented with a cigarette, smokers who were told to envision the long-term consequences of smoking (lung cancer, heart disease, early death) were far more likely to resist the urge to light up than those who were told to imagine the short-term benefits of smoking (it feels good, it’s calming).

The hazards of short-term thinking in business are well understood. Of the recent crises that have shaken companies, markets and even entire economies… many can be traced to decisions made for immediate gain – often for the shameless benefit of individuals… and at the expense of future prosperity.

We need to focus on creating and nurturing a culture of long-term thinking. Strategic planning and goal-setting are part of this. We need to anticipate problems and take measures to head them off.  But long-term thinking isn’t only important in preventing problems, it’s critical for organizations to keep up to speed in this rapidly changing, global competitive environment.  Bill Gates once stated of his early Microsoft days: “There was no near-term thing. It always was this many-decades thing where there were no shortcuts and we’d sort of put one foot in front of the other.”

Managing for the long-term guides the ethics and behavior of both management and employees. Capital markets demand quick returns and quarterly results, but we need to stop rewarding organizations and employees for meeting short-term targets.  We’ve known since Skinner’s pigeons and Pavlov’s dogs that reward shapes behavior.  So what can you do in your position of leadership to help your organization make this shift?

• Strong leadership is needed to model, facilitate, and support a change in the culture and the way of thinking. Culture often echoes management style.
• Create and support practices that enable and prove the benefits of longer-term thinking. Behaviors need to change to really have an impact in changing the culture.
• Spread knowledge of these practices within and among your organization and supply chain.
• Make sure the reward structure reinforces both short and long-term thinking, rather than just short-term.
• Know where your organization is going. What is its mission, values, and long-term goals?
• The aim is to enable the change so that longer-term thinking becomes the norm and policy-makers can set rules that sustain it.

People are very important to every organization and having the right people is even more important.  Zappos puts new hires through 4 weeks of training.  The training immerses the new hires in the firm strategy, culture, and the firm’s focus on the customer.  Zappos stresses customers and customer service throughout the firm.  This is emphasized during the orientation.  The new hires receive full pay during the orientation.  Then a week after the training, Zappos offers the new hires a bonus to quit.  The bonus started at $100 and has increased over time.  Currently, the bonus is $3000.

Zappos wants the right people working for them and the firm believes people who accept the bonus offer are not committed to the firm.  The right people make for a better firm and Zappos sees the money as money well spent.  Zappos has become one of the fastest growing firms in its industry (online shoe sales) and is well known for customer service.  The bonus offer after the training plays a role in the firm getting the right people and the right fit.

Yukl(2008) and Charan and Colvin(1999)both discuss and stress in addition to developing strategy (which Charan and Colvin say is the sexier obsession) leaders need to also implement a strategy, vision and mission.  Zappos has a vision stressing customer service (set a direction), has implemented a rather unusual technique to achieve the direction and continues to dedicate itself to the Zappos culture.

Finding and retaining talent is critical for all organizations and costly.  Steps organizations can take to improve retention can be invaluable.  What new strategies are you willing to try to find the right people?  How much are you willing to pay to find the right people?  How much does it cost when the wrong person is hired?

References:

Charan, R. & Colvin, G. 1999. “Why CEOs Fail,” Fortune, June 21:  68-78.

Yukl, G. 2008. “How Leaders Influence Organizational Effectiveness,” Leadership Quarterly, 19(6):708-722.

Fresh out of the Air Force, I followed my friends to the place where ex-fighter pilots went to fly commercial airliners and tell stories about days gone by. I soon found out that Southwest was much more than just another airline…although Southwest flies the same Boeing machines, uses the same airports, is subject to the same FAA rules and regulations, and so forth, there was definitely something different about the company and the people who worked there. Those observations started on the very first day of training at Dallas Love Field in June of 1995.

The first event on the schedule Monday morning, for my class of 25 new hires was “breakfast with Herb”. Although I don’t remember too much about that event, what does stick in my mind was the way Herb interfaced with all of us. He was easy, self effacing, confident, a jokester, and a generally nice person to meet. By the end of breakfast he knew everyone’s name and was on first name basis with all of us…I also remember seeing a bottle of Wild Turkey somewhere in the room. He was definitely not cast in the mold of a corporate CEO!

As training continued and I began to fly on the line, I found myself part of an organization that was more family than employer…all in the style and culture created by Herb. I enjoyed the three years I spent at SWA and when I decided to leave in 1998, the decision had nothing to do with the airline itself… but that is another story altogether. A number of years later, when my wife left corporate aviation, she was hired by SWA and so happily, my association with SWA was renewed, although this time at arm’s length. It wasn’t long before another Herb story surfaced.

Liz was dead-heading to training in Dallas, and when she got to Dallas, she called me immediately and relayed the following story:
Her flight had an intermediate stop in Austin and at the assigned departure time, the Captain got on the PA and announced the flight had been delayed because they were waiting for a late passenger – who happened to be Herb Kelleher. The Captain apologized and asked for the passengers’ patience. Herb arrived for the flight and as he boarded the flight he was met with huge applause and he hugged every female on the jet as he made his way towards the back where Liz was seated…he got to her seat and gave her a huge hug, a sloppy wet kiss and loudly proclaimed to the adoring passengers “I feel a sexual harassment lawsuit coming on….”. Everyone laughed, more pictures were taken and the flight proceeded to Dallas. Upon arriving at the gate, Herb was again surrounded by passengers who wanted to hug him, shake his hand and have their pictures taken with him. In Liz’s breathless words, “He was treated like a rock star!”

So, why is it that this one airline has grown to be the largest in the country and one of the most admired companies in the United States? The airline industry is a cutthroat business and known for everything from brutal competition among companies to disagreements between labor and management that have effectively killed entire companies. Why is Herb, who long since left his role as SWA CEO and is fully retired, still a folk hero among Texans? Why would Liz receive a book this week before Christmas from her employer, co-authored by Colleen Barrett (former SWA CEO) and Ken Blanchard (a leading expert on leadership and organizational development) and titled Lead with Love? Doesn’t that sound a little “over the top” for a book about an airline that engages in fare wars, competes on the basis of ridiculously small margins and slugs it out every day with its competitors? What is going on here?

I will leave you with those questions and invite you to comment….and in a few weeks, we will revisit the story of Southwest Airlines – a fierce competitor in the unforgiving world of commercial aviation, and yet a company that leads with its heart.

Look forward to hearing from you…

Cheers, Kees

At Embry-Riddle Aeronautical University’s Center for Aviation and Aerospace Leadership (CAAL), we have a team of experts whose focus is on keeping our industry and the companies and institutions within it abreast of the best ways to compete in the global marketplace. Our findings at CAAL will be shared at the Second Annual Summit in February; and stay tuned for our “Aerospace Economic Report and Outlook 2011” which will be published in April through CAAL.

In the interim, here are some issues to think about on strategic planning in the global A&D manufacturing industry.

The strategic planning process, whether it is being conducted by Boeing, Airbus, Lockheed Martin, Raytheon, the metal-bending firm in Ohio, the fastener company in Florida, or the aerospace research incubator in Warsaw or Mumbai is the same, though with varying degrees of input, output and implementation plans. While the strategic planning process can be straight forward and clear, its development and implementation can be complex and challenging.

Strategy has been used for centuries. The victors were those who used strategy best. Most of us are familiar with The Art of War , written by the Chinese general Sun Tsu, in sixth century BC. He viewed strategy as both deterministic and emergent. As Sun Tsu posited, one aspect of strategic planning is conducted in a static/controlled environment; and another aspect of strategic planning emerges as circumstances change in the fog of war, as supply chains are disrupted and as competitors’ plans change and clash, and unanticipated consequences and events arise.

Then and now, strategic planning includes understanding the environment in which our firms compete:

• What is driving our industry and the economy in which it competes;
• What are our firms’ and our competitors’ strengths and weaknesses and how can we leverage them; and
• How does our firm respond to industry drivers and align our resources and capabilities to not only effectively compete—but to win.

Those of us who operate in the A&D manufacturing industry do so in a very complex, and often arcane, environment. In order to compete effectively – and profitably – we must deal with a vast array of issues that involve complex economics, finance, new competitors in emerging markets, industry consolidation, and intricate and multi-national supply chains. In addition, there are often counter-intuitive import and export regulations, new alliances with former competitors and foreign partners, technology and process transfers, and operations in countries and cultures that may truly be foreign to us. How do we “boil the ocean” to a set of industry drivers and requisite resources and capabilities, not just to compete, but thrive in what is without doubt a global—and uncertain—marketplace?

That is where CAAL comes in. Our major mission is to help firms rise to the challenge of developing a solid understanding of the global environment, grasp what is driving our industry, and capitalize on the ever-changing economy in which it competes.

If you want to improve your place in the industry, the best place to start is at our 2nd Annual Aviation and Aerospace Manufacturing Summit, Thriving in Global Markets: 2011 and Beyond , February 23-25, 2011 in Orlando, Florida.

Join leaders from across the industry, ranging from the U.S. military, NASA, and Department of Commerce to private industry and academia, as they lead what promises to be outstanding sessions and seminars. The array of industry presenters reads like a “Who’s Who” in aviation and aerospace.

Immediately before the summit begins, you may wish to take advantage of our strategic planning workshop that will help you to outline plans for your firm’s individualized strategic planning process. Go to our web site to find out more.

Most successful companies “call in the experts” to help them grow and thrive. We are the experts in strategic planning in the A&D manufacturing industry. We truly hope you will avail yourselves of our resources, not only for the benefit of your own firm, but also to help keep the overall A&D manufacturing industry strong for our nation’s economy and security. Tailored presentations are also available for your firm or for academic, federal, regional, economic development agencies, and trade associations.

I look forward to seeing you at the Summit in February, if not before.