Tuesday, November 29th, 2011

Melbourne, Australia:   Qantas - whose market share of passengers flying out of Australia has slumped to 18% - should take the lead  from Air New Zealand in its strategy implementation.  In 2002 Air New Zealand was facing a surprisingly similar situation ... and is currently enjoying a 43% market share (equivalent).

According to Strategy & Marketing Specialist, Graham Haines of Plans To Reality: "Since 2002 when  the New Zealand government rescued it from virtual bankruptcy after the  disastrous take-over of Ansett, Air New Zealand has re-invented its strategic plan and successfully implemented its strategy - to the extent that it was  voted "Airline of the Year" in 2010 and has the largest market share  on every route that it flies (with one exception)."

How did Air New Zealand address its challenges? And what can Qantas learn from their example  ...

How Air New Zealand did it - and what Qantas needs to do now

  • Get everyone  to understand - and agree - to where Qantas is now

    In 2002, it was clear to everyone that Air New Zealand would fold without  government help. In the disputes that Qantas has with its pilots, baggage  handlers and engineers, the Unions and management have very different  perspectives of where Qantas is now.

    The Unions maintain that Qantas has remained profitable, whereas management say  profits are nowhere near high enough to fund the investment required to keep the  business going, with the international arm of Qantas losing $200 million p/a. 

    Haines says: "The end-result is an upstairs/downstairs culture with little  respect shown by either side - and a gulf between what many of Qantas'  employees and its management believe the current reality to be."

    "Unlike the Air New Zealand situation in 2002, there is no consensus at  Qantas on the current reality - and that makes support for the new strategy virtually impossible to achieve."
  • Get everyone to understand where they're going and how they'll get there

    As in the first point, the key word is - "everyone". It would appear that  the new strategy for Qantas has two major problems from its employees'  perspective: 
    • Qantas management would not seem to have consulted with their front-line employees in the development of the off-shoring strategic plans. "So the new strategy is owned by management and forced onto those who will be implementing the strategic changes", says Haines.
    • Many employees feel that Qantas management has basically "given up" on developing a strategy to restore the company's fortunes on international routes. Haines maintains that "They see this as  an act of surrender, and Qantas' decision to establish an offshore Asian hub as  a betrayal of everything that Qantas stands for."

    Air New Zealand didn't have the  luxury of an off-shore option. Air New Zealand had to do much better what it  already did. It had to define its target market, understand their particular  needs and then satisfy them in an innovative way that differentiated the airline from its competitors. And it did.

  • Get everyone  to understand their role in getting there

    "For many years now, Qantas have pursued a policy of cost-cutting that has frequently involved out-sourcing  overseas - from IT to engineering services", says Haines. "Many employees must even question whether they have a role to play under the new business model."

Organisational alignment and communication is the key

Without  organisational alignment, change is hard to introduce, and for leadership to be effective, there must be clear goals - and the capacity to lead through change.

In a scenario all too familiar to Qantas, Air New Zealand were carrying out their own heavy maintenance.  However, it was costing Air New Zealand $NZ30  million per annum that it simply couldn't afford. There were two alternatives:

  1. Close the heavy maintenance operation and move this function offshore, or
  2. Reduce costs by 20% across the board

Negotiations went on for two years. Shortly after taking  over as Air New Zealand's CEO, Rob Fyfe decided to visit the heavy maintenance  hanger and talk with the engineers directly. By all accounts the exchange of views was pretty fiery, but in the end the engineers said to him. "I don't respect your  decision, but I do respect you coming down here".

"So often with Qantas, one gets the impression that communication between management and Unions is largely via the media, with the emphasis on playing the blame game and justifying each others' actions."

Strategic planning is all about environments, markets, products, and processes: but strategy implementation is all about people. Air New Zealand  understand that - but I don't think Qantas do.

Plans To Reality offer facilitation and workshop services for strategic planners that ensure the strategic plan turns into a reality, using its  unique operational model - developed over Graham's 40 year career - and identifying over 36 barriers to strategy implementation.

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Graham Haines, Plans To Reality

Plans To Reality offer facilitation and workshop services for strategic planners that ensure the strategic plan turns into a reality, using its unique operational model - developed over founder Graham Haines' 40 year career - and identifying over 36 barriers to strategy implementation. Graham's new book - "Execution To Die For - The Manager's Guide To Making It Happen" explores in depth the 36 reasons that things don't happen as strategic planners intended and then shows how - through the use of his unique operational model "The Wagon Wheel WayTM" - how these barriers to strategic plan implementation can be overcome. This is his second book. "Execution To Die For - The Manager's Guide To Making It Happen" is currently available from Amazon and Australian Institute of Management (AIM) Bookshops. Find out more at www.planstoreality.com.au
Graham Haines
P: 03 9870 5159
M: 0409 401 365
W: www.planstoreality.com.au


qantas, qantas dispute, strategic planning, business planning, strategy implementation, implementation management, change management



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