Tweet
But the fact that the management team at Singapore Airlines today has to contend managing four different assets: Singapore Airlines, SilkAir, Tiger Airways and now Scoot, is an interference in a more profound way. How it came about that Singapore Airlines today is a mesh of four different airlines, purportedly to serve different customer segments is a story of how its main shareholder clumsily went about trying to respond to the unknown challenge brought on by the budget airlines, as it rapidly unfolded.
At first, they tried to deny the threat. A former Singapore Airline chief executive was rebuffed for trying to launch what would have been the first budget airline in the 1990s. In those days, as it is today, Singapore Airlines was a sacred cow that no other proposition from within the country would be allowed to challenge.
When Air Asia came about, Temasek did a due diligence on them, and then decided to co-invest in an Australian budget airline, Jetstar, for the only reason because Air Asia was from a competing neighbor. Then Tiger Airways was set up to teach the boys and girls at Singapore Airlines how to run a budget airline. It barely survived. Then Scoot was introduced like an innovation lab to experiment within the fold.
What a right royal mess. No chief executive would be able to keep focus on the core proposition, while making sense of the three other assets. The company is today a playpen for someone outside it to sort out their own ideas of where the airline industry is heading. Its main shareholder in turn is reduced to dealing with Singapore Airlines as an asset management business, and not as a going concern. This and this alone explains the choice of the current chief executive.
It’s a dangerous experiment. It might pay off, it might not pay off. But the fact that not a single Singapore Airlines management staff, least of all the chief executive, can explain convincingly to any investor or even a customer as to why they need to manage four different assets, is an indication of just how dangerous it is. It is an even more dangerous experiment because if it fails, it will be nobody’s fault.
In fact, I have only heard one management staff attempt to explain the four assets – it was the Kiwi boy they tapped to run Scoot. Apparently, the name “Scoot” for an airline was his idea, which speaks well for him, because he was taking ownership for it. But it made me think also why would Singapore, in all its glory, give over an important experiment to a foreigner instead of to one of its own sons-of-the-soil to learn and build his own management skill? Where would the future Singaporean business leaders get their training from? In New Zealand? Isn’t this the kind of “foreign talent” (hardly a talent if he was doing it for the first time) that the local electorate has been clanging against? But I digress.
So it is, that the reason Singapore Airlines has such a weak and uninspiring chief executive is not because he is a good worker, or that he has great integrity, all of which I am sure he has in abundance. But because that it is all he will be required to be. The board has taken on itself all the leadership roles of making the strategic decisions for the company.
Having said that, the current chairman is not anymore inspiring. On a flight to New York two years ago, I had the chance of watching how non-executive he was. Let’s just say that exemplary service before self was not on his mind at all, even with paying passengers all around him. Later, I heard how he could barely string a useful sentence together when giving his take to the staff redesigning the airline’s lounges. Not inspiring at all.
Why would an airline that spends millions of dollars on advertising world-wide not be able offer up its chairman or its chief executive as living expressions of its brand? The only logical answer is that it no longer values its own brand, as evidenced by its falling rankings on all the major lists worldwide.
If these are the kind of people responsible for Singapore’s most visible asset today, you wonder how it all runs. The answer is, on standard operating procedures that have not been refreshed or revived for a new age since 1974. Large organisations run on doing the same thing every day. After a while, you will not be wrong to imagine that there is nothing more to add, and so a mere administrator for a chief executive will do just fine.
But without a refresh on the core themes of the business, subsequent generations of managers will only know how to take away rather than modify or add to the unique factors that makes the company successful. This is the reason why customers who were accustomed to being delighted by this company in the 1980s found all the delights taken away from them one by one more recently. More than ever, this company is crying out for a new chairman or a new chief executive who will take ownership of refreshing the dream and resetting the DNA for a new phase.
We don’t realize the decay at first, because things work as they are supposed to. But the dream is lost. So the purposes for which they do what they do is also lost. A sense of entitlement sets in, and a generation of managers and board members take more than what they give to the fine brand.
The late Sir Brian Pitman, former chairman of Lloyds TSB was so pleased to be on the Singapore Airlines board that he could not find any reason whatsoever to objectively describe the things it was struggling with. Every board meeting was a happy encounter to listen to all the rave reviews the airline was getting at that time. He also served as advisor to something else I was doing when he was alive, and so over his favourite gin-and-tonic we would chat about my list of things he could bring up at the board meetings.
One of the previous short list for the current CEO position was an old friend from University, with whom I used to be quite cordial. He would not connect with me on Facebook, while we were connected to other mutual friends, when he found out I criticized too much. Criticism as valuable feedback is a basic tenant in the service industry, but it is definitely not in the DNA of the management team.
It is these same senior managers who ask their frontline crew to take customer complaints on the sheen, while they can’t themselves. That is why the story of the origins has to be told correctly, so that managers like these can at least pay lip service to the standards that the men and women who built it set for them.
But Singapore Airlines is not on steady state. It is going through a real test as a company. It makes so many mistakes at every level every day. The guys who price tickets are going nuts treating premium ticket passengers like budget airline bums – shorter validity, high penalty fees and so on. This is the only airline that is capable of making a full fare paying first class passenger cry because she had to pay a US$300 penalty for missing her flight at the gate. On top of that, chiding the ground handling company for trying to restore some dignity to the situation. All this just because another former chairman, Koh Boon Hwee had installed the culture of nickeling and diming all their most valuable stakeholders – the customers and their partners – and losing the plot yet again.
The guys running inventory having a hard time understanding that what is really useful is not necessarily the most expensive thing in the toiletry kit. The guys running cabin design can’t decide what comforts to give economy passengers to stay competitive – so they stock the economy seat with lots of gadget connections except for the most important of all – a power plug. Emirates does just that and steals precious customers on that route.
On the surface, these are normal everyday decisions that all companies struggle with. Some companies get some things right and other things wrong. But only an organization that is led by vision will head in the general right direction.
We only need to remember the SAS story to realize that a brand pitched at the premium end needs to only make a few mistakes to run to the ground. The recent decision to dismantle non-stop premium flights to New York is one case in point. From having a monopoly on that route, Singapore Airlines is now setting itself up for competition from every airline in the region introducing new hardware at half the fares. The reason for the decision appears to come an asset management perspective – only one type of aircraft is able to fly that route - at the expense of an overall strategic idea that create winners and losers in business.
They won’t be able to blame it on the price of oil, because Singapore Airlines was born in 1974, just before a much worse oil crisis, at a time when the hedging market did not even exist. They won’t be able to blame the budget airlines because these are run by people with less education.
The clear conclusion I have come to is that yes, chief executives should have the personality and character to lead, in addition to skill. Just being administratively competent is not good enough anymore. Being charismatic and even charming are useful, but is asking for too much. The base line is that being visionary and with a vocabulary to state his strategy are inalienable characters of a good CEO, if only because he has so many moving parts to hold together.
He also has to contend with a thinking public, critical people like me, who take the time to write some of these things precisely because we enjoy, as long term and loyal customers, being part of that story. There are very few people in management position who get that.
When a CEO suspiciously does not have that holding power, look to the board, and ask, what is the board up to? Look at the CEO again and ask if he is a correct expression of the board’s thinking. Very often, the CEO is trying his best to do the job they gave him, so he is not the one to blame.
At first, they tried to deny the threat. A former Singapore Airline chief executive was rebuffed for trying to launch what would have been the first budget airline in the 1990s. In those days, as it is today, Singapore Airlines was a sacred cow that no other proposition from within the country would be allowed to challenge.
When Air Asia came about, Temasek did a due diligence on them, and then decided to co-invest in an Australian budget airline, Jetstar, for the only reason because Air Asia was from a competing neighbor. Then Tiger Airways was set up to teach the boys and girls at Singapore Airlines how to run a budget airline. It barely survived. Then Scoot was introduced like an innovation lab to experiment within the fold.
What a right royal mess. No chief executive would be able to keep focus on the core proposition, while making sense of the three other assets. The company is today a playpen for someone outside it to sort out their own ideas of where the airline industry is heading. Its main shareholder in turn is reduced to dealing with Singapore Airlines as an asset management business, and not as a going concern. This and this alone explains the choice of the current chief executive.
It’s a dangerous experiment. It might pay off, it might not pay off. But the fact that not a single Singapore Airlines management staff, least of all the chief executive, can explain convincingly to any investor or even a customer as to why they need to manage four different assets, is an indication of just how dangerous it is. It is an even more dangerous experiment because if it fails, it will be nobody’s fault.
In fact, I have only heard one management staff attempt to explain the four assets – it was the Kiwi boy they tapped to run Scoot. Apparently, the name “Scoot” for an airline was his idea, which speaks well for him, because he was taking ownership for it. But it made me think also why would Singapore, in all its glory, give over an important experiment to a foreigner instead of to one of its own sons-of-the-soil to learn and build his own management skill? Where would the future Singaporean business leaders get their training from? In New Zealand? Isn’t this the kind of “foreign talent” (hardly a talent if he was doing it for the first time) that the local electorate has been clanging against? But I digress.
So it is, that the reason Singapore Airlines has such a weak and uninspiring chief executive is not because he is a good worker, or that he has great integrity, all of which I am sure he has in abundance. But because that it is all he will be required to be. The board has taken on itself all the leadership roles of making the strategic decisions for the company.
Having said that, the current chairman is not anymore inspiring. On a flight to New York two years ago, I had the chance of watching how non-executive he was. Let’s just say that exemplary service before self was not on his mind at all, even with paying passengers all around him. Later, I heard how he could barely string a useful sentence together when giving his take to the staff redesigning the airline’s lounges. Not inspiring at all.
Why would an airline that spends millions of dollars on advertising world-wide not be able offer up its chairman or its chief executive as living expressions of its brand? The only logical answer is that it no longer values its own brand, as evidenced by its falling rankings on all the major lists worldwide.
If these are the kind of people responsible for Singapore’s most visible asset today, you wonder how it all runs. The answer is, on standard operating procedures that have not been refreshed or revived for a new age since 1974. Large organisations run on doing the same thing every day. After a while, you will not be wrong to imagine that there is nothing more to add, and so a mere administrator for a chief executive will do just fine.
But without a refresh on the core themes of the business, subsequent generations of managers will only know how to take away rather than modify or add to the unique factors that makes the company successful. This is the reason why customers who were accustomed to being delighted by this company in the 1980s found all the delights taken away from them one by one more recently. More than ever, this company is crying out for a new chairman or a new chief executive who will take ownership of refreshing the dream and resetting the DNA for a new phase.
We don’t realize the decay at first, because things work as they are supposed to. But the dream is lost. So the purposes for which they do what they do is also lost. A sense of entitlement sets in, and a generation of managers and board members take more than what they give to the fine brand.
The late Sir Brian Pitman, former chairman of Lloyds TSB was so pleased to be on the Singapore Airlines board that he could not find any reason whatsoever to objectively describe the things it was struggling with. Every board meeting was a happy encounter to listen to all the rave reviews the airline was getting at that time. He also served as advisor to something else I was doing when he was alive, and so over his favourite gin-and-tonic we would chat about my list of things he could bring up at the board meetings.
One of the previous short list for the current CEO position was an old friend from University, with whom I used to be quite cordial. He would not connect with me on Facebook, while we were connected to other mutual friends, when he found out I criticized too much. Criticism as valuable feedback is a basic tenant in the service industry, but it is definitely not in the DNA of the management team.
It is these same senior managers who ask their frontline crew to take customer complaints on the sheen, while they can’t themselves. That is why the story of the origins has to be told correctly, so that managers like these can at least pay lip service to the standards that the men and women who built it set for them.
But Singapore Airlines is not on steady state. It is going through a real test as a company. It makes so many mistakes at every level every day. The guys who price tickets are going nuts treating premium ticket passengers like budget airline bums – shorter validity, high penalty fees and so on. This is the only airline that is capable of making a full fare paying first class passenger cry because she had to pay a US$300 penalty for missing her flight at the gate. On top of that, chiding the ground handling company for trying to restore some dignity to the situation. All this just because another former chairman, Koh Boon Hwee had installed the culture of nickeling and diming all their most valuable stakeholders – the customers and their partners – and losing the plot yet again.
The guys running inventory having a hard time understanding that what is really useful is not necessarily the most expensive thing in the toiletry kit. The guys running cabin design can’t decide what comforts to give economy passengers to stay competitive – so they stock the economy seat with lots of gadget connections except for the most important of all – a power plug. Emirates does just that and steals precious customers on that route.
On the surface, these are normal everyday decisions that all companies struggle with. Some companies get some things right and other things wrong. But only an organization that is led by vision will head in the general right direction.
We only need to remember the SAS story to realize that a brand pitched at the premium end needs to only make a few mistakes to run to the ground. The recent decision to dismantle non-stop premium flights to New York is one case in point. From having a monopoly on that route, Singapore Airlines is now setting itself up for competition from every airline in the region introducing new hardware at half the fares. The reason for the decision appears to come an asset management perspective – only one type of aircraft is able to fly that route - at the expense of an overall strategic idea that create winners and losers in business.
They won’t be able to blame it on the price of oil, because Singapore Airlines was born in 1974, just before a much worse oil crisis, at a time when the hedging market did not even exist. They won’t be able to blame the budget airlines because these are run by people with less education.
The clear conclusion I have come to is that yes, chief executives should have the personality and character to lead, in addition to skill. Just being administratively competent is not good enough anymore. Being charismatic and even charming are useful, but is asking for too much. The base line is that being visionary and with a vocabulary to state his strategy are inalienable characters of a good CEO, if only because he has so many moving parts to hold together.
He also has to contend with a thinking public, critical people like me, who take the time to write some of these things precisely because we enjoy, as long term and loyal customers, being part of that story. There are very few people in management position who get that.
When a CEO suspiciously does not have that holding power, look to the board, and ask, what is the board up to? Look at the CEO again and ask if he is a correct expression of the board’s thinking. Very often, the CEO is trying his best to do the job they gave him, so he is not the one to blame.
Comment