04.03.2011 Aviation, Management, Values

What does an airline do with 90 A380

“Our Heads Are Round so our Thoughts Can Change Direction” [Francis Picabia]

In LinkedIn, based on a recent analysis by RBS, someone raised the concern about 90 A380. Will it impact Europe? I disagree with the question, it’s point of view and the analysis.

The main mistakes most “Western” analysts and experts do in looking at the Emirates (and the greater Middle East) is the trained focus on shareholder value, fiscal year (results) and political elections.

Long term thinking in “The West” has been replaced long ago by the above obstacles. But it is a vital part of the cultures in other parts of the world. First and foremost is the family. Followed by the clan. Then the neighboring clans, then by the “same people” (i.e. Muslims, other Sheiks, …). The main rule is that the family and the clan must prosper. Until very recently in such terms, the Sheiks survival was simply a matter of following these simple rules – which by the way are also described in the bible.

So what will ‘the Emirates’ (not just talking about the UAE) do with hundreds of A380s, with thousands of seats? Why do they build the largest number of luxury resorts worldwide? The Palm? The World? Free Zones for commerce? Because having the – what thes DO understand to be temporary – “Gift” of Cruide Oil income, their expressed target is to establish the Emirates regions as a crossroad for international tourism and commerce – and the “it-destination” for the rich and famous.

When the crude oil is gone, they will be remembered by their own for their foresight and to not just have spend the riches but at the same time made a lasting impact.

Will Europe, India, other markets suffer from that? Yes. Because the Emirates and their development tries to take away long-haul-connecting passengers. They will expand. They started on the racetrack Europe-Asia. They slowly expand now to Russia-North-Africa, connecting Asia with North Africa at the same time. They will not be competing much on the ruinous Europe-America-market, except to take the passengers connecting in Europe from North America to Asia…

They play by the rules, as long as these rules don’t interfere with their goal. when politically advisable. Else, always be aware: Their family and the clan comes first! If they have to bend or break other people rules for the benefit of the family or clan, they will do.

Their goal is so easy – but hard to grasp for too many of so-called “experts”, as their goals are so long-term…

Food For Thought…

12.04.2009 Values

Seven Weeks Without

It is Easter Sunday. In the wake of my father’s death (the reason there was no Food For Thought last week) I think about god. Yulia does an Easter Lent. So I thought about the Easter Lent in Germany and learned only today about “Seven Weeks Without”, an Easter Lent initiative in the German churches. This year’s motto: “Decide! Seven Weeks Without Hesitation” (Sich entscheiden! Sieben Wochen ohne zaudern).

The publications that came along with the motto say we make the mistake to play it safe. Don’t we all know (what we call) the “egg-dance” of politicians, trying to avoid any decisions? I have too much of those to my liking lately.

Then I received a post by my dear friend Sapphire, called Orphan. About the missing link to god. I do not believe much in church. But in the wake of my father’s death, I also learned the truth of the saying “You can remove a boy from the bible belt, but you cannot remove the bible belt from the boy” (the bible belt is a very religious region in the U.S. midwest). I was raised Lutheran (a Christian variant). I believe in god. And as Yulia just said to me yesterday: It is the believe in god that unites us.

But this Food For Thought is a business blog, so why do I address something like god, the lent or Orphan here? Because of the lent motto. Decide! We cannot always play it safe. This is another recurring topic, in this case on LinkedIn Q&A: What makes a good manager. A good manager decided, stands to his decision (doesn’t blame others on failure) and reverses it quickly if needed. Not like a politician without an own opinion. First it is the decision. And no, not the decision not to decide 😉

Especially in the crisis, the decision makers are likely to survive. They move.

Or to quote Barrack Obama: Change! Yes – We CAN !!!

Food For Thought. Thanks for sharing yours!

22.02.2009 Management, Values

The Impact of Government Safety Funds

There were two interesting reports on German Television lately. A short summary:

The Money Market

Currently the Money Market is a soap bubble. Anything is dealed, put into mass, dealed again and again and again. For any winner, there is a looser though, but no-one tells about the loosers.

Industry

You can only sell products. Money in itself is no product. Neither is “service” in itself. But did you know that Porsche made about five times more money on “financial market” than on building and selling cars?

Governmennt Funding

They are a very short-sighted remedy! Experts expect inflation to explode to 10% and more quite shortly, as all that money does not provide any additional value!

Food For Thought:

Inflation will result in increased prices. So we will see another explosion in crude-oil price within the year, with a drastic impact on aviation and other industries dependent on crude oil! And we better all understand that the “financial crisis” is not over, until the markets value industry and industry products again and cut down on “services” to a healthy level.

Virtual Reality meet Real World. You got to produce (and value your producers) to be able to spend on secondary services. Cut that down to the old businesses: Farming, industry. I am educated in “whole-sale” and we learned that whole-sale is just the distribution of goods, but the goods is what it’s all about! It does not help to have streets or rails if you have no goods to ship!

08.02.2009 Management, Values

The Need For Consultancy

I lately got involved in discussions about the need for consultancies and how that market suffers the first from the financial crisis.

German top-consultant Roland Berger was quoted saying “You cannot push-start a car from the inside”. Which I found valuable. But it reminds me of a major shortcoming of todays managements: I have not needed to push-start a car for decades. The view is rather rare on the streets. But I need to confirm: The job of a consultant in most cases is to have an unbiased look at the company, speak to the people, listen to their advise, organize it and present it to the company. At that level, some creative suggestions on how to solve the identified shortcomings helps to make you a good consultant.

Another cause is the discouraging of creativity by the bean counters. “Do your job, don’t think” is very common in larger companies with strict hierarchies. Mostly these companies are “managed” by bean counters, thinking of staff only as a little wheely in the machine – a “human resource”. Exchangeable, not valuable. In such cases I either can make these managers understand the value of a reevaluation of their values and the advantages of motivation of creativity, but more often I can only help them by voicing what they overheard for too long from their own people.

So the job of a truly good consultant (but they are rare) is to listen. To gain the trust from the people. To qualify, summarize their needs, consider solutions and present the findings to the management. The best ideas on the job are usually not mine. My experience only helps me to qualify them and put them into a structure and present them to management in a way they understand. Being the moderator…

Food For Thought.

01.02.2009 Aviation, Low Cost, Values

Crumbling Facades

What is money all about?

First the financial market in the United States failed. Constructs where a single person is responsible for the loss of 50 Billion US$ are just the top of an iceberg. That ice berg turned and we all feel it’s repercussions.

But it was not the U.S. that caused the problem, but the greed of financial managers and the corruptibility of the politicians that made it possible. German’s federal state banks had to be sold, only to learn the buying banks from the other states are simply in similar troubles.

Deutsche Bank manager Ackermann and Deutsch Bahn boss Medorn keep up the facade of the reasoning for the indecent salaries they and their buddies in other corporations pay themselves, blaming others in their companies for the problems their companies face. Isn’t it the CEO who is ultimately responsible? If he has his company not in check, he may not be worth his salary. If his company looses money, they make a bonus? When they fire people, they make another bonus? “No risk, just fun” the yellow press recently titled…

Companies asking for help, often “suddenly” coming up with hidden “treasures” and financing leaks often as high as the losses so far admitted. Oops. If I have a management that has no up to date information about their financial situation, I can imagine this in a start up or small company – but we talk “global players” here! My advise: Fire them! Sue them! You got to, they got to learn the basics of business before they are allowed any management job again!

Politicians having been informed as early as August about the financial troubles of German Hypo Real Estate but now claim their innocense?

In Russia, Oligarch Boris Abramovich lost first the control on AirUnion, which meanwhile “somewhat” restarted as Rossavia as a state airline, now looses Malev as well. His buddy Lebedev is out of a deal to take over German Öger Tours, he’s short on money – weren’t these the people anyone worldwide envied for their incredible wealth?

And wasn’t “U.S. President” a synonym for integrity? Thank you Mr. Bush… What a legacy for Barrack Obama.

So with all these crumbling facades, it is not the time for blame. But it’s time to roll up your sleeves and work to get us out of the mud hole these irresponsible and greedy idiots drove us all into. I am daily facing cases, where good people loose their jobs to managers, still thinking to cut heads is the solution. Or airline managers believing that it’s important to increase revenue at all cost. Flights take off fully booked but causing the airline to loose money?! That has nothing to do with bad sales, but with a bad, price-only-focussed strategy of short-sighted managers. Good service needs good people. But our industries miss to show their own strategy. What makes an airline commercially successful? More aircraft with less people? A drop in service? A university graduade being sent to the key account having no idea what a cross ticket is or what makes a travel reseller select one airline vs. another? Pay for coffee inflight? The next business for airports and catering companies is logically to have vending machines offering snacks and drinks at the gate (or on the aisle infront of the waiting room) at cost below that offered inflight…

But what keeps my mind busy is the question, why the facades visibly crumble, why we work in an industry where everyone tells me no one in his right mind would invest in? I did question the human “resource”-thinking. I hear from Lufthansa that the “Lufthanseat” (the employee news) is off reality. American Airlines staff tells me they have never heard of the company update video I remember from the 80s.

Our industry is like the opposite to the car industry, but not any better: Where they focus to build the big cars for big money and ignored the growing demand for low-consuming cars, our managers seek quick revenue at any cost…? Load factors and market share at the cost of yield and income.

We can learn from the current U.S. president. Airlines got to learn again that the manager is head of the family. That means (s)he also has to look after the family income and budget. But they got to get out of their glass domes, listen to staff and customers alike and finally start face reality!!! And come to grips and learn to make money!

Food For Thought – your thoughts about this sure are welcome…

18.01.2009 Values

Job Challenge or Play It Safe?

I am recently faced with the question, if I shall take up a very challenging position, asking the best of my abilities, thus meaning fun, but at high risk of a temporary assignment … Or play it save and go for a job I can do good, but which does not pose any real challenge but routine work – in return for a safe job?

And many friends face a similar question. Do they leave their “secure” job for another one around the corner they don’t know how “secure” it truly is? Monetary thoughts, very high valued by the bosses are of minor interest to most. It must be decently paid. No question about it. But if that is the case. Would you trade safety for some risky challenge? Sure – this answer did change quite a bit since the financial market turned the entire world into a madhouse.

So we all have to think about this question and give it serious consideration. But it can not be generally answered. Any one’s risk assessment is different. It depends on obligations to others, family, credit for a house, etc., etc..

If we have a challenging, well paid job and loose it? It is sad to see friends going broke, their spouses leaving them when times are no longer luxurious. So what values are important in life? At the same time, there are many companies speaking not of personell, staff or “our people”, but of human resources… What messages do we get from that?

Reconsider your values…

Food For Thought

30.11.2008 Aviation, Values

Old School – New School

Some of you have already read the Sapphilosophy-Blog I created in September as a result of another discussion with friends on philosophical issues like love, friendship, honor.

Very famous in Germany on the topic is “the Knigge”, his book “On Human Relations” being considered to date the guideline for respectful interpersonal relations.
In the past weeks, I was told to be “old school”, namely for the respect I have for people, but also about topics like loyalty or (personal) honor. These values are in short supply these days, but I am convinced it is the more necessary to hold up the flag.

Once more I was told this is my main weakness. Right. But being a weakness in business, I found it my great strength in life. I stay errect and look into the mirror with pride. Sure I made my share of mistakes, but is there anyone flawless? And I stand up to them. The same friend questioning this “weakness” asked me, how I could be so optimistic despite the treatment I received throughout my business life. That is because of my friends – mostly people like you, reading this blog. For you I am grateful.

I thought about it quite a while if I should address this topic in the Food For Thought blog, but the world is changing. Greed, arrogance and egomaniac arrogance are going out of fashion, the global financial crisis and people like Barrack Obama make us reconsider our values. In aviation and travel industry, we shall also consider how we treat our own, business partners and staff alike. And if it makes sense to save money at all cost.

Robert “Bob” Crandall was my topmost boss when I started in the airline industry back in the late 80s. He shaped the entire industry, but having met him just briefly, he has been a role model for me ever since. Under his management, the entire company was a family. Everyone worked for the benefit of the family. Suppliers were happy to deal with American Airlines. Sounds strange to you these days? Yeah. The bean counters took over.

Food For Thought: Can you look at your life with pride?

23.11.2008 Values

Debugging Six Sigma

If you don’t know what Six Sigma is about, read this Wikipedia-article first.

I had some discussions lately about sense or nonsense of Six Sigma. Part of the information flooding today is that there are a lot more variations of “best practices”. So I do not disagree with Six Sigma, but there’s two points you should keep in mind with their or any other best practices. They are guidelines. Not a panacea. And with all such best practices, they are about what you make out of them.

For Six Sigma especially, there is a point I found far to strictly adhered to: The financial focus.
In most jobs I have done in my life, I was the fire fighter for managers who did not understand the value of a fire fighter. Because a fire fighter is paid like an insurance. You are happy if you never need it.
We call it the Saint-Florian-principle:

Oh dear holy Saint Florian,
Don’t burn my house
take the other one…

There are many such jobs in any company, but that’s the jobs, most often the first ones being cut by Six Sigma disciples. Service, support. They are cost factors, they do nothing but cover for the mistakes done up front. As there must be no mistakes, there’s no need for service and support. It’s a very typical trend for any company where managing responsibility is transferred from the entrepeneur to the finance, money driven folks.
Good ideas are declined as they are risky and you got to believe in the idea. Speaking to the financial guys, my experience is that you hit a brick wall. The same is true if you talk about “non-essential” services. Like service. And my experience is that the entrepeneur has a total different understanding of Six Sigma or other such best practice principles, than financial bean counters.

So it is not about Six Sigma or not, but what you make out of it! I think, we just learn, what bean counters got and get us into. I call it greed and fear. “CYA”: Cover your ass. I learned that from a CEO with finance background. I may live better if I would live their way. But I sleep far better trying something and standing up for my own mistakes.

What a chance the U.S. to have a president-elect who is creative and open to change = risk? I hope the focus of companies shifts from a conservatory play-it-safe back to a search for creative new ideas and do some trial. Sure, not everything will work out. But I predict: The survivors are the ones that move.

02.11.2008 Values

Value of Time

Having linked Momo last week, I know the book is worldwide not as well known as in Germany. It is the story about a little girl fighting the Grey Gentlemen, who live of time and suck it (just like vampires) from us. We have less and less time to be happy. People themselves become grey. “Time is money and we don’t have any” is a joke I increasingly hear. Itself and it’s variants. Seminars in “time management” are said to be a cash cow.

Time is the only commodity we cannot replace.

What good is it, if you are wealthy but lack happiness? Friends wonder that I take one hit by Murphy after another, still smiling, still happy. A question of priorities: I am happy. Yes, I can live of Hartz IV if I have to. No, nothing I fancy. But we are lucky to have such a fail-safe! I visited Russia lately. The average income in the city I visited is 10-15.000 Rubels (350-500 Euros). No real social security. The average cost for a one-room apartment is 10-15.000 Rubels. Oops…? I have met people living there. Happy people. Not rich. But happy. Something becoming rare as people gain wealth…

Money ≠ Happiness?

Do I want to be wealthy? No. Yes, a decent monthly income doing a decent job would be great. And I love to do a good job. I am happy.

26.10.2008 Values

Blood Money

An Inuit chief once compared the human life on Earth with cancer. Instead of looking after the world and trying to live in balance, we exploit its resources, extinct other life-forms, farm life, even kill and eat other intelligence, such as whales. No symbiosis but parasite. Like vampires.

What was not said, but I imply it – is that not all people, but just some (powerful) humans are like cancer. Many managers think they must be “tough”, make utmost profit at all cost (who told them that?). And humanity’s and world’s immune system fails.

The “Western” industry nations are build on a religious system that values life. God gave us Earth to foster it. But there is a strange implied value system that builds around “wealth” and “power”. It’s an old question: Are rich people happy? Can you purchase happiness? If you dominate, are you loved?

Starting my own business, I was (very) quickly confronted with “Corporate Social Responsibility” and questions about corporate morale and ethics. Questions as alien to me as the question “Do you breathe?”. (If I don’t, the question is useless).

Thinking about this, I hope that this crisis will enable some of our “decision makers” to recognize some of the disease and cut it. But I doubt that. Too many politicians (and journalists) are part of the systems, suck blood themselves. They would risk too much of their own blood-money, are part of the system. Welcome the Gray Gentlemen.