Air New Zealand and the “3C’s”

Finding the synergy between Consumer Value, Commercial Responsibility and Culture has been the key to Air New Zeland success …

“Our customer centricity, commercial focus, and highly engaged culture have made Air New Zealand the most revered company in our part of the world as reflected in our corporate reputation rankings on both sides of the Tasman.”

Mr Luxon says he will miss heading to work every day to lead the aviation equivalent of 12,500 All Blacks. 

“It has been an awesome journey and what we have achieved by working together with a common goal of supercharging New Zealand’s success economically, environmentally and socially has been nothing short of remarkable.

“I have absolutely loved the responsibility and experience of leading this company over the last seven years. It has been intellectually challenging, people centred and an absolute privilege to do this job. However, I do feel it is the right time for a new leader to take over and preserve and enhance the good things from our past, but also to put their own stamp on the organisation bringing their own personality and emphasis to the role as I did.”

He says the culture at Air New Zealand is unlike any other company and it has only strengthened as the airline introduced performance management and leadership development programmes, pioneered High Performance Engagement (HPE) with its union partners, chose to pay a Company Performance Bonus, improved its safety record and lifted its commitment to diversity and inclusion. 

“All of this has seen Air New Zealand regularly voted as the best place to work in the country. I will miss the friendship and support of all those with whom I have worked with and served.

Air New Zealand Media Release
https://www.airnewzealand.co.nz/press-release-2019-air-new-zealand-chief-executive-officer-resigns

Houston, we have a problem! (HPtE #8)

A Finance Manager, Ops Manager, HR Manager and a group of Employees walk into a bar. They all fight over whose round it is. End of joke!

The Finance Manager had noticed that the Ops Manager and HR Manager always ask for more money than they need. They also noticed that every year they spend all of the money they asked for whether they needed to or not. And those Employees seem to be the biggest cost (opportunity) of all.  “If only those people would change their behaviour, stop working in silos and be more accountable”.

The Ops Manager had noticed that the Finance Manager and HR Manager want to put controls in place for everyone to keep everything stable. They also noticed that changing the amount or placement of people is their colleagues favoured way to try and improve ‘performance’. And as for trying to predict how much time and money is required – we better ask for more than we need and build in some extra for safety, especially the labour component. “If only those people would change their behaviour, stop trying to control what is uncontrollable and let us do our work”.

The Employee’s had noticed that the Managers always wanted improvements relating to time and money but it usually came at their cost. They started to spend more work time with their Union trying to get a fair share of the money. “If only the Managers would change and realise how important Employees are”.

The HR Manager had noticed that the Ops Manager and the Finance Manager want to have people ‘on the tools’ all the time. They also noticed that despite the Manager’s desire for continuous improvement there was little time and money spent on the growth of the people doing the work. To make matter worse, every time the Managers would put pressure on improving things the Employee’s and their Union would resist. “If only everyone would stop fighting with each other over time and money”.

If only those people would change!

I have said this in a previous post but, it is worth repeating. People respond to the environment they are in. They respond to the operating system they are part of.

The most common operating system today was actually designed in the industrial age when things moved much slower. That is when silos worked. That is when controls and restructuring worked. That is when people were expected to do the same thing day in and day out and work like machines. That is when Unions were formed to protect Employees. That is when that operating system worked.

That operating system is very ingrained in us. That operating system sets us up to compete with each other. That operating system is old and tired (well at least the people in it are feeling that way). That operating system doesn’t work in a fast-changing world.

It’s not the peoples’ fault. It is the operating system they are part of.

Let’s look at what is going on.

The people looking after finances want to reduce the time spent and keep the money. They compete for their time and money.

The people doing the work want to keep their time and get more of the money. They compete for their time and money.

The people looking after operations want to reduce the time spent and spend money on improvements. They compete for their time and money.

The people in HR are trying to keep everyone working together and deal with the conflict that keeps turning up. They are trying to stop everyone competing for time and money and prevent it from turning into a more serious conflict.

Houston, we have a problem!

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Up next in the #HPtE series: 22 serious problems when people compete for time and money (HPtE #9)

The history behind the 3C’s (HPtE #7)

Finding the synergy between the 3C’s is not an easy task, and it has alluded many.  

Some will even tell you that it is impossible. There are now numerous examples of organisations throughout the world who have found some level of synergy and have reaped the benefits.  It is possible, but it takes commitment, perseverance and courageous leadership.

Before we explore the ‘how-to’ and road map of the HPtE Strategy® Framework it is necessary to explore the historical relationship between the 3C’s and what causes the tension that exists.

The Traditional Metric – Commercial

“Cash is king”, “money doesn’t grow on trees” and “money is the root of all evil”.  Whatever your feelings towards money it is the lifeblood of all organisations.

Traditionally, organisations have focused on achieving performance by focusing only on commercial responsibility. Organisations would look for improvements in efficiency and then try to convert those improvements into financial results. The fastest and easiest way to do that is to focus on improvements that reduce cost.  In part, this was because of an environment of mass production with limited consumer choice. Efficiency is also far easier to measure numerically than anything else.  It was perceived to be difficult, and unnecessary, to measure Consumer Value.

Evolving Metrics – Commercial and Consumer Value

But, reducing costs and driving efficiency will only get you so far. If you cut too deep, you start to impact on the ability to add value to the consumer.  Focusing on reducing cost has another more devastating effect that we will discuss further on.

The last two decades have seen more of a focus on continuous improvement (CI) towards creating increased consumer value and improved processes as well as converting those improvements into financial results. Strategies like Lean, Six Sigma and Agile have made a significant contribution to this effort.

Apple is an excellent example of an organisation that delivers to both financial results and consumer value.  How important do you think it was for Apple to up the game with the iPhone and then again with the iPad?

We know that Commercial responsibility and Consumer value are essential for high performance.  But what if we want sustainable high performance?

Where does a culture that is safe, secure and satisfying best fit into the picture?  We ask this question in our introductory workshops.  The answer is always “culture best connects to finding improvements for consumers”.

Commercial, Consumer Value and Culture

A constructive Culture is key to unlocking improvements to Consumer Value.  Remember that bus driver in an earlier post?  What difference does a warm smile and going the ‘extra mile’ make to perceived Consumer Value?

There is an important assumption that should be made explicit here. The people closest to the Consumer or the process have more knowledge, intuition and experience about how to make improvements to Consumer Value than anyone else.

As we move out of the ‘Industrial Age’ and into the ‘Knowledge Age’ where we have to adapt and change faster than ever a new aspect of history is evolving where finding the synergy between the 3C’s is critical for sustainable high performance.

More recently the term “Operational Excellence” has become a focus for many organisations.

“Operational Excellence goes beyond the traditional continuous improvement methods to a long-term change in organizational culture. Companies in pursuit of Operational Excellence do two things significantly differently than other companies: they manage their business and operational processes systematically and invest in developing the right culture.”

http://insights.btoes.com/resources/what-is-operational-excellence-an-introduction

It focuses on meeting customer expectation through the continuous improvement of the operational processes and the culture of the organization.

So, where is the problem?  Why is it so difficult to find synergy between the 3C’s?

The problem occurs because the people behind each of the 3C’s compete for time and money. More on that in the next post.

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Up next in the #HPtE series: Houston, we have a problem! (HPtE #8)