Five strategy lessons from Qantas’ dramatic decision to ground its fleet
Monday, October 31, 2011/
It’s been a tough few months for Qantas. Dealing with industrial action and distraught customers is no easy task, and having to maintain a steady budget while doing so is a challenge few would want to take on.
Customers will no doubt welcome the Government’s resolution that both Qantas and the unions will now need to attend arbitration in order to settle out their dispute, granting certainty after a few days of what can only be described as chaos.
Whether Qantas took the right course of action last Saturday is up for debate. The business community is divided, and the long-term impact on the company’s brand won’t be felt for several months, or even years.
While it’s unknown what type of benefits or consequences Qantas will reap, here are five lessons SMEs can take away from the weekend’s events:
If you are going to do something controversial, control the communications
One of the most important requirements in any corporate crisis is for the core business to be communicating with their customers. Throughout the past few months, Qantas has been quick to announce any changes to its flight schedule, and has been assisting customers over Twitter and other social networking services as well.
Cancelling flights is bad enough, but keeping customers in the dark is even worse. Qantas may have drawn a lot of criticism for its surprise shutdown but at least it’s been able to keep information flowing through as fast as possible.
A key part of Qantas’ communications strategy has been the public presence of Alan Joyce. Attending interview after interview has given the company a public face, allowing the company to avoid a “faceless corporation” label in the minds of customers.
Whether or not Qantas suffers long-term damage because of the whole experience, the company has avoided a lot more pain by making sure customers are informed.
Plan for every scenario…
Joyce said over the weekend the company had been planning intensively for different scenarios, detailing how it would act in every situation. And while the company claims the decision to ground its fleet wasn’t made until Saturday, there is absolutely no doubt it was discussed at length beforehand.
Contingency plans are a must for any business. Leaders need to know what to do when disaster strikes, how they will move forward, and then what the next five steps will be after that.
After the financial crisis hit, many businesses stated they had already organised plans if revenue had dropped below a certain point, or if their customer base waned. Those businesses succeeded over those that did not.
Whether or not Qantas’ action was the correct one, it demonstrates that any significant decisions require careful and extensive planning and analysis.
…and then make sure you cost it
Planning is all well and good, but that planning won’t do anything for you if you haven’t attached some figures and determine how it will affect your coffers.
Throughout this entire ordeal, Qantas has been quick to point out numbers – that the industrial action was costing $15 million a week, and that all-out groundings would cost it $20 million a day.
It’s clear that Qantas has not only done the work to determine how it should proceed in each scenario, but has clearly detailed what each of these scenarios would do to its finances.
This is a crucial lesson for SMEs. Plans mean nothing unless they are costed. Do the hard work and figure out how much your plans – and contingency plans – will set you back.
Keep the element of surprise
Qantas has been criticised by the Government for failing to inform regulators and the flying public of plans to halt its entire fleet. But the fact the airline caught everyone by surprise did allow Qantas to control the agenda and put its opponents on the back foot.
There were no hints or leaks in the lead up to the grounding to suggest Qantas would take such drastic action. In an age of instant communication, maintaining that sort of plan for so long without any leaks is a testament to how carefully Qantas handled the decision.
Taking the market by surprise is risky, but when it does work it can give you a distinct advantage.
Calculate the long-term impact on your brand
While Qantas may have attempted to protect its brand by ensuring constant communication with customers and keeping a public face, there is no doubt that customers will still feel at least some animosity towards the company.
Naturally, the Qantas board will have determined that in order to maintain the company long-term, short-term pain was needed. The company will no doubt argue that although customers will remember this incident in the near future, in perhaps one or two years they may have forgotten this. Qantas may also be betting that in a small market like domestic aviation, many customers won’t have a choice but to fly with Qantas.
However, such an assumption could be flawed. Flying is an expensive and timely activity, and customers like to travel with whom they feel comfortable. There are many executives who choose only to fly with certain airlines – could this incident change the game?
Whether or not this is the case, only time can tell. But it shows that no matter what course of action a business takes, it needs to acknowledge the impact on its brand not just in the short-term, but over many years as well.
Even Facebook encounters huge protests when tiny changes are made to its site. The smallest decisions can affect your brand – so be sure to have plans in place when things turn sour.
This article first appeared on SmartCompany.