BA backs the Bus and the Dreamliner

September 29, 2007

willie-walsh.jpg

British Airways splits its future plane purchases between Boeing and Airbus. Although earlier statements suggested that the company was not interested in a Superjumbo sized carrier such as the new generation A380, Willie Walsh and his team show a chess-like grasp of strategy

Speculation in Seattle was pretty much right. A week before any official announcement, Industry insider James Wallace noted

The campaign is a key showdown between the A380 and 747-8 Intercontinental and the 787 and A350 . So far, only Lufthansa has ordered the passenger version of the 747-8. But Airbus also needs another major international customer to back the A380. It has repeat orders from Lufthansa and Singapore Airlines, but Airbus has long sought to bring BA into the A380 fold.

Jefferies & Co. analyst Howard Rubel told the AP he believes investors are expecting British Airways to split its order between the two aerospace rivals.
“I think B.A. wants to bring a little competition into the mix,” he said.
BA Chief Executive Willie Walsh has visited Boeing and Airbus for briefings on their planes.
The airline recently ordered more 777s.
Even though British Airways early on said the A380 was too big for its needs, Walsh has said the airline is now interested in the big Airbus jet, which will enter airline service next month with Singapore Airlines after a two-year delay.

Wallace’s blog also attracted a remarkable set of speculations about the prospective decision. Most seemed to be based on ‘sources close to Boeing or BA’. The following was typical

Posted by unregistered user at 9/20/07 9:21 a.m.
I’ve heard 10 A380’s + options on 10 more , 20 787’s + 10 options and 10 A350’s + 10 options

When the news of the decision was formally announced it was widely replicated from news agency sources. I took this from The BBC, but found it on all the main news feeds.

BA will buy 12 Airbus A380 superjumbos and 24 Boeing 787s, to be delivered between 2010 and 2014, for a reported $8.2bn (£4.1bn). The group also has options to buy seven more A380s as well as a further 18 Dreamliners from Boeing.
Further negotiations will occur so that BA can replace its remaining 747-400s. This appears to be between the 787-10 and the 777-300 ER from Boeing, and the Airbus A350

The Boeing reaction was between gritted teeth:

The Boeing Company [NYSE: BA] is honored that British Airways has selected the 787 Dreamliner as a key element of its long-haul fleet renewal

What’s going on?

Leadership geeks may be tempted to see unfolding a story of strategic leadership. If so, it is a story which has to place leadership with a wide cast of strategic players. We may start by thinking of Willie Walsh as the dominant decision-maker in the story, with some billion pounds/dollars to invest in the future of his company.

The evidence of Mr Walsh’s leadership style suggests that he will have been very active in the processes building up to the decision, internal to British Airways. At present we can only speculate. However, the decision has enormous significance. It will impact on the travelling lives of millions of people some more directly than others. Arguably it will impact on the future of employees of Boeing, EADS, and a myriad of suppliers and sub-contractors including Rolls Royce who will supply the engines. At another level, the debate on political influence and subsidies to Airbus and Boeing continues to bubble away.

However charismatic and autocratic his leadership style, Walsh will have been flying in tricky conditions and with a chief pilot’s usual near-overload of advice and chatter. Advisors, and advisors of advisors will have examined assorted risk assessments from in and outside BA into which data will have been fed from numerous sources. Somewhere in these the influence of various governments and global institutions will have been factored in, as well as the much-publicised production delays at Airbus and more recently at Boeing for the A380 and B787 projects. Willie Walsh keeps sane by following what the great Herbert Simon called satisficing, or simplifying the decision through a set of personal mental filters.

In an avalanche of articles and books since the 1950s, Simon ..focused much of his attention on the issue of decision-making – and [developed his theory of ] “bounded rationality”. Agents, he claims, face uncertainty about the future and costs in acquiring information in the present. Thus .. they have only “bounded rationality” and are forced to make decisions not by “maximization” by “satisficing”, i.e. setting an aspiration level which, if achieved, they will be happy enough with, and if they don’t, try to change either their aspiration level or their decision.

I have taken the view that such processes are those which chess-players also have to make. In this chess-game, BA wants to avoid fixing the position, when there is much to be said for keeping options open. So the overall decision on replacing the fleet of aging 747 400s may or may not have been made. It makes sense to keep options open, even to the extent of splitting up the decision between the two giant contenders for the business. That is partly why decisions also involve options as well as firm commitments.

Those with a liking for logistics theory can debate the merits of smaller planes and P2P (point to point) strategy, and larger ones with a Hub-based strategy. Whatever.

A judicious mix of planes of differing size keeps both strategic options open. A judicious mix of ‘top-down’ leadership actions, and ‘data driven’ analysis may also be appropriate.


Waterhole warriors and mandrill management in British Airways truce

January 30, 2007

According to a Ghanaian saying, when the big beasts arrive at the waterhole, it’s time for the mice to hide. Yesterday, the leaders of British Airways and the Transport and General Union moved their troops to the waterhole. It seemed a case of Mandrill management. But the body language of the leaders had already signalled their intentions of reaching a bloodless truce.

Mandrill

The strike of Cabin Crew at British Airways scheduled for today was called off yesterday after last-ditch negotiations by corporate and Union leaders. The drama reminded me of something a colleague from Ghana was fond of saying about industrial conflicts, that when the big beasts arrive at the waterhole, it’s time for the mice to hide.

Waterhole behaviors and Mandrill Management

Why should a Ghanaian maxim about jungle beats throw light on the current industrial relations battle at British Airways? The metaphor suggests that in times of conflict we may see patterns of human behaviour reflective our deeper instructs for fight/flight.

The process has even been described colourfully as Mandrill management.

This variety of ape, famous for its red nose, turns out to be one of the biggest bullies in the simian world. Mandrills are creatures dedicated to the cult of the Alpha Male. They spend their lives climbing to the top of the group hierarchy and, once there, behave abominably. Bottoms are flashed, willies waved, rivals clobbered and females impregnated with abandon.

Waterhole behaviours tend to be ritualistic. There may be some baring of teeth by the alpha-males, but more often than not the conflicts are resolved peaceably. For the alpha males, a temporary truce is the preferred outcome.

If we are to take the analogy further, we might note that the ritualistic nature of the conflict also preserves the superiority of the leaders over their own followers. In this instance, as a pitched battle seemed likely, the leaders took their place at the head of their respective armies, replacing their deputies.

At this stage, the language (speech acts as the social scientist would call them) of each leader was that of respect. They met to parley, not fight. And parley they did. Yet, the ritual has its own demands. The waterhole rituals can not be abandoned too swiftly. Why? Because that would leave open the opportunity of another wannabe leader stepping up to challenge not just the enemy without, but as importantly, the position of alpha-male in his own troop.

The key points agreed by BA

In practice, the outcome of such a stand-off will be couched in win-win terms. Concessions are reported, even if they had not figured highly in earlier stages of the conflict, making it difficult foe either side to claim total victory.

For example, the current dispute has been described as being about excessive sickness days by BA cabin crew (BA version), and bullying of crew to work even when they were sick (Union version, and an accusation of Mandrill management methods at BA). The agreement yesterday indicated that

BA and the union have also agreed on the implementation of the current sick leave policy, introduced 18 months ago, whereby staff have to explain to managers why they were off sick .. The T&G says it is now happy that the policy will be implemented fairly, and that staff will not feel obliged to go to work if they are sick.

That wasn’t Mandrill Management

The wider issues of concern between BA and the T&G union have been ‘resolved’ with plenty of scope (it seems to me) for future renewal of hostilities. A pay deal for two years has been agreed. Company efforts at addressing a major pensions fund deficit have been ‘noted’. Cabin crew team leaders are to be reduced from four to three on the largest planes of the fleet.

Overall, the outcome is adequately complex to defeat efforts at establishing winners or losers. Try as we might, we can hardy make sense of what happened ‘at the waterhole’ as essentially down to two leaders engaged in Mandrill management. The complexity of the agreement suggests extended and thoughtful effort by wider teams dealing with matters requiring high levels of experience and professional knowledge.

But there might still be a culture of confrontation

So congratulations are in order to the leaders who snatched at least a temporary respite from all-out conflict. Nevertheless, we can understand the reasoning behind the BBC observation that

BA also has to continue to deal with what some analysts see as an ongoing environment of worker militancy.

The content of the negotiations might demonstrate creative problem-solving. Nevertheless, the implicit messages are of Mandrill Management embedded in the perceived culture of alleged bullying of cabin crew to work when sick. Willie Walsh and Tony Woodley both won their present leadership positions with track records as tough confrontational leaders.
Which suggests that the truce at the waterhole may still only be a prelude to more serious battles.


Why Margaret Thatcher and BA needed their Willies

January 26, 2007

The BA dispute appears to be an old-fashioned Union versus Bosses confrontation as the company struggles to introduce a major shift of culture. The BA board has brought in Willie Walsh, a ‘tough’ leader with a track record of success through a confrontational style that has echoes of Margaret Thatcher’s . How will this influence the efforts of the company to achieve a transformation in its operational culture?

In days gone by, Industrial Relations in Britain was said to be symptomatic of The British Disease. Governments repeatedly found themslves in bitter conflicts against organised labour. The ultimate threat available to the Trade Union leaders (be the dispute ‘official’ or unofficial was a ‘breakdown in negotiations’ leading to the Unions unleashing their weapon of last resort, withdrawal of labour.

However, the old maxim was frequently disproved. The threat was not more powerful than its execution. The strikes seemed easier to start than to finish. (Interestingly, the most famous strike of all, the General Strike was rather quickly resolved). Sometimes the ‘reason’ for the strike was a bafflingly trivial incident or issue to the public whose daily life was being disrupted.

Efforts to achieve a more collaborative culture in place of strife largely failed. The bitterness of the disputes if anything reinforced the confrontational culture within which they occured.

Tony Blair has hardly concealed his admiration for the political achievements of Margaret Thatcher who appeared to have out-confronted the Unions a decade earlier. He was to achieve his victory over traditional Labour symbolically through the removal of Clause four from its constitution.

News of my death has been exaggerated

Defeat of an idea is harder than the defeat of its leading supporters. Labour’s so-called awkward squad has remained, in the party and trade-unions, and a reminder to Tony Blair that culture change (like regime change) is never simple. Tony Woodley, leader of the T&G Union is to play a part in this unfolding story at BA.

The protagonists in the BA dispute

Willy Walsh was brought in to British Airways with a reputation as a successful industry ‘lifer’. He joined Aer Lingus as a cadet Pilot of 18, and left as CEO in 2005. In the meanwhile he had been attributed with playing a major role in the transformation of Aer Lingus:

Successfully reinventing Aer Lingus as a profitable no-frills airline, while other established European flag carriers went to the wall, he slashed costs by 30% and shed more than a third of staff. He refused to apologise for the swingeing cuts, saying “we make no apologies for focusing on profit”.

Not distracted by a stand-off with unions that led to a three-day lockout in 2002, Mr Walsh once claimed in an Aer Lingus staff publication that “a reasonable man gets nowhere in negotiations”. It is a comment unlikely to have been missed by the Transport & General Workers Union (T&G), whose members voted for the forthcoming strikes at BA.

Tony Woodley, leader of the T&G Union is also a transport industry lifer, but in the Auto-industry. His reputation as a left-wing traditional socialist was confirmed in his overwhelming victory to the T&G leadership in 2003 where he replaced the popular Bill Morris, and defeated a candidate known as a supporter of Tony Blair (and by implications his New Labour policies).

Woodley/Walsh seems to be lining up as the major battle. They have entered negoatiations in stage two. However, the story can not be reduced to a simple slugging match between the two.

In stage one, the T&G was represented by Jack Dromey, the candidate Woodley defeated as Union leader. He has recently hit the headlines for another reason in the Cash for Peerages scandal, spiced up because of his marriage to another Blairite (and a cabinet minister, Harriet Harman).

BA in stage one may have been hindered by the imminent retirement of their most senior and experienced ‘people person’ Neil Robertson.

Where does Margaret’s Willie come into all this?

Margaret’s Willie comes into this partly because it seemed such a nice headline. But wait, there’s more. One of Mrs Thatcher’s sayings was in recognition of the debt she owed to her close friend and cabinet colleague Willie Whitlaw. (“Every Prime Minister needs a Willie”).

Maybe the humour was unconscious or in a flash of rarely observed irony from the Iron Lady. Avoiding tempting puns, I suggest that MT was acknowledging the benefits of a combination of her sort of leadership style with someone to play a moderating role. Superleadership, in effect, with other team members compensating for the excesses of the dominant figure.

IN an earlier post to this Blog, I explored the possibility that a dispute over sick employees may raise questions over sick leadership. In which case, at BA at the moment, Willie Walsh may well need his Willie Whitelaw. As maybe Tony Woodley as well

Jack Dromey as Willie Whitelaw?

Well, that would make a nice simple story. Life’s not like that. TW seems to be the one taking a conciliatory stance. Jack Dromey, whever his location on the tricky political dimension left to right, has had his earlier moments of industrial heroism. His track record is not exactly that of a non-confrontational leader. Indeed, he played quite the opposite role in the famous Grunwick dispute which lasted two years and ended in defeat for the Non-Unionised workers involved.


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