Thursday, 4 February 2016

The Pike Syndrome

I would like to share with you this story that shaped the way I approach unknown problems and situations.

In 1873 a German zoologist Dr Karl Mobius conducted a famous experiment with a pike –an aggressive fish predator. Dr Mobius put a glass divider in the middle of a tank. On one side he dropped small prey fish, and pike into another. The pike started to charge the minnows. It charged over and over, and each time it would crash violently into the glass wall. Sometimes the impact was so strong that it would float upside down for some time before recovering. Finally, after 3 months the pike gave up. After six months the glass wall was removed and the pike roamed freely among the minnows – they peacefully shared the tank. The pike survived by eating the food given by Dr Mobius. Other researchers have repeated Mobius’s experiment with the same results. Some have actually allowed the pike to starve to death while minnows swam safely around.

Our glass walls are created by our past experiences, beliefs, and habits. The sooner we start questioning our old assumptions and become aware of their true value the sooner we will free ourselves from the pike syndrome. The same applies to organisations where their core business values are being unknowingly eroded by inherited habits and practices.

Monday, 11 January 2016

How to Boost Airline Revenue, Reduce Costs, and Survive The Age of Disruptions

Being and staying profitable and competitive is going to be more and more difficult as we are approaching the age of growing disruptiveness and travel discomfort. According to EU/Eurocontrol officials, by 2035 20 airports in Europe will face the congestion that Heathrow has today. This will cause a further ripple effect across the airport network and the capacity crunch will cost airports and airlines more than €40 billion in lost revenues and €5 billion in congestion costs, annually. Airport capacity crunch will have severe repercussions throughout Europe. In particular, delays and congestion will be skyrocketing throughout the airport network, with average delay per flight increasing fivefold. The fact that these airports currently handle over a half of the total number of passengers raises serious concerns about the future of the industry. Without getting more deeply into the reasons for this situation, one thing is sure - it has much to do with industrial approach to managing one of the most dynamic industries.  

In this situation doing short term profit fixes at the expense of quality will no longer be a workable option. Nor will the rise in auxiliary revenue ever be enough to compensate for disruption losses in quality and reputation. The key to success will more than ever be in airline ability to control disruptions and there lies a big opportunity for improvement. This will be the decisive factor in ensuring competitiveness. Knowing how to reduce avoidable disruptions opens up an invaluable opportunity for reduction in cost and internal inefficiencies while improving passenger loyalty, revenue, and competitiveness all at the same time. 

The effect of even the smallest increase in passenger loyalty on the increase in revenue could be staggering, as shown in the following example:

Let's say that reduction in number and length of disruptions on the route A-B carrying 1000 passengers resulted in 10% increase in number of passengers, 10% increase in number of return passengers, and allowed for the increase of revenue per passenger for 10%. This will result in 33% rise in revenue - the work of geometric progression.




Add to this the cost saving made by reduced disruptions and you can fully understand the benefits of improved quality of operational performance. The sooner you realise this and apply the right methods for disruption control , the better your chances to be more successful than your competitors will be. See www.astuteaviation.com for guidance.   

Saturday, 28 November 2015

Astute Aviation - my next step

As many readers of this blog know, I am passionate about making sense of airline data that don't say much about the intricacies of things that shaped them, unknowingly contributing to undesired changes in planned operations and hard-to-identify operational losses. My work is focused on bridging this information gap by using disruptions as change messengers to access and address the origins of hidden but avoidable losses. Methods and tools designed to support these activities have evolved over time, bringing new insights into this still insufficiently explored area of airline management. My consultancy Astute Aviation is taking the next step in that direction.

What drew me into this work in the first place were the many years of involvement in complex decision making, especially while being responsible for managing commercial planning and scheduling departments - the crossroads of conflicting requirements between strategic and corporate side, and front-line decision-makers. My later involvement in strategic and operational management and also information and data modelling helped me get an insider’s view of these conflicting interests created by organisational detachments. At the same time these helped me to understand the interactions between data, people and process seemingly impossible to identify and control but essential for shaping the airline future.

The decisive moment that influenced my decision to do what I do today happened after finalising the disruption cost evaluation for a major airline. In order to calculate authentic cost of a single, but complex disruption event and identify its full operational consequences (including long knock-on effects), loss of revenue, and impact on passengers I was driven from one department to another, ending up with meeting 40 people across the organisation to finalise the project. The number of independent legacy applications was counted in hundreds and people were not aware about who is exactly doing what and where the information I was looking for could be found. The project ended up with astonishing results - the real losses were three times higher than the original estimates of £285,000.

This was an eye-opening experience. I learned widely and deeply about problems faced by almost every airline. I learned more about the ongoing issues than one could ever learn from all existing management reports put together. It has become clear that disruption loss analysis, supported by the right tools, can be applied much more widely to improve operational and cost efficiency and quality of service. A number of subsequent work engagements I undertook contributed to validate these observations further, and subsequently the concepts that underpin what I do today.

Bringing more authenticity and agility into decision making that cuts across organisations and domains has been central to my activities over the last ten years, including consulting, software modelling, articles and book writing, speeches, lectures, and blogging. My quest for contributing to better cross-functional decision making continues with introduction of the latest approach to managing complex contexts in complex organisations which is successfully applied in other industries. Applying some of these principles to airline industry has been a challenging task. It resulted in the development of enhanced methods and techniques to support collaborative approach to complex decision making in constantly changing airline environment. It brings together evidence-based and otherwise unavailable pieces of information essential for answering tough business questions like strategic trade-offs between growth, profit, and quality, problem oriented cross-functional cost reduction, and effectiveness of schedule buffers. Follow this link to learn more about practical benefits of Astute methods and tools. 


Apart from consultancy, Astute Aviation also offers courses and talks on the above subjects. For more information visit www.astuteaviation.com.


Thursday, 26 November 2015

A Powerful Lesson in Simplifying Complexity

"When there are too many layers people are too far from the action, therefore they need KPIs, metrics, they need poor proxies for reality. They don't understand reality and they add the complicatedness of metrics"

"Complicatedness: this is your battle, business leaders. The real battle is not against competitors. This is very abstract. Where do we meet competitors to fight them? The real battle is against ourselves, against our bureaucracy, our complicatedness."

This are the quotes from Yves Morieux TED talk 'As Work Gets More Complex, Six Rules To Simplify'.  Hope you'll find it inspiring.


Monday, 5 October 2015

When Doing More Starts Making Things Worse

When we make plans we expect that most things will respond in a linear way, that more input will get us more output. If we want more passengers, we add more flights, fly to more airports (even if overcongested), squeeze more seats into the plane, pack more people in, run more ads. We also want to be bigger and stronger than our competitors. The bigger we become the more we are inclined to ignore the critical resource limitations and issues of quality.

In real life however most things don't respond in a linear way (quality in particular). This is why we fail to notice the critical point from which the quality of outcome turns downwards. From that point on, adding more flights or having more passengers only make things worse. This happens whenever the traditional way of thinking and doing makes us wilfully ignorant to what is happening now, when we are unable to understand early signals of this decline and are deluded by the occasional rise in profit. By letting physical limitations and wasteful practices go unnoticed, we unknowingly increase complexity and are later surprised by unexplainable losses, unforeseen disruptions, and loss of reputation.

The following chart shows dependences between growth, quality of outcome, money, and time. These relationships are essential for understanding the current state of business and its future prospects.




I suggest that you draw your own inverted-U curve and mark the point that best describes your company’s position now. Then find out how to do more without giving up on quality.



Monday, 28 September 2015

Managing Quality - from Abstraction to Reality

ISO 8402-1986 standard defines quality as "the totality of features and characteristics of a product or service that bears its ability to satisfy stated or implied needs."

Business Dictionary described this by using the following example:
If an automobile company finds a defect in one of their cars and makes a product recall, customer reliability and therefore production will decrease because trust will be lost in the car's quality.

Using this analogy, if an airline flight is disrupted or cancelled, customer loyalty will decrease making further operation unsustainable because trust in service quality will be lost. It’s as simple as that… or is it?

We use the word quality as an abstract, subjective attribute to describe services we think to be appealing to our customers. This appeal is reflected in the price, flight punctuality, care, and relationship. However delivering such services is a completely different thing - turning the abstract into reality often becomes an unsurmountable obstacle.

At the core of this problem are the conflicting interpretations of local qualities restricted by local views limited by too-small-openings in organisational cubbyholes. Because quality cannot be measured in a conventional way it remains abstract to the decision makers, letting related problems grow so big that they overpower all other efforts in making a business profitable and prosperous. Despite the fact that quality is the key to long term success, current management practices and tools are not designed and organised to diagnose the root causes of quality related problems, nor to measure their impact on overall performance.

For companies opened to innovate, emerging EBM like practices and visualisation techniques that combine quality issues with cost and revenue can massively improve decision making processes in all parts of an organisation.  




Wednesday, 29 July 2015

How To Bring More Clarity Into Your Business

Grand visions and strategies are not hard to think up; making them work is the problem. We are all exposed to numerous daily destructions which make obstacles to achieving the company's goals more and more hazy and even invisible. To see the major problems more clearly they need to be examined not long after they occur - the only place where clarity can be found. Letting them retire in long arrays of corporate numbers, and various mental makeups takes the clarity away, brings more confusion and further diversions from desired goals. When left unobserved, the causes of complex issues become dissipated through multiple organisational channels and cubbyholes losing their wholeness and authenticity and breaking links between visionaries and doers. Decisions made in such circumstances make corrective actions (unknowingly) ineffective.


Improving clarity of decisions related to complex contexts like those of strategic and corporate nature assumes early recognition of causes with widespread consequences that can drift a company off course. It also requires a good understanding of their intertwined origins residing inside the company.

Committing to practice and technique for turning the complex, seemingly chaotic situations into more orderly and controllable ones allows executives to see things from new perspective, assimilate complex concepts, and address real-world problems and opportunities. It is an indispensable tool for learning, teaching, interacting and sharing the cross-cut knowledge with rewards that no traditional teachings and practices can offer - simultaneous improvement in profitability, operational performance, and safety.

Have a go by following the three basic underlying principles*:  
  • Simplify 
  • Focus 
  • Measure wide 
Feel free to drop me an email if you need a start-up push.



*Beyond Airline Disruptions, p97

Thursday, 16 July 2015

Back to Normal or Bouncing Forward

When flights get disrupted, people in Operations Control Centers take command over usually chaotic situations. They do their best to bounce the schedule back to normal as soon as possible.

The problem is that what is called normal could be flooded with errors and omissions made during the backward-looking, top-down planning processes excluded from disruption related scrutiny.



To improve normal and bounce forward instead of backward you need to be alert to opportunities arising from disruptions.

It is impossible to understand business reality and its true potential without understanding disruptions from inside out.  

Saturday, 25 April 2015

The Victory of Simplicity

Traffic figures for 2014 show that for the first time low cost airlines as a group in Europe carried more passengers on European and domestic routes than the airlines that are members of the Association of European Airlines by a margin of 51% to 49% (Airline Business April 2015).

This seems to be an unstoppable trend - the victory of simplicity over complexity, shorter vs longer travel time, on-time vs disruptive passenger experience.

Isn't it time to change the name of airline business models so that the confusing ‘traditional’, ‘network, legacy’, ‘low-cost’, ‘low-fare’ and so-on named models are replaced by 'complex', 'simple' and 'inbetweeners'. And, use colour codes to refine grades of complexity, disruptiveness, and time-waste associated with each airport and airline. Apart from benefiting the passengers this could shake-up even the most complex airlines and airports to shift their course towards simplicity, even by smallest initial steps. Then there will be no worries about the future of air travel.

Tuesday, 21 April 2015

How to Prevent Complex Airline Systems from Drifting Into Failure

The daily life of an airline is a collection of myriads of activities that are happening simultaneously: aircraft are flying, flights are delayed, passenger travel is disrupted, aircraft are repaired, crew ran out of hours, reservations are made, new flight schedules are created, investment decisions are made, route profitability is scrutinised, existing network and sales strategies are questioned, prices are revised, a new cost saving program is in operation, hub connectivity is reassessed, negotiations with service providers are taking place, and on and on.

Each of the daily activities, peoples' interactions, and every decision made at every moment are shaping the company's future. However, these complex, multidimensional interactions are impossible to identify and measure by conventional means. They lack the human component and authenticity of information, essential for addressing the complex system issues, setting new goals, and making predictions, all of which has a big impact on the quality of management decisions especially in companies with complex business models. 

These old management methods, including backward looking decision making, worked well during the periods of stable operating history and relatively static environment, but are no more up to the task. They are creating an illusion of stability because in retrospect, complex systems appear to be ordered and predictable. Decisions based on the past patterns while internal and external conditions constantly change result in costly deviance from planned outcome which are hard or impossible to explain.

One of the visible consequences of these shortfalls is the deviance from planned operations manifested through on-the-day disruptions which can account for up to 3% of total variable costs. Much higher, however, are the hidden costs of wrong system decisions as they have a longer term impact. They are not as obvious as they may include decisions to invest in expansion through additional capacities and equipment without true understanding of infrastructural and resource limitations that may have a serious impact on overall business performance. As a result, additional inefficiencies are built into the system, they become institutionalised and accepted as a new norm, perpetuating the whole process, and gradually drifting the company into failure.

To make improvements at system level requires introduction of dynamic methods and tools that combine computer-based and tacit information with quality attributes and human component. This can allow executives to see the emerging real-world problems from a new, wider perspective and understand their causes and consequences.

Rejuvenating management practices by addressing hidden, hard-to-resolve problems at system level will help airlines to absorb uncertainty, create resilience, and detect weak signals on the go - things that conventional approaches would ignore.

These principles are ingrained in the leading-edge methods and tools of Event Based Management (EBM) which is at the core of my current work.

You can contact me for more information about EBM or to arrange talks and workshops at jasenka.rapajic@beyondairlinedisruptions.com.

Tuesday, 31 March 2015

The Value of Saying Sorry

(She is only dreaming...)
'As we've been busy commercializing, industrializing and lawyering the world, countless bureaucrats have forgotten what it means to be human, and have forgotten how much it means to us to hear someone say it, and mean it. "I'm sorry you missed your flight, and I can only imagine how screwed up the rest of your trip is going to be because of it.'
(Seth Godin)
Converted into business language, one heartfelt 'sorry' could be worth thousands of pounds later. One hundred sorrys can bring higher return on investment than things like happiness blankets, and so on.

Why is saying  'sorry' so hard when it is so needed?

                                                                  

Thursday, 19 March 2015

The Value of Seeing Things from Different Perspective

When your persistent, try-hard attitude to solve a difficult problem takes you nowhere, try stepping into the shoes of outsiders and try to think it their way.

In an attempt to refresh my thinking patterns about network congestion in airline industry, I borrowed the ideas from software engineers faced with the same problem (in a different context) and turned them the airline way. You may find this useful if you are a decision maker at strategic or operational level and anywhere inbetween.

Network congestion
In route networking and queuing theory, network congestion occurs when a hub is carrying so many flights that its quality of service deteriorates. Typical effects include flight delays, blocking of new connections, and passenger desperation. Network protocols which use aggressive flight cancellations to reduce network congestion can exhibit output known as congestive collapse. Modern networks use congestion control and congestion avoidance techniques to try to avoid congestion collapse. These include reduction in queuing. Another method to avoid the negative effects of network congestion is implementing priority schemes, so that some flights are transmitted with higher priority than others. Priority schemes do not solve network congestion by themselves, but they help to alleviate the effects of congestion for some services.

Congestion Management
Congestion management is the process of managing a congestion condition. Congestion management mechanisms include the use of buffers that can temporarily store flights in one or more queues until they can be forwarded further. As the buffers fill to capacity, flights can be discarded, perhaps selectively based on a priority or quality of service (QoS) mechanism. If a network is designed to absorb this impact, a skilled 'router' may have the ability to identify and exercise alternate paths if the primary path is suffering congestion levels that exceed definable parameters established in consideration of QoS objectives. Some network protocols provide for a 'router', for example, to advise its peers of congestion conditions and to instruct them to adjust their communication rates to avoid compounding the situation. Similarly, 'routers' can advise customers to take it easy, or even temporarily suspend their desire to travel by offered traffic until the congestion condition relaxes. Finally, a 'router' can simply reject a call or message by stranded passengers. In a voice network  a central office (CO) provides the rejected caller with a fast busy signal.

If this kind of technique doesn't help you solve the problem, you will at least have some fun along the way. I definitely did.