Everyone loves turnaround stories. They give us hope. They tell us that no matter how bad things are now, change is possible and that greatness is just around the corner. They provide inspiration and reward loyalty. Even though our team hasn’t been to the playoffs in 14 years, our loyalty will be rewarded and this season will be different (Let’s go Buffalo!). After all, it has happened before:
- The Boston Red Sox went from worst-to-first in 2013. They had the worst record in the AL East in 2012 with a 69-93 record. In 2013 they went to first with a 97-65 record and won the World Series.
- The 1999 St. Louis Rams had a 4-12 record that they followed up with a 13-3 record and a Super Bowl victory in 2000. Many call it the greatest single season turnaround in NFL history.
Not Just for Sports Fans
The love of a turnaround story is not just for sports fans. Business turnarounds also capture people’s imagination and provide a ray of hope for customers, employees, shareholders and the surrounding community that a flailing business will achieve greatness or make it back to their glory days. At my most recent “Power Hour” talk at TSIA’s Technology Services World, Monetizing the “Internet of Things”, I opened with an intriguing look at the recent transformation of Delta Airlines. After the Delta / Northwest merger in 2009, Delta ranked among the worst big airlines for on-time arrivals, cancellations, and baggage handling. And yet in 2014, Delta was named the Most Admired Airline Worldwide by Fortune Magazine.
How did Delta do it?
Just like most business turnarounds, the Delta story starts with a sharp focus on the customer. A key finding from their 2010 Voice of Customer Survey was:
Given the choice of a canceled flight and rebooking within 2 hours OR a 2 hour delay, the customer will choose the delay, due to the perception of more certainty.
This key finding and the subsequent effort to eliminate cancellations was the start of Delta’s turnaround (Source: “A World Where Flights Aren’t Canceled”: Wall Street Journal, April 2, 2014). A few other salient points on the turnaround:
- Customer Outcome Focus: By focusing on the customer’s desired outcome, ie the certainty of getting to their destination in a known timeframe, Delta was able to achieve best in class results in cancellations, on time arrivals, and baggage performance. (Source: Delta Airlines Form 8-K 12/2013). Managing customer outcomes is also a major theme of TSIA’s latest book, B4B: How Technology and Big Data Are Reinventing the Customer-Supplier Relationship.
- Executive Leadership: It took a great deal of courage and leadership on CEO Richard H. Anderson’s part to place such an emphasis on cancellations, which at around 2% of all flights, seemed by many as too small an issue to focus on. This reminds me of the courage of a CEO in another worst-to-first story [The Bank], when the idea of improving the customer experience at the branch network was seen as a waste.
- Co-locating Maintenance and Customer Service: Communication is paramount, especially in large organizations. Locating departments in different buildings can lead to sub optimization of the total operation even in this day of constant email, text, video conference etc. With the maintenance department close by, customer service was aware of potential issues and had a say in how to resolve them before they became a big problem.
- Improved Spare Parts Management: “For want of a nail . . . the kingdom was lost” is an appropriate quote for the importance of managing your spare parts. Knowing which parts can cause a flight cancellation and having a spare within 2 hours can make all the difference. The more companies focus on achieving customer outcomes, the more important the management of spare parts and reverse logistics becomes.
- Remote Monitoring and Proactive Support: Using the capabilities inherent in the Internet of Things, Delta has implemented new analytical software and instruments that monitor the health of systems on airplanes with the ability to predict which parts will soon fail and replace them before they become a problem. The benefits of remote monitoring range from increased uptime to increased revenue performance in the technology industry.
Preparing for another turnaround story
So, congratulations to Delta on being named Fortune’s Most Admired World Airline in 2014! Having recently returned to Delta as my go to airline after dumping them 10 years ago, I have been rewarded with nothing but outstanding service and 100% on time arrivals. Most organizations look for a quick fix and are not willing to do what is necessary in the short term to ensure long lasting success. However, Delta faced reality about where they were, knew where they wanted to go, and then set daring, but achievable goals. Lastly, their leader had the vision, courage, and determination to push forward when many lined up against him.
Which brings me back to sports and the start of a new NFL season. Right now everyone’s record is 0-0 and many of us are rooting for the Buffalo Bills to end a 14 year playoff drought. The world is ready for another major turnaround story in 2014 (at least Western NY is)!