Performance Improvement and Your Competitors

airline performance improvement
How do you know when your performance improvement (operational excellence) efforts are paying off? When even your competitors notice and cannot help but acknowledge your great results publicly!

This just happened in the cut-throat world of US airlines. In an article entitled American Airlines to Delta Air Lines: Hats Off To You For Operational Excellence, Tom Reed , a Forbes Magazine contributor, pointed out that Robert Isom, the COO of American Airlines, explicitly congratulated Delta’s CEO Richard Anderson (and all of Delta Air Lines – a chief rival) on their excellent performance.

“American Airlines and Delta Air Lines are obviously not the best of friends, but on Thursday a top American executive (Robert Isom, American Chief Operating Officer) congratulated Delta for its operational excellence.”

Tom Reed, Forbes Magazine

Now, I am not an expert in airline operations, but I do know about performance improvement efforts inside of large organizations. Reed’s short yet effective article just jumped out as a great example of all the reasons why metrics should be the cornerstone of your improvement efforts; as such, the following observations may be of use to you when you think about your current or future improvement efforts.

The Importance of Metrics

Performance Improvement (or Operational Excellence — the two terms will be used interchangeably here) efforts always require the use of metrics to identify what success looks like and to determine the impact of all efforts.

Reed demonstrates the importance of using metrics to determine and show-case the most meaningful measures of business performance when he summarizes a conference call where Isom discussed American’s improvements not by a mountain or words, but by displaying slides that show American’s metrics related to improving operational performance. The metrics Reed highlighted included completions (completion factor),  on-time departures and arrivals, and mishandled bags.

Metrics provide the groundwork for discussing meaningful business results. With them, results automatically have meaning and context. Without them, business discussions often become story telling exercises — usually when excuses are needed.

Metrics are also how you can quantify results-to-date. This is why they are the one foolproof way to get your competitors to acknowledge your results (even if they are envious).

You Are Not the Only One “Crazy Enough” to Invest in Operational Excellence

When at least two senior competing players in a massive and highly competitive industry are driving full-out to improve performance, they you know it is worth paying attention to what they are doing and why. And although airlines are not my area of expertise, it does not take a rocket scientist to see that the (revenue-boosting) results are changing for the better for both those rivals.

Performance Improvement efforts can be contagious. Indeed, Reed observed: “All three global U.S. carriers – American, Delta and United – have been working to boost operational performance” and quoted Isom acknowledging that “Delta ‘is operating at a level that’s never been seen before, especially for an airline that large.'”

Who wants to deal with a competitor who may be faster or more cost-effective? A competitor who can do this consistently, day-in and day-out, all because they took the time and energy to focus on what was most important?

But what does this mean for me…?

No one should ever base their decision to invest time and money towards improving their results based on what their competitors are doing. However, if one or more of your competitors ARE spending the time and money to get sustainable, improved results, this should start to worry you.

Who wants to deal with a competitor who may be faster or more cost-effective? A competitor who can do this consistently, day-in and day-out, all because they took the time and energy to focus on what was most important?

What should really worry you is if your competitors have the Operational Excellence bug and you do not. That would be the worst of all worlds. And do not kid yourself – this happens more often than you know.

Record profits – the cause or effect of performance improvement work?

While Reed said that “unprecedented (airline) profitability” is helping drive the push towards excellence, please note that is not always the case. Sadly, my experience tells me how companies routinely use high profitability as an excuse to rest on laurels vs. an incentive to build insurmountable competitive advantage barriers around them; then, these sad-case companies complain bitterly that there is no money to drive positive performance improvement when times turn hard again, as they must for many industries.

Until recently, Canadian manufacturers were saddled with a high dollar when compared to its value over the last few decades. When the dollar rose, it was a case for many to “cue the tales of woe” — to few decided to get serious about their performance. Many companies folded or exist now as reduced rumps of their former selves.

But now that the dollar has dropped to its more historical valuations, do you think companies will take that windfall and invest in improving their own performance? We shall see….

Whatever your profit position, the time to start is now. Even if you are not ‘totally ready’, it is critical to start to ask the important questions so that you can prepare yourself, so you can recognize when the right time to start actually comes around. (Hint: it is not always when you might think it is.)

Please feel free to contact me if you would like more information….

The power of focusing on the Key Performance Indicator that is essential to a Critical Success Factor

Reed also singled out how Delta CEO Richard Anderson has made it a priority to complete all flights. (For US airlines, this metric is called the completion factor.) How good is good? Well, in the third quarter, Reed quotes Anderson who claims that Delta completed 99.9% of its flights and even had 40 days with zero cancellations. September had fewer than 0.02% cancellations from “more than 83,000 flights.”

That is good!

What are your Critical Success Factors and how healthy are their Key Performance Indicators? What is the gap between your current performance and your past optimal “best-in-history” performance? What is that gap costing you? And how long are you willing to pay that unnecessary cost?

You Can Make Progress or You Can Make Excuses

Look at the airlines. If anyone has a whole built-in cavalcade of excuses, it is the airline industry. Weather, external groups (ex: all the different staff from the many airports served by an airline), passengers who may not always be cooperative with procedures or schedules, etc. provide convenient cover for operational shortfalls. And planes’ on-time performance are affected by baggage handling, maintenance, and other issues. airport staff of many stripes, etc.) Yet they ARE achieving absolutely stellar performance.

How good is your quality level? Is your manufacturing or service delivery process as complicated as an airline’s? If not, and you are not achieving similar service levels, you know you have some work to do.

But take heart and know that it can be done! Reed’s article is one more objective, real-world bit of evidence that it can be done, that absolutely extraordinary performance levels can be achieved when you pay attention to performance improvement. All you have to do is find the way for you and your staff to focus on and achieve the necessary changes.

And change takes commitment…

Reed points out that Isom’s graphs showed  third quarter results of 99.3% completed flights, a big increase from 96.4% in the first quarter. And Isom is not just a one-trick pony. Three (3) other metrics also improved: On time arrivals and On time departures both increased while the number of mishandled bags dropped.

This is obviously a long-term effort by both airlines (and others one could safely bet) to make significant, lasting improvements to their performance metrics. How willing are you to keep up the effort the breakthrough to significant changes?

Performance improvement is a full-team game

Quoting further from Reed’s article: “Isom said improved maintenance operations can boost schedule reliability. Maintenance ‘offers a pretty fertile ground for us to mine … we’re designing our maintenance programs …to ensure that it’s all around day-to-day reliability.’”

Sometime, performance improvement efforts are too narrowly focused. People focus all their attention on the obvious source of pain, forgetting that others groups have roles to play in performance.

The flip-side is also true. Sometimes, support players — like maintenance departments —  take all the blame. Again, usually, this is unfair.

Almost every group I have every worked with has been faster in identifying ways others could change to help them than they are in identifying where they themselves could change. This is just one reasons half-hearted change efforts are doomed to fail.

Over to you

I loved Reed’s short article because he was able to quote Isom’s words and reference his performance numbers because Isom had the courage to share them publicly. This is evidence of a leader who’s commitment towards operational excellence moves far beyond lip service. And while I do not have any special insight as to how they are achieving their results, I can at least see that they are changing for the better. Such performance improvement is never by accident, yet the benefits are longer-lasting than most realize and everyone, from the CEO down to the most recent, junior hire, benefit immensely. And I hope the same for you and your organization.

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Trevor McAlpine

Trevor McAlpine is the President and Founder of Synergetic Management and is in charge of consulting, training, and content strategy. When he isn't devising new ways to help entrepreneurs and executives get awesome results, he likes to solve the mysteries of the universe. He also wishes he had even more time to spend with his family.