Willie swings his axe
Paxing All Over The World
BA finds itself in the same position as many others: it is old and that means that it is near to the end of it's natural life. Whils the company has undergone several major 'D' overhauls, basically, the airframe is getting close to the natural time limit.
All companies (and govts and institutions) face this. In the UK at present, we have Marks & Sparks and Boots on the way down as well. They might be able to merge and meld or they might not. Any company that has a long history will have accumulated more baggae than it can carry. If they can negotiate themselves into a good merger (like Boots is trying) they might last a lot longer. Companies die for many reasons, some of which are:[list=1][*]They made a colossal financial gamble and lost[*]They broke the law[*]They were overtaken by younger competitors[*]Old age[/list=1] You just have to judge which one will apply and how long to go before it happens. As I indicate, every employee should be considering their employer in this light at least once a year and more rapidly as the noose tightens.
But one of the most consistent reasons for a company failing and losing everything (pensions included) is that the managment think that they can buck the trend and outsmart all the others. Mostly they can't and so, rather than a measured and managed merger, they hit the wall and some lucky company picks up the pieces for peanuts. Currently, M&S is in this category. Where BA is - I cannot be sure, for that will depend upon WW and the Board.
All companies (and govts and institutions) face this. In the UK at present, we have Marks & Sparks and Boots on the way down as well. They might be able to merge and meld or they might not. Any company that has a long history will have accumulated more baggae than it can carry. If they can negotiate themselves into a good merger (like Boots is trying) they might last a lot longer. Companies die for many reasons, some of which are:[list=1][*]They made a colossal financial gamble and lost[*]They broke the law[*]They were overtaken by younger competitors[*]Old age[/list=1] You just have to judge which one will apply and how long to go before it happens. As I indicate, every employee should be considering their employer in this light at least once a year and more rapidly as the noose tightens.
But one of the most consistent reasons for a company failing and losing everything (pensions included) is that the managment think that they can buck the trend and outsmart all the others. Mostly they can't and so, rather than a measured and managed merger, they hit the wall and some lucky company picks up the pieces for peanuts. Currently, M&S is in this category. Where BA is - I cannot be sure, for that will depend upon WW and the Board.
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Paxboy makes some very good points and I agree entirely with his views on BA being outdated and having undergone a make over too far. It will indeed have to reinvent itself in the next decade or await a takeover if it can make cost saving improvements. Survival at its present levels with regular tampering is not good enough for the shareholders or the financial markets. It is noticeable that the new a/c orders do not emrace BA but innthe main are from Asian / Middle East carriers who innthe next decade will cause the western airlines a great deal of grief.
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BA will be having a strange time over the next 2/3yrs.
1. They will reduce numbers, many fine staff will leave and many slackers will remain.
2. Staff will be worried about all the changes and focus will be lost/confused.
3. Staff will not accept pension changes.
4. Terminal 5 will open and Heathrow will be hard work on a good day, horrible if it rains,snows or is windy.
5. Other cash rich airlines flying bigger and bigger aircrafts to Heathrow and other UK Airports.
It will be like getting Married, have a Baby, change Jobs, move House, get Divorced and a Family Member being advised by the Doctor they have Cancer. Not a nice time.
But it will be Fun To Watch.!!!
1. They will reduce numbers, many fine staff will leave and many slackers will remain.
2. Staff will be worried about all the changes and focus will be lost/confused.
3. Staff will not accept pension changes.
4. Terminal 5 will open and Heathrow will be hard work on a good day, horrible if it rains,snows or is windy.
5. Other cash rich airlines flying bigger and bigger aircrafts to Heathrow and other UK Airports.
It will be like getting Married, have a Baby, change Jobs, move House, get Divorced and a Family Member being advised by the Doctor they have Cancer. Not a nice time.
But it will be Fun To Watch.!!!
Last edited by Joetom; 6th Dec 2005 at 20:35.
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I fear you're right, joetom. The Masonic Order used to have a double-entendre message when ending a meeting with a non-Mason..........."May you live in interesting times!"
It sounded like a compliment but could actually have been construed somewhat differently!
All of us at BA are indeed "living in interesting times" and, thanks to the blasted Gate Gourmet fiasco, our properly elected Trades Union representatives are virtually powerless!!!
It sounded like a compliment but could actually have been construed somewhat differently!
All of us at BA are indeed "living in interesting times" and, thanks to the blasted Gate Gourmet fiasco, our properly elected Trades Union representatives are virtually powerless!!!
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BA finds itself in the same position as many others: it is old and that means that it is near to the end of it's natural life........In the UK at present, we have Marks & Sparks and Boots on the way down as well
And for whichever plonker said short haul pilots will have to do as many duty hours as necesary to reach 900 flying hours, well I'm sorry to inform you that they won't. Duty hours are invariably the limiting factor on shorthaul, not flying hours, and no matter what WW does there's still only going to be 365 days in a year. If he wants more duty hours he'll have to get the CAA to change the rules.
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quote:
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I'm I the only one living in the real world here? IIRC BA is currently one of the most profitable airlines in the world and possibly the most profitable airline in Europe, despite being in an intensely competitive market skewed by state funding and loss-leading lo-cos scrambling for market share.
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True - unfortunately BA are a PLC. So need to be compared to business as a whole not the Airline Industry only as its the markets that determine their future. And a £3.3 billion debt allied to a rather large investment needed for fleet renewal and then that little pension problem.
They still cant pay a dividend and somewhere down the line a price will have to be paid. Thats why WW needs those annual (large or huge - you decide) cost savings.
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I'm I the only one living in the real world here? IIRC BA is currently one of the most profitable airlines in the world and possibly the most profitable airline in Europe, despite being in an intensely competitive market skewed by state funding and loss-leading lo-cos scrambling for market share.
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True - unfortunately BA are a PLC. So need to be compared to business as a whole not the Airline Industry only as its the markets that determine their future. And a £3.3 billion debt allied to a rather large investment needed for fleet renewal and then that little pension problem.
They still cant pay a dividend and somewhere down the line a price will have to be paid. Thats why WW needs those annual (large or huge - you decide) cost savings.
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As I'm sure has been mentoined elsewhere, the pension deficit could be paid off in a little over a year if they chose to. The pensions regulator certainly won't let them pay one whlst they continue to pay off debt (which is now down below £2bn) rather than deficit. Fleet renewal is a red herring. We have a brand spanking new fleet of V2500 powered Airbusses, the oldest of which is just 6 years old. LGW won't get any new aircraft until it makes a profit, which is at least two years away. The oldest 777s are only about 8 years old and the oldest 744s are only 15 with a minimum 5 years of life left. Fleet renewal is not a short term prospect, and even it would only be with a few extra 777s and the release of some 744s. The 747 -800 is still on the drawing board and theres nothing to say we'd buy them in any large quantity any time soon. Management bonusses and dividends - thats the real goal of the efficiency drive.
Suggesting that because BA is a PLC it should be considered in the context of business as a whole is a rather moot point. If you want to make money these days you don't invest in airlines. Even if you do consider it in that context were still doing better than M&S!
Suggesting that because BA is a PLC it should be considered in the context of business as a whole is a rather moot point. If you want to make money these days you don't invest in airlines. Even if you do consider it in that context were still doing better than M&S!
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The car and IT industries are a good indication for what BA will face in the next few years.
Air travel is mostly a commodity for the vast majority of travellers. As with any commodity (seats in this case) you survive only by cutting costs to a margin where you can be profitable. As everyone does this, you can’t differentiate on price, so your differentiator will be customer care.
But, simple as it sounds, those companies lumbered with pensions, health schemes, and highly unionised workforces make change difficult and add to your cost base making it hard to adapt and reduce margins.
If you look at Ford, GM and other US car companies, they are all nearing the end of their lives - if they continue to operate in the US. They all have cost bases which make competition impossible with the likes of Honda, Toyota and others without the legacy of 50+ years of operation. I guess the Honda equivalent for BA is Virgin, Emirates etc.
18 years ago who would have considered that IBM would be the company it is today? One of the most respected consultants at the time wrote a book called 'In search of excellence' promoting IBM as the case study for all companies to follow. 3 years later IBM posted the biggest corporate loss of all time. Now its main business has little to do with personal computers. But, the PC market is still alive and well; Dell could start from scratch and produce PCs at a fraction of the cost that IBM could.
A deregulated airline industry will face the same challenges. It will be interesting to see how the management of BA will face it.
Air travel is mostly a commodity for the vast majority of travellers. As with any commodity (seats in this case) you survive only by cutting costs to a margin where you can be profitable. As everyone does this, you can’t differentiate on price, so your differentiator will be customer care.
But, simple as it sounds, those companies lumbered with pensions, health schemes, and highly unionised workforces make change difficult and add to your cost base making it hard to adapt and reduce margins.
If you look at Ford, GM and other US car companies, they are all nearing the end of their lives - if they continue to operate in the US. They all have cost bases which make competition impossible with the likes of Honda, Toyota and others without the legacy of 50+ years of operation. I guess the Honda equivalent for BA is Virgin, Emirates etc.
18 years ago who would have considered that IBM would be the company it is today? One of the most respected consultants at the time wrote a book called 'In search of excellence' promoting IBM as the case study for all companies to follow. 3 years later IBM posted the biggest corporate loss of all time. Now its main business has little to do with personal computers. But, the PC market is still alive and well; Dell could start from scratch and produce PCs at a fraction of the cost that IBM could.
A deregulated airline industry will face the same challenges. It will be interesting to see how the management of BA will face it.
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The Emirates competition is overstated, the only places they can serve with less stops than BA is Australasia and the smaller cities of the Far East/India. Business pax will never fly LHR to NRT/HKG/DEL/SIN via DXB when there are direct options. They will take more low yield tourist and VFR market but BA fill from the front not the back. VS are similar they have been going 21 years now not quite the new startup anymore, they are even getting strike threats from crew. They have some mature routes that they still cant get the loads up enough to go double daily, and they pulled off ORD which is very profitable for BA.
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Dell already does produce PCs at a fraction of the cost IBM does. So why is IBM still one of the worlds largest and most profitable IT providers? Because it sees IT as a service rather than a product and tailors its business to suit that. Dell produce the commodit and once its shipped thats the end of it. You got a problem? Call the helpdesk in Bangalore where they won't be able to help you. Dell can ship to the public at cheapo prices but if you need an integrated IT solution with support and flexibility you go to IBM. Which is actually a very good analogy for the airline industry. You want cheapo commodities then go to Easyjet. If your doing business in 4 continents in 8 days and you need back up when the schedule goes awry who are you going to go to?
You can look at Ford, GM and other US car companies all you want, but when did they last make any money? BA has followed and occasionally bucked the airline trend. When they lost money, nobody made any money. When the people were making profits BA were raking it in. Virgin provide competition but they ain't no Honda. They can do the product more cheaply but they don't necessarily do it better as many an airline award will testify. Whilst they make much of their 'innovation', many of their ideas are simply following other areas of the industry. 4 years to get a fully flat bed doesn't sound much like innovation to me.
These arguments always seem to boild down to the idea that some people think that cost is the only differentiator. That may be true if you travel in the low yield economy classes. The reality is that the money is up the front end of the aircraft where publised prices bear little relation to the actual fares paid and price is but one of many differentiators. Anybody can take Joe Bloggs from A to B. Its the service standards which differentiate the airlines.
You can look at Ford, GM and other US car companies all you want, but when did they last make any money? BA has followed and occasionally bucked the airline trend. When they lost money, nobody made any money. When the people were making profits BA were raking it in. Virgin provide competition but they ain't no Honda. They can do the product more cheaply but they don't necessarily do it better as many an airline award will testify. Whilst they make much of their 'innovation', many of their ideas are simply following other areas of the industry. 4 years to get a fully flat bed doesn't sound much like innovation to me.
These arguments always seem to boild down to the idea that some people think that cost is the only differentiator. That may be true if you travel in the low yield economy classes. The reality is that the money is up the front end of the aircraft where publised prices bear little relation to the actual fares paid and price is but one of many differentiators. Anybody can take Joe Bloggs from A to B. Its the service standards which differentiate the airlines.
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Exactly CM, when cost has been done to death, everyone has to differentiate themselves on something else. Cost reduction is only ever a short term gain, and never a customer retention strategy, as most companies who outsource their customer care to India are finding out. Once you've all done it, then where do you go? Most head towards better customer experience strategies to differentiate. This is what Easy Jet are attempting to do, and BA have always made a claim for that crown, (although as an ex-Gold card holder I think they are very mistaken, ever since you got rid of the customer care group based in T4...)
Incidentally, there is no cost difference in a Club World ticket versus a Upper Class ticket to Boston, LA, Jo-Burg, Cape Town etc...so it's what lounge you prefer, schedules, ease of check-in etc.
Anyway the point is that you have to evolve, as IBM did. But, how easy does your legacy allow it, and can you do it in time?
Incidentally, there is no cost difference in a Club World ticket versus a Upper Class ticket to Boston, LA, Jo-Burg, Cape Town etc...so it's what lounge you prefer, schedules, ease of check-in etc.
Anyway the point is that you have to evolve, as IBM did. But, how easy does your legacy allow it, and can you do it in time?
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Suggesting that because BA is a PLC it should be considered in the context of business as a whole is a rather moot point. If you want to make money these days you don't invest in airlines. Even if you do consider it in that context were still doing better than M&S!
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And I would suggest that is THE point. BA have to convince the markets else no-one will invest (and given the rise in share price over the last 6 months, very short term at least they are doing it). No investors, no BA.
Somewhere down the line they need to return dividends otherwise whats the point?. The market against BA at the moment is skewed, with some of their major competition in bankruptcy protection of one sort or another, illegally subsidised airlines in Europe (Alitalia and its one chance last chance funding that now appears to be one chance last chance until the next chance for example. How many times will Olympic be saved, and as for Air France - enuff said)
Whilst I disagree with the debt levels mentioned, WW and the board most certainly have their work cut out over the next 5 years or so.
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Suggesting that because BA is a PLC it should be considered in the context of business as a whole is a rather moot point. If you want to make money these days you don't invest in airlines. Even if you do consider it in that context were still doing better than M&S!
__________________________________________________
And I would suggest that is THE point. BA have to convince the markets else no-one will invest (and given the rise in share price over the last 6 months, very short term at least they are doing it). No investors, no BA.
Somewhere down the line they need to return dividends otherwise whats the point?. The market against BA at the moment is skewed, with some of their major competition in bankruptcy protection of one sort or another, illegally subsidised airlines in Europe (Alitalia and its one chance last chance funding that now appears to be one chance last chance until the next chance for example. How many times will Olympic be saved, and as for Air France - enuff said)
Whilst I disagree with the debt levels mentioned, WW and the board most certainly have their work cut out over the next 5 years or so.
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carnage matey
there are indeed 57 reasonably shiny v2500 Airbus 32x.
but needing replacement sooner or later will be:
10 CFM56 A320 - BUSB FF was 1987.
33 B733/4/5 - LGTH FF was 1988.
13 B752/752ER - CPEL FF was 1989.
- so pretty much half the European fleet. There are only 7 more A32x on order at present but Willie likes cutting types.
Hopefully WW's contacts in Airbus are still good from the EI order - although they might not be too pleased at his public poohpoohing of the 380
there are indeed 57 reasonably shiny v2500 Airbus 32x.
but needing replacement sooner or later will be:
10 CFM56 A320 - BUSB FF was 1987.
33 B733/4/5 - LGTH FF was 1988.
13 B752/752ER - CPEL FF was 1989.
- so pretty much half the European fleet. There are only 7 more A32x on order at present but Willie likes cutting types.
Hopefully WW's contacts in Airbus are still good from the EI order - although they might not be too pleased at his public poohpoohing of the 380
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Service and Outsourcing
Couple of points:
Carnage: IBM have sold their PC business in its entirety to Lenovo, a Chinese Company. Turns out IBM didn't make a penny out of PCs in the last five years.
Outsourcing: Dell outsourced all their support to India, but the customer backlash was so strong in the US that all US support has now been repatriated. Dell won their position by being a 'clean sheet' operation that held no inventory of parts and used customers' credit cards to finance operations.
In both cases, traditional business models no longer work. That's why BA must change -- ailines are having the traditional model challenged. However, what the LoCos can do on short-haul won't necessarily work on long-haul where the customer profile and the challenges are different. No cabin service on an 11-hour flight to the West Coast? I don't think so.
Carnage: IBM have sold their PC business in its entirety to Lenovo, a Chinese Company. Turns out IBM didn't make a penny out of PCs in the last five years.
Outsourcing: Dell outsourced all their support to India, but the customer backlash was so strong in the US that all US support has now been repatriated. Dell won their position by being a 'clean sheet' operation that held no inventory of parts and used customers' credit cards to finance operations.
In both cases, traditional business models no longer work. That's why BA must change -- ailines are having the traditional model challenged. However, what the LoCos can do on short-haul won't necessarily work on long-haul where the customer profile and the challenges are different. No cabin service on an 11-hour flight to the West Coast? I don't think so.
Paxing All Over The World
Carnage Matey!
Not because of short term profits but long term history. BA has had a horribly mixed life - due to politicians - and I suspect that the enforced BOAC/BEA merger will yet be one of the causes of its undoing. They have to find a way for mainline and CitiExpress to live and work together. As an outsider, I see no evidence of that, for each side seems to to dislike the other and common ground is small. But there is more history that will affect the future. As with any hull loss, the death of a company can be traced back to often small and disparate failures that eventually link up. VS is not a direct competitor for BA in all areas and, as I understand it, never set out to be so. In another 50 years they will also be looking for parachutes!
no sponsor
Yes!!! The way in which IBM managed to pull success from disaster is a text book case. BUT the advantages for IBM were:[list=1][*] The disaster was of their own making (the PC) rather than politicians (Nationalisation and enforced merger) and so they could unpick it.[*] I.T. was developing into new areas, whereas the carrying of bodies is, essentially, the same as it always has been.[*] The I.T. world has little regulation of the product itself (as opposed to business practise) but the airlines are regulated for every inch that they move.[*] Computers may be the cause of national esteem but not the frenzied cries of 'flag carrying' that so badly drags down all mainline carriers.[*] A failure of IT causes irritation but only occasionally the loss of life.[/list=1] Accordingly, the opportunties to evolve/develop (or any other buzz words) is very small.
manintheback is dead right to point out the skewed market. Once Olympic is gone (in it's present form), one of the US carriers goes bust and if AF/KLM ever get themselves sorted, then the world will be even more uncomfortable for the likes of BA.
To give them credit, they saw all this coming and have tried mergers but failed. They cannot afford to go it alone (no main carrier can) and they must find partners. In the short term, cutting costs is all they can do and removing types or replacing airframes is all by the by. The strategy has to be, first, to fix the CitiExpress/Mainline problem and - concurrently - Find a good partner. That, however, may well mean a change in the law of more than one country. But laws can be changed and most govts would prefer to have some sort of airline biz than none.
Can someone explain to me how that is considered 'on the way down'?
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the point is that you have to evolve, as IBM did.
manintheback is dead right to point out the skewed market. Once Olympic is gone (in it's present form), one of the US carriers goes bust and if AF/KLM ever get themselves sorted, then the world will be even more uncomfortable for the likes of BA.
To give them credit, they saw all this coming and have tried mergers but failed. They cannot afford to go it alone (no main carrier can) and they must find partners. In the short term, cutting costs is all they can do and removing types or replacing airframes is all by the by. The strategy has to be, first, to fix the CitiExpress/Mainline problem and - concurrently - Find a good partner. That, however, may well mean a change in the law of more than one country. But laws can be changed and most govts would prefer to have some sort of airline biz than none.
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I'm really struggling to see how you're forming your conclusions here PAXboy because they really don't seem to be supported by the facts you present. You are harking back about 30 years to the merger of BOAC and BEA and claiming that that is the albatross that will sink BA? If that was going to happen do you not think it would have happened a long time ago, given Lockerbie, Mid East terrorism, oil shocks, Gulf War 1, Gulf War 2, 9/11, Foot and Mouth etc etc. I remember reading these forums towards the back end of 2001 and again during Gulf War 2 and the message was the same - BA is doomed, too expensive, no more than two years to live. But here we still are, most profitable airline in Europe.
Easily achieved. Mainline do LHR & LGW, BACX do everything in the regions. The dismal performance of BACX has nothing to do with their inability to operate out of LHR or LGW, where their aircraft are too small to effectively utilise valuable slots, and everything to do with an utterly inept management team who screwed up the operation and wrecked BAR before them.
Now that statement I find totally bizarre! Are you really suggesting that once the subsidised competition goes bust and the relentless downwards pressure on transatlantic yield is eased things will get harder? I'm sorry but the logic of that escapes me completely. As for AF/KLM, yes they'll have some big efficiency savings when the merger is complete (assuming their 'history' doesn't create problems as you believe it does for BA), but how will they tackle productivity. The benchmarking data shows BA pilots are flying about 150 hours per year,or nearly 20% more than AF pilots. Do you think they'll take to a similar increase in their productivity? We're doing a lot more than KLM too.
I agree with finding a partner but then it's no secret that the board have been longer at that for years. However I do think you have something of an obsession with what you call CitiExpress/Mainline problem. Whilst BACX may be the biggest regional airline in Europe, it's revenues are a drop in the ocean to BA, and its losses totalled about £30M last year, which is even moer money than the accountants would have you believe short haul lost. Fix the BACX problem by all means - replacing the management would be a great start - but don't try to claim some huge synergy remains untapped because they remain seperate organisations. They're different types of operation for different types of flying.
MarkD - age is but a number in aircraft life terms and one of many factors. If the 757 fleet goes how do you think that will affect operating costs for the 767/757 fleet as a whole. As for Gatwick, like I said, they won't be getting anything new until they can turn a proit, which is at least a couple of years away.
manintheback - your estimate of the debt levels is significantly too high. Trust me, we get the debt levels rammed down our throats each week in the company newspaper, by e-mail, by mailshot DVD presentations, by management presentations and by very large posters at our workplace. It's all part of the propoganda campaign surrounding the pension issue. Even they don't claim the debt is at £3.3Bn.
nosponsor -
With that statement I think I know where you are getting your information from, and I think its the current big red advertising campaign by Virgin which says just that. The real world, as ever, is rather more complex and when you factor in corporate discounting the difference in fares and service could be quite different betwee carriers. It all depends who you've got the best deal with.
They have to find a way for mainline and CitiExpress to live and work together
Once Olympic is gone (in it's present form), one of the US carriers goes bust and if AF/KLM ever get themselves sorted, then the world will be even more uncomfortable for the likes of BA.
The strategy has to be, first, to fix the CitiExpress/Mainline problem and - concurrently - Find a good partner.
MarkD - age is but a number in aircraft life terms and one of many factors. If the 757 fleet goes how do you think that will affect operating costs for the 767/757 fleet as a whole. As for Gatwick, like I said, they won't be getting anything new until they can turn a proit, which is at least a couple of years away.
manintheback - your estimate of the debt levels is significantly too high. Trust me, we get the debt levels rammed down our throats each week in the company newspaper, by e-mail, by mailshot DVD presentations, by management presentations and by very large posters at our workplace. It's all part of the propoganda campaign surrounding the pension issue. Even they don't claim the debt is at £3.3Bn.
nosponsor -
Incidentally, there is no cost difference in a Club World ticket versus a Upper Class ticket to Boston, LA, Jo-Burg, Cape Town
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Just a small point but only 4 of the B757 are old, the others are much newer around 1998. I was told by our Planning Director that these would stay till 2014, which is about the replacement time for the B767 as well. So they will probably be replaced by one type?
Food For Thought
IMHO, Britain has an entrenched class system that does not seem to produce large, well managed organisations. I note the latest appointee as leader of the Conservative party as a shining example of what's not needed - no life experience outside politics, and born with a silver spoon, no experience of adversity.
If you want to know what you are likely to be confronting in terms of business models, have a look at Googles "Seven Rules" (reprinted below lifted from Newsweek, but available elsewhere anyway). I would like to suggest that the first airline that can come up with an equivalently striking and appropriate model will crush BA, Ryanair and all the rest.
I do not think that a British Airline (or any British business) could run this way.
"At Google, we seek that (competitive) advantage. The ongoing debate about whether big corporations are mismanaging knowledge workers is one we take very seriously, because those who don't get it right will be gone. We've drawn on good ideas we've seen elsewhere and come up with a few of our own. What follows are seven key principles we use to make knowledge workers most effective. As in most technology companies, many of our employees are engineers, so we will focus on that particular group, but many of the policies apply to all sorts of knowledge workers.
* Hire by committee. Virtually every person who interviews at Google talks to at least half-a-dozen interviewers, drawn from both management and potential colleagues. Everyone's opinion counts, making the hiring process more fair and pushing standards higher. Yes, it takes longer, but we think it's worth it. If you hire great people and involve them intensively in the hiring process, you'll get more great people. We started building this positive feedback loop when the company was founded, and it has had a huge payoff.
* Cater to their every need. As Drucker says, the goal is to "strip away everything that gets in their way." We provide a standard package of fringe benefits, but on top of that are first-class dining facilities, gyms, laundry rooms, massage rooms, haircuts, carwashes, dry cleaning, commuting buses—just about anything a hardworking engineer might want. Let's face it: programmers want to program, they don't want to do their laundry. So we make it easy for them to do both.
* Pack them in. Almost every project at Google is a team project, and teams have to communicate. The best way to make communication easy is to put team members within a few feet of each other. The result is that virtually everyone at Google shares an office. This way, when a programmer needs to confer with a colleague, there is immediate access: no telephone tag, no e-mail delay, no waiting for a reply. Of course, there are many conference rooms that people can use for detailed discussion so that they don't disturb their office mates. Even the CEO shared an office at Google for several months after he arrived. Sitting next to a knowledgeable employee was an incredibly effective educational experience.
* Make coordination easy. Because all members of a team are within a few feet of one another, it is relatively easy to coordinate projects. In addition to physical proximity, each Googler e-mails a snippet once a week to his work group describing what he has done in the last week. This gives everyone an easy way to track what everyone else is up to, making it much easier to monitor progress and synchronize work flow.
* Eat your own dog food. Google workers use the company's tools intensively. The most obvious tool is the Web, with an internal Web page for virtually every project and every task. They are all indexed and available to project participants on an as-needed basis. We also make extensive use of other information-management tools, some of which are eventually rolled out as products. For example, one of the reasons for Gmail's success is that it was beta tested within the company for many months. The use of e-mail is critical within the organization, so Gmail had to be tuned to satisfy the needs of some of our most demanding customers—our knowledge workers.
* Encourage creativity. Google engineers can spend up to 20 percent of their time on a project of their choice. There is, of course, an approval process and some oversight, but basically we want to allow creative people to be creative. One of our not-so-secret weapons is our ideas mailing list: a companywide suggestion box where people can post ideas ranging from parking procedures to the next killer app. The software allows for everyone to comment on and rate ideas, permitting the best ideas to percolate to the top.
* Strive to reach consensus. Modern corporate mythology has the unique decision maker as hero. We adhere to the view that the "many are smarter than the few," and solicit a broad base of views before reaching any decision. At Google, the role of the manager is that of an aggregator of viewpoints, not the dictator of decisions. Building a consensus sometimes takes longer, but always produces a more committed team and better decisions
* Don't be evil. Much has been written about Google's slogan, but we really try to live by it, particularly in the ranks of management. As in every organization, people are passionate about their views. But nobody throws chairs at Google, unlike management practices used at some other well-known technology companies. We foster to create an atmosphere of tolerance and respect, not a company full of yes men.
* Data drive decisions. At Google, almost every decision is based on quantitative analysis. We've built systems to manage information, not only on the Internet at large, but also internally. We have dozens of analysts who plow through the data, analyze performance metrics and plot trends to keep us as up to date as possible. We have a raft of online "dashboards" for every business we work in that provide up-to-the-minute snapshots of where we are.
* Communicate effectively. Every Friday we have an all-hands assembly with announcements, introductions and questions and answers. (Oh, yes, and some food and drink.) This allows management to stay in touch with what our knowledge workers are thinking and vice versa. Google has remarkably broad dissemination of information within the organization and remarkably few serious leaks. Contrary to what some might think, we believe it is the first fact that causes the second: a trusted work force is a loyal work force."
If you want to know what you are likely to be confronting in terms of business models, have a look at Googles "Seven Rules" (reprinted below lifted from Newsweek, but available elsewhere anyway). I would like to suggest that the first airline that can come up with an equivalently striking and appropriate model will crush BA, Ryanair and all the rest.
I do not think that a British Airline (or any British business) could run this way.
"At Google, we seek that (competitive) advantage. The ongoing debate about whether big corporations are mismanaging knowledge workers is one we take very seriously, because those who don't get it right will be gone. We've drawn on good ideas we've seen elsewhere and come up with a few of our own. What follows are seven key principles we use to make knowledge workers most effective. As in most technology companies, many of our employees are engineers, so we will focus on that particular group, but many of the policies apply to all sorts of knowledge workers.
* Hire by committee. Virtually every person who interviews at Google talks to at least half-a-dozen interviewers, drawn from both management and potential colleagues. Everyone's opinion counts, making the hiring process more fair and pushing standards higher. Yes, it takes longer, but we think it's worth it. If you hire great people and involve them intensively in the hiring process, you'll get more great people. We started building this positive feedback loop when the company was founded, and it has had a huge payoff.
* Cater to their every need. As Drucker says, the goal is to "strip away everything that gets in their way." We provide a standard package of fringe benefits, but on top of that are first-class dining facilities, gyms, laundry rooms, massage rooms, haircuts, carwashes, dry cleaning, commuting buses—just about anything a hardworking engineer might want. Let's face it: programmers want to program, they don't want to do their laundry. So we make it easy for them to do both.
* Pack them in. Almost every project at Google is a team project, and teams have to communicate. The best way to make communication easy is to put team members within a few feet of each other. The result is that virtually everyone at Google shares an office. This way, when a programmer needs to confer with a colleague, there is immediate access: no telephone tag, no e-mail delay, no waiting for a reply. Of course, there are many conference rooms that people can use for detailed discussion so that they don't disturb their office mates. Even the CEO shared an office at Google for several months after he arrived. Sitting next to a knowledgeable employee was an incredibly effective educational experience.
* Make coordination easy. Because all members of a team are within a few feet of one another, it is relatively easy to coordinate projects. In addition to physical proximity, each Googler e-mails a snippet once a week to his work group describing what he has done in the last week. This gives everyone an easy way to track what everyone else is up to, making it much easier to monitor progress and synchronize work flow.
* Eat your own dog food. Google workers use the company's tools intensively. The most obvious tool is the Web, with an internal Web page for virtually every project and every task. They are all indexed and available to project participants on an as-needed basis. We also make extensive use of other information-management tools, some of which are eventually rolled out as products. For example, one of the reasons for Gmail's success is that it was beta tested within the company for many months. The use of e-mail is critical within the organization, so Gmail had to be tuned to satisfy the needs of some of our most demanding customers—our knowledge workers.
* Encourage creativity. Google engineers can spend up to 20 percent of their time on a project of their choice. There is, of course, an approval process and some oversight, but basically we want to allow creative people to be creative. One of our not-so-secret weapons is our ideas mailing list: a companywide suggestion box where people can post ideas ranging from parking procedures to the next killer app. The software allows for everyone to comment on and rate ideas, permitting the best ideas to percolate to the top.
* Strive to reach consensus. Modern corporate mythology has the unique decision maker as hero. We adhere to the view that the "many are smarter than the few," and solicit a broad base of views before reaching any decision. At Google, the role of the manager is that of an aggregator of viewpoints, not the dictator of decisions. Building a consensus sometimes takes longer, but always produces a more committed team and better decisions
* Don't be evil. Much has been written about Google's slogan, but we really try to live by it, particularly in the ranks of management. As in every organization, people are passionate about their views. But nobody throws chairs at Google, unlike management practices used at some other well-known technology companies. We foster to create an atmosphere of tolerance and respect, not a company full of yes men.
* Data drive decisions. At Google, almost every decision is based on quantitative analysis. We've built systems to manage information, not only on the Internet at large, but also internally. We have dozens of analysts who plow through the data, analyze performance metrics and plot trends to keep us as up to date as possible. We have a raft of online "dashboards" for every business we work in that provide up-to-the-minute snapshots of where we are.
* Communicate effectively. Every Friday we have an all-hands assembly with announcements, introductions and questions and answers. (Oh, yes, and some food and drink.) This allows management to stay in touch with what our knowledge workers are thinking and vice versa. Google has remarkably broad dissemination of information within the organization and remarkably few serious leaks. Contrary to what some might think, we believe it is the first fact that causes the second: a trusted work force is a loyal work force."
Join Date: Nov 2004
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Well by those standards BA is doomed indeed! Decade and a half in BA and all I've seen is the antithesis of the above post, and now we have, DA DA:- WW with his bonus scheme for upper upper management designed to scr@w everyone else royally. We are on a hiding to nothing. BA staff are expected to give and give whilst he and the wrecking crew take and take. Not a prayer. Sell your shares now or look for a new job - I will be doing both.
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I remember about 17/18 years ago getting stuck at Heathrow and looking at the aircrafts landing or taking off.
I noticed many BA aircraft types. from memory. 1-11/Trident/Tristar/Concord/737/747/757/DC10.
I was talking to a BA pilot later the same day and mentioned what I had viewed and advised that I thought so many types of aircrafts would be awkward and cost much money to operate, he advised me that in future BA will fix the problem.
Over time I can see how well they have done. various config 737-3/4/500's/744/757/767 with RR(only operator me thinks)777 with two eng types/320 family with two eng types.
I hear they looking very hard at 747-800 and 777-2/300ER/LR, but also thinking of 787/350 and 380 with all different engine types.
I know the saying eggs for eggs, but just may be a lesson from Ryan or Easy could be passed on to WaterWorld
I noticed many BA aircraft types. from memory. 1-11/Trident/Tristar/Concord/737/747/757/DC10.
I was talking to a BA pilot later the same day and mentioned what I had viewed and advised that I thought so many types of aircrafts would be awkward and cost much money to operate, he advised me that in future BA will fix the problem.
Over time I can see how well they have done. various config 737-3/4/500's/744/757/767 with RR(only operator me thinks)777 with two eng types/320 family with two eng types.
I hear they looking very hard at 747-800 and 777-2/300ER/LR, but also thinking of 787/350 and 380 with all different engine types.
I know the saying eggs for eggs, but just may be a lesson from Ryan or Easy could be passed on to WaterWorld