The title of Jan Carlzon’s book, “moment of truths” is perhaps the main reason I chose to read the book among other recommended books. The term “moment of truth” became a household name to me as far back as my past studies in Sales and Marketing at Helsinki Business College. Carlzon’s book laid emphasis to a customer-centric and service-driven organization which also gives good consideration to employee reward and engagement. I found Carlzon as a visionary leader who has the ability to combine two or more leadership styles as the situation demands to get the needed result. I found out that in order for a leader to be successful he/she must be prepared to see things from multiple perspectives, inspire his followers, and provide the enabling environment for them to deliver good result. Carlzon’s in my opinion applied and experimented authoritative, democratic, and affiliative leadership style at one time or the other in most of his relationship with his followers. His followers were the employees of the companies in which he had been privileged to be a President or Chief Executive Officer. Carlzon became the president of Vingresor and Linjeflyg airline at the age of 32 and 36 respectively. In 1980 Carlzon took up the position of Chief Operating Officer in SAS. He was adjudged as the youngest airline President in the world at the age of 36 when he joined Linjeflyg. I will describe Carlzon’s achievement as commendable and wonderful given the complexity attach to airline businesses. In addition, His career path was quite fast up the ladder in a remarkable way. He rose quickly as the leader of three different companies within the period of six years i.e. (1974 – 1980).
I hereby present what I have learnt from Carlzons leadership style and business strategy in each of these companies in a chronological order.
Carlzons Presidency at Vingresor:
Vingresor according to this book was described as a package vacation subsidiary of Scandinavian Airlines (SAS). In my analysis of Carlzon’s initial approach in Vingresor, I found out he began with an authoritative style of leadership. This was evident in the way he was described as an “order giver and not a listener”. This leadership style was meted to both employees and customers, and the end result was a myriad of mistakes. According to the book, it was stated that he made all the “mistakes in the book” as a result of this leadership approach. I learnt that authoritative style of leadership has its place in leadership; however, it has to be applied with caution and in the barest minimum. Moreover, it is understandable to me that leadership in itself is situational. Combination of different styles of leadership depending on the context and the objective of an organization is the best way to lead an organization. Leadership cannot be a one size fits all kind of approach. Carlzon’s experience as a leader in Vingresor typical of many people in the start of their career was more of a learning process. It was remarkable that he was able to realize his mistakes, and know when to turn a new leaf in his approach to yield a better result. The circumstances that surrounded the appointment of Carlzon as the President of Vingresor also informed his authoritative leadership approach.
He felt he had to command a great deal of authority in order not to fail, as well as earn the respect of the over 1400 employees under him. Some of these employees were his age mates with no less qualification than he had. This baffled Carlzon and caused tension within him as he could not pin-point the reason why he had been selected as a President over these equally qualified employees. This brought to my attention that leadership goes beyond academic or professional qualification. Rather, it is a combination of many other factors such as personality traits and intuition. Perhaps the people who appointed Carlzon as the President of Vingresor saw in him some traits of a good leader. However, Carlzon felt he had to cease from being his usual self in order to be a leader, whereas he soon realized this was not the case. He was not expected to be a superman or a small god that was infallible. This tells me that it is important for people to recognize their strengths and build on it as much as possible, and not discard it overnight in order to act another person. Carlzon took over Vingresor at a time when there was an oil crisis that affected prices in the airline industry. The company did not have many options of services which it could leverage to make extra profit. Hence, it had to fine tune and redesign the current service it had on ground. I learnt that a company could be innovative by not cutting costs on it existing service, and at the same time cut costs in other unprofitable areas. I found out that a service company cannot afford to cut services which customers have been used to overnight without replacing it with a suitable alternative or a service upgrade. Service cutting in order to minimize cost would lead to reduction in revenue and customers’ disgust which degenerates further into a slump in market share. In addition to cutting unprofitable costs, Carlzon also ensured the company was restructured, and made flexible in order to meet the exigencies of the present and the future in terms of market trend.
Carlzons Presidency at Linjeflyg:
Linjeflyg was described as a Swedish domestic airline and an affiliate of Scandinavian Airlines (SAS). Ordinarily, Carlzon would not have taken up the opportunity to become the President of Linjeflyg because the company was in a bad shape in terms of performance. However, after much persuasion the temptation to confront challenges did the magic for Carzon and the owners of Vingresor. He accepted the responsibility as the President of Linjeflyg, and this became a win-win situation for him and the other parties. Carlzon in my own analysis had learnt his lessons when he was in Vingresor. He had become more mature and confident in himself and his ability. As a result of this self-awareness, and the fact that his earlier authoritative leadership style was not profitable; he decided to change his approach in Linjeflyg. This is part of change leadership ability that is expected of any true leader. I will recall the famous saying that it is insane to continue to do something in same way, and expect a different result. The action of Carlzon lends credence to my belief in “change” being a constant thing in life. It is no longer news that life itself, and the walks attached to it are dynamic.
Carlzon’s new leadership style in Linjeflyg was to a great extent democratic and affiliative as against authoritative leadership style. Democratic leadership style is the type of leadership that seeks the opinions of its followers, and has their inputs and opinions count in a democratic way.
Democratic style of leadership seeks to carry it followers along in order to reach a general consensus on how to run the organization. Affiliative leadership style is a people-oriented leadership style. It strives to build emotional connection with the followers, and have it transferred to other aspects of the company life such as customer relationship and general management. It is expected that more cooperation and shared values are generated when followers are emotionally engaged with their leaders in an organization. Affiliative leadership style employs different strategies such as robust employee reward, enviable recognitions, and attractive promotions. Carlzon was committed to seeing things through the eyes of the customers and employees when he joined Linjeflyg. He worked assiduously on his people skill and ability to motivate and inspire others. He began by asking for their cooperation and helping hands. He presented himself in a simple way that can make his followers empathize with him. Naturally, Carlzon’s new leadership style changed the expectation of his followers in Linjeflyg having learnt his lesson in Vingresor. On the other hand, perhaps some of the employees might have been prepared to approach Carlzon with subtle insubordination and a resistance to organizational change in order to humble him, or to make a point that they were also humans. His new approach I would say let him off this potential controversy. This was evident in the feedback from the employees after he addressed them, and sought to have their hands of cooperation. Among other things the employees said his new approach was contrary to their expectation and indeed it was a positive and a welcome development. Typical of humans, Carlzon was able to make his employees see themselves as valuable people who were not liabilities but a primary stakeholder in the success of the organization. As a result of this they supported the vision, dreams, policy, and strategy of the organization as if it was their personal business.
I learnt and observed the ability of Carlzon to put in place an overall business strategy that has four major action plans. This overall strategy was to revolutionize Linjeflgy to become a customer-driven company instead of a production-oriented one. I learnt the technique he adopted in order to make the best use of their fixed resources e.g. planes and their flight times. I learnt the power of marketing communication and business slogans i.e. how they raised the bar to make bold to be called “the world’s best airline” especially in a conservative and moderate Scandinavian market. I will refer to this as breaking the status-quo of passivity and lackluster marketing approach that Scandinavian companies were known for due to their overly reserved culture. Carlzon also refer to this flamboyant approach as “violating the social norm of moderation”. However, it is important to quickly point out at the same time that it is better for a company to under-promise and over-deliver, than to over-promise and under-deliver in the overall assessment of its moments of truth. Carlzon also initiated good internal organizational restructuring in terms of roles and responsibilities in Linjeflyg. This created a better working arrangement and cooperation between the marketing and production departments of the company. The activity of the two departments complimented the other to identify and deploy values to customers, cut costs, and swell revenue. Carlzon also took the courage to take positive risk out of intuition beyond what was written in the books. These risks included reducing flight fares and coming up with a promotion called “Hundred Notes” i.e. 100 Swedish kronor. This implies given a 50-percent discount fare to people under the age of 27.
This brought about 125,000 new customers instead of the estimated 5000 customers according to the books. They also up-sold their services by offering full break-fast for 2 USD and a cup of coffee for 1 USD. This meal service used to be free of charge, but with the right kind of service packaging and friendly atmosphere people were willing to pay for them.
Furthermore, other ideas of making additional money on board were brought by the cabin crews and other employees. This was the power of democracy at play. The ideas of the followers had been made to count and it paid off. This is a further testimony to the fact that no one has a monopoly of knowledge, wisdom, creativity or good ideas. Today’s boss was once a junior member of staff, and today’s teachers for instance in the universities were once students, and the students of today will be part of tomorrow’s teachers. In view of this, everyone reserve the right to be granted an opportunity to grow, express him/herself, harness his/her creativity and potentials to unleash the innovative giants in him/herself for the good of the society and all and sundry. Carlzon attested that one of the major reasons for his success as the President of Linjeflyg was the cooperation and passion of the employees. The employees were able to understand and identify with the vision and objectives of the company at every point in time. The services of Linjeflyg became so effective and customer-centric, and yet affordable such that they began to compare their costs and service with SJ, the Swedish train service. This brought to my mind the way Norwegian Airline has been able to offer very affordable flight service to the city of Oulu at the expense of the Finnish trains. I will not be surprised if the trains to Oulu are becoming empty of passengers these days.
Carlzon’s Chief Operating Officers role at Scandinavain Airlines (SAS):
In 1980 Carlzon took up the position of Chief Operating Officer in SAS. It was easy for Carlzon to take up this new role because he seemed to have become a guru in the airline industry having survived the storms of Linjeflyg. It was a time SAS was declining in terms of high loss and poor performance. SAS was drifting towards 20 Million USD loss, a sum that is highly significant to any company. Carlzon continued with his winning streak as he had done in Linjeflyg but with a different management strategy. The leadership approach however, was not any different from the combination of affiliative and democratic style of leadership.
As a result of the stagnation being witnessed in the airline industry, the former executives of SAS have had to cut cost across board in a very drastic way such that it began to affect the efficiency of their services. Carlzon was able to identify this current state of the company due to his experience and analytic skill. Carlzon was able to realize that a new business strategy was needed in order to salvage the remains of SAS. This is where change leadership attribute of Carlzon came to play once again. Carlzon with his team were able to identify a customer segment that seemed relatively viable and stable during this period. This customer segment was the frequent business traveler segment. SAS under Carlzon decided to rebrand its service with a slogan as “the best airline in the world for the frequent business travelers”.
This customer segment of SAS was given a facelift through the introduction of a value-driven service tailored to the needs of business travelers.
Carlzon and his team capitalized on the fact that business travelers are usually compelled to travel during good and bad times. As a result, the prevailing economic crisis then was expected to have lesser negative impact on the travel needs of business people as compared to other group of travelers e.g. tourists. Carlzon and his team were able to turn expenses around from something to be avoided to a form of competitive advantage. Expenses become a source of competitive advantage when they are harnessed in such a way that they contribute fully to meeting the goals and objectives of a business strategy. Under the leadership of Carlzon, Linjeflyg made concerted effort to be “one percent better in 100 things than to be 100 percent better at one thing”. This implies scaling up the quality of their service and operations in many ways than ever before. The company made a radical change to focus more on good service delivery thereby becoming a service-oriented company. The focus of the company’s top management team shifted to better service in addition to other areas. This was contrary to what is common and traditional in many companies whereby top management teams often focus mainly on areas such as investment, management, and administration at the expense of service. At SAS Carlzon put to work the power of delegating responsibilities in an effective way by empowering the employees to function well even in his absence. He realized in traditional companies the CEOs are often decision making machines and often in their absence a company becomes stagnated from running its day to day activities. In this traditional companies employees’ morale are often low and they don’t seem to have an independent mind to brainstorm and solve organizational problems themselves. Carlzon pointed out that a leader is not expected to know everything or be capable of every detail functional duties of the employees. A good leader should be able to find the right and competent people to deliver needed result, and not seek to micromanage employees due to his/her lack of confidence in them. To me lack of confidence in the employees indicates lack of personal confidence in the capability of the leader him/herself. A poor leader is bound to recruit poor employees or inspire poor followers.
Carlzon emphasized what has now become a modern day trend in top notch management setting, especially with front runner organizations which is the ability to flatten hierarchical structures. He insisted that the organizational pyramids of bureaucracy should be collapsed. He posited that any business organization that wants to generate a good customer orientation and impressive moment of truths must be prepared to flatten the pyramids. For instance, more responsibility and authority were given to the front line employees as they are the gateway to the company. The journey towards accessing a company’s moment of truth starts with the front line employees touchpoints. The Frontline employees were able to unleash their individual creativity and put it to work to the advantage of the company through this new structure. The employees’ freedom to use their discretions when the chips were down facilitated timely decision making during moment of exigencies. Carlzon advocated for corporate democracy, however not entirely in its purest form in order to create check and balances. He understood that everyone in the company should air their opinions towards decision making. However, not all the employees will be fully involved in making the final decision. I learnt how Carlzon decentralized the structure of the company to ensure seamless flow of information, and stimulate unhindered cooperation between all units.
I learnt how a company should review its strategy with respect to the essence of its being in business from the customers’ perspective. An airline company for instance should ask itself if it’s in the business only to acquire fleets of airplanes to convey passengers to their destinations, or to create additional values as much as possible such as safety, comfort, punctuality, confidence, fun etc. A classical account of the analysis of customers’ service touchpoints in regards to the position of plane hangars and departure gates was highlighted by Carlzon. He discovered a design flaw wherein some departure gates were rather far away from the point of transit of many passengers. In other words, some passengers have had to run from pillar to post, or from one end of the airports to the other in order to transit, something which causes inconvenience. Carlzon canvassed the establishment of a nonstop route from Stockholm to New York by switching from a bigger plane to a smaller one to cater to the preference of the customers.
The need to take positive risk cannot be overemphasized based on the way Carlzon went about his leadership practice. He gave a good account of the advantage in taking risk having done a good feasibility studies in businesses. Timing was one thing Carlzon said should be right in order to make a new and uncertain leap in business. He rhetorical asked about the first company to launch “turbo charged engines in cars”. Surprisingly He said many people would guess it was Saab as a company, while only few would recall that BMW did same thing as far back as 1974. The difference in the two companies’ launch of “turbo charged engine cars” was a factor of rightness or wrongness of time. BMW launched theirs during a wrong time. However, Saab launched theirs during a time of oil crises when the demands for such cars were very high.
Carlzon emphasized the power of communication in leadership practice. Communication can make or mar the fortune of an organization due to lack of understanding and shared values among team members. The good communication skill of a leader should be allowed to be replicated across the whole organization among all the employees. By so doing, a common language of communication will be institutionalized to forestall failures due to misunderstanding and wrong assumptions among employees. This communication skill also worked for SAS in terms of its marketing communication and advertisements. Carlzon said communication goes beyond words and “advertising images”, but also includes symbols. He said everything about a leader should be symbolic displaying good conducts morally and professionally. Carlzon raised the importance of exemplary leadership. A true leader is expected to portray good examples to the followers and not just do the talk but he/she must walk the walk. Carlzon explored the technique with which a sustainable and mutually beneficial relationship could be developed among a company board, the unions, and its employees.
The importance of putting in place a reliable method of measuring results and performance was brought to the fore by Carlzon. This is quite important given the fact that many companies lay claims to good performances based on a poor result measuring system, or at worst measuring the wrong things instead. For instance the extant measuring system prior to the observation of Carlzon in the company had measured results in a non-exhaustive way. The old monitoring system was measuring cargoes’ turnover in terms of volume and paper works attached to them instead of the overall service precision itself.
As a result of this lapse, the QualiCargo system which measured swiftness of telephone responses, meeting of delivery times, and having cargoes arrive with the planned planes was developed. This new system saw 80 percent of cargoes arriving at the expected time, and this grew to 92 percent overtime. This taught me that the right indicators must be identified, and the appropriate way of measuring them should be devised in order to make a meaningful progress.
Carlzon talked about what he referred to as the second wave in the life of SAS under his leadership. This has to do with how to manage a company’s success, and continue to engage the employees to remain focused and channel their energies towards sustainable productivity. The employees at a point in time felt they had accomplished all the goals and objective expected of them, and they no longer see any challenge in the company. Hence, they channeled their idle energies to demanding extra benefits and all manners of self-centered and narrow things from the company. These demands became uncontrollable so much that a way had to be adopted to address the problem in the interest of the company. Carlzon found out that part of this problem was that they had set a short-term goal which should have been taken as a sub-goal among many others over a long period of time. This will make these sub-goals a cumulative sum of a long term goal in the long run, and as a result the employees will be kept on their feet to keep buckling up. The approach devised to tackle this development was to make specific sets of demand from the employees all over again to wake them up. In view of this approach, the employees of SAS were placed on the defensive while the company came back to its “offensive” position in terms of challenging the employees to continue to deliver good services. For instance Carlzon and his team raised a “what if scenario” concerning the future of their industry. This has to do with the possibility of facing a deregulated market in the future where other players from around the world could compete with them in the same market. This served as just another business riddle to be solved by the company and its employees. Hence, they got busy again like never before. This paid off in the overall interest of the employees, the company, and other stakeholders as findings have it that everyone needs a challenge in order to keep growing.
Overall the book is very informative with practical steps and case studies of how a good leadership practice could turn around the fortune of any organization regardless of its current state. There is also some element of humor in the book that makes one to derive extra pleasure in reading it. I will recommend the book to others who are interested in change leadership and service culture.
Carlzon, J.1987. Moments of Truths – New Strategies for Todays’ Customer-driven Economy. HarperCollins: New York.
Mansueto Ventures LLC. 2012. 6 Leadership Styles, And When You Should Use Them. Available on: http://www.fastcompany.com/1838481/6-leadership-styles-and-when-you-should-use-them
Text by: Adeyanju Alade, SID Master’s student