28 January 2015
This article first appeared on Forbes.
These are tense days for Britain’s aviation industry and, by extension, the leaders of the companies involved in that industry. Next week sees the end of the consultation period on the Aviation Commission’s assessment on the proposals for increasing runway capacity at Heathrow and Gatwick airports. Not that this will be anything like the end of the process, of course. The commission’s chairman, Sir Howard Davies, has already said that the final report will not be delivered until after May’s General Election. Even if the recommendation is for some form of expansion it is frankly anybody’s guess when that would happen and what it would look like. The British penchant for compromise and fudge could mean that what could eventually emerge once the politicians have become involved could bear little resemblance to any of the proposals.
Meanwhile, there has been – as one might expect – any amount of lobbying and manoeuvring on the part of the airports (which for the past five years have been under separate ownership), business groups anxious about the effect of congestion on London’s international standing, environmentalists and residents. The last named have been more successful than they might have hoped in winning local politicians to their side. So there is plenty of mileage left in this saga.
Nor is this debate taking place in a vacuum. There are conflicting stories of London continuing to outpace global rivals as a hub for air passenger traffic and of Dubai and other Arab centres taking advantage of their almost limitless space and funds to move ahead. But another threat is starting to emerge – high-speed trains. The Channel Tunnel link between Britain and Paris and Belgium (and increasingly many other destinations across mainland Europe) has already proven highly popular, especially among business travellers who are saved much of the hassle of air travel. Fast long-distance trains have long been popular in Japan and are becoming more so in China. Even the United States, for so long highly dependent on regional air travel in the absence of much else in the way of public transport, is under President Obama starting to embrace the idea. There are plans for a route linking northern and southern California and many more could follow. Indeed, the possibility of a new age of the train is thought to be sufficiently feasible that a new report is entitled Could trains overtake planes?
Chris Lynch, head of global aviation at PA Consulting, which produced the study of the big issues likely to affect passenger aviation over the next 20 years with economists Oxera Consulting, stresses that the point was not to come up with firm predictions but to explore and set out possible outcomes. As he acknowledges, this practice of “scenario planning” has been widespread in both business and government for some time. However, it is possibly not as widely used or adhered to as one might expect. For example, a UK government “white paper” on the future of air transport published in 2003 barely mentioned the development of hub airports in the Middle East and yet barely 10 years later they – and the airlines operating from them – were transforming the industry. A further 10 years on, they have become the gold standard.
The strength of the report lies not so much in the details of the four scenarios mapped out (although they each seem pretty plausible) but in the fact that by building in a lot of detail rather than just sketching out ideas of the future they enable those involved to consider the implications of the various ways in which the industry could evolve. The report says: “While we do not predict that any of these future world scenarios will become reality, certain elements are likely to hold true. Equally, these scenarios may not reflect all the uncertainties facing particular businesses, but we hope they will stimulate the insight business leaders need to plan for their futures.”
We hear a lot these about the importance of insight. And yet still it is hard to escape the notion that a different sort of sight – vision – is seen as preferable. Boards and investors like chief executives with vision because they dream that they will replicate the success of visionaries like Steve Jobs at Apple and Sir Richard Branson of Virgin.
Charismatic leaders such as these are assumed to be driven by an idea and are revered as heroes pushing against the status quo. Fellow directors and outsiders can be won over by their enthusiasm and confidence. But in a world as unpredictable as the current one – how many people, for instance, saw the price of oil falling like it has? – such confidence can be a leader’s undoing. As Lynch says, “It makes sense to do scenario planning – particularly if you are a charismatic leader.”
For support he cites research by Christian Stadler, associate professor of strategic management at Warwick Business School in the UK, that suggests that companies should avoid hiring charismatic leaders. The problem with charismatic leaders, he says, is just that – charisma. Because of their exceptional powers of persuasion there is little resistance if they are taking the company in the wrong direction. “If your company is heading in the right direction, a charismatic leader will get you there faster. Unfortunately, if you’re heading in the wrong direction, charisma will also get you there faster.”
Studies of some of Europe’s most successful and long-lived businesses suggests that a different approach to leadership – which Stadler calls “intelligent conservatism” – is more successful. The key components of this style are listening to the employees and having a great in-depth knowledge of the company and its industry. This would appear to favour insiders over outsiders. But, returning to the aviation industry, where many executives do rise through the ranks, it is at least interesting that the British low-cost carrier easyJet is widely felt to have fared better than its rivals since the arrival as chief executive in 2010 of Carolyn McCall, who had previously run Guardian Media Group. On the other hand, perhaps it just demonstrates the importance of at least considering possible scenarios. Maybe the other airlines were caught out because they had not anticipated that a new chief executive might take easyJet in a different direction.
For a copy of our report, Aviation report click here.