MNO 6201

CHARIT BHATT

18-Feb-2013

Case Write up Gordon Bethune at Continental Airlines 1. Bethunes challenges when he stepped into the CEO role at Continental in 1994: There were many challenges and issues that Bethunes had to face as he stepped into the role of the CEO. The company has already lost its brand in the market place. He himself believed that the company has lost focus on its corporate mission. There was a not a common aligned corporate goal. The company was continuously degrading since Bob Six retired in 1981. This has included two bankruptcies as well. The company was the lowest in the in the Forbes edition. It was also last amongst the ten major airlines in on time percentage. It was near the bottom in ranking in mishandled baggage and poor service. The feedback and complaints from the customers were getting ignored that gave company a bad name in the market. The company suffered a loss of 38.5 million dollars for the final quarter of 1993, which gave a warning sign that the company is heading towards the third bankruptcy for the third time in the decade. This would be a very tough job for Bethune stepping in as the CEO of the company. The employees morale was sagging due to the massive layoffs, bitter management employee relation and the bureaucratic culture that started in 1983. The company had a policy of making more mergers to get the bottom line numbers look good. There was nothing for the employees in it. There was a lack of team spirit after years of internal fights over turf, resources and knowledge. People had lost sight on how to effectively collaborate to run an airline. The communication was strained. There was no proper channel for communication.

MNO 6201

CHARIT BHATT

18-Feb-2013

Another major challenge that Bethune was facing was the criticality of the time that he had on his hand. He had just 10 ten days to come up with a plan for the companys short term well as long term strategies. Bethune had already analyzed that making profit would be not be possible given the current companys culture. Every solution to the problem got lost into the maelstrom of anger, backbiting and dispirited disgust that has evolved over the years. 2. What aspects of Bethunes background prepared him for the challenges that he faced? Bethune has learned in his early years that when whatever responsibility one has he should carry it out very diligently and that the consequences of screwing up were very drastic even if the job is too small or too easy. This gave him a lesson about the attention to details. This lesson was very helpful in his later career. This helped him took the job very seriously. He also negotiated with his mother very smartly to get in to the navy. He had a very modest and disciplined early year that taught him the discipline and taking accountability and ownership to handle tough situations. He volunteered to take the position of the CEO despite the fact that the company was in very bad state. The 20 years of experience in Navy helped him developed his domain knowledge (while building and repairing planes) and gave him leadership experience. He learned a very important concept of leadership that he would use later to succeed as a CEO. Leadership is getting everyone to play the game you want them to not because they were forced to, but because

MNO 6201

CHARIT BHATT

18-Feb-2013

they wanted to. If you can convert your need into their want, you got it made! He understood that you need to speak the language the people you lead speak. As a commercial airline executive at Braniff, he learned about the admin side of the airline business. The journey of Braniff from a record high profit one quarter to bankruptcy helped Bethunes understand the intricacies of the business. He was able to gauge the reasons for the downfall of Braniff as bad business plan, high costs, and poor management. This business and domain knowledge came out very handy during his reign in Continental airlines. Switching to Western airlines and Piedmont airlines, he developed his flying skills and got his private pilots license. This would later help him deals with the pilots as he was not able to understand them. This was his was of leading by example in the company that he would become CEO of. As an employee at Boeing, he learned how to fly Boeing Jets, believing that it would give credibility in the eyes of Boeing employees. 3. Evaluate Bethunes leadership style and major initiatives using the Five Practices of Exemplary Leadership model. Model the Way Inspire a shared Vision Challenge the Process Enable Others to Act Encourage the Heart

MNO 6201

CHARIT BHATT

18-Feb-2013