Transformational Leadership

6 Secrets of Business Transformation

Dato’ Sri Idris Jala

MD/CEO Malaysia Airlines

April 2009
The 6 Secrets of Business Transformation

Divine Game of the

Intervention Impossible

6 1

Winning 2 P&L
5
Coalitions Anchorage
4 3

Situational Discipline
Leadership Of Action
 Secret No. 1:
The Game of The Impossible
(1) The Game of The Impossible

Steps to making the ‘impossible’ happen:

4 Set “Olympic” targets (very few precedence,
difficult to justify)

4 Conquer the fear of failure – conversations!

4 Create a game so large it will consume you
4 People innovate when their backs are against
the wall
Many thought it was impossible to save
MAS….

News Strait Times

(1st Dec 2005)
01 02
Cash Crisis Profit Crisis

Critical
Level
1b RM600m
2005 2006
(9 months) Full Year

End ‘05 Apr ‘06

-1.3b

-1.7b
We will solve our own problem
(PM: “No bail out”)
BTP 1 Target
2006: -RM 620m
2007: +RM 50m
2008: +RM 500m

2005: -RM1.3b loss

Record profits, record turnaround!
Highest profits in 60-year history
851
RM
million
461

319 337 326

288
261
222 233
151 154 144
112 111 (1,252)
7
(260) (700) (259) (417) (836) (134)

02/03

03/04

04/05
’86/’87

’87/’88

Dec07
94/95

96/97
95/96
89/90

92/93

93/94
88/89

90/91

91/92

Dec06
97/98

99/00

00/01
98/99

01/02

Dec05
MAS remained profitable for FY08 despite
tough operating environment
RM

364m

240m 242m

133m
122m 113m 120m

40m 38m 46m

1QFY06 2QFY06
3QFY06 4QFY06 1QFY07 2QFY07 3QFY07 4QFY07 1QFY08 2QFY08 3QFY08 4QFY08
-177m

-321m
(FY08)
RM 244 m
-177m

10th Consecutive Quarter of Profits

-321m
8.9b
De
lta
Air

5.3b
Li n

5.3b
Uni es
ted
Airl

4.8b
ines
Nor
thw
est

2.1b
Am Airl
ines
eric
an A

1.8b
Kor ir lin
ean es
Air

1.2b
Air
Fra
nce
Air -KL

894m
Can M
ada
Tha
i Ai
rwa
ys**

591m 585m
Con
tine
ntal
All Airl

435m
Nip ines
pon
400m Airw
Chi ays
na A
irlin
338m

EVA es**
Air*
Kin *
283m

gfis
her
Air
213m

Brit line
ish s

(Net income in US$)

Jet A ir wa y
Airw s
ays
138m 135m

Air
Asi
a
State of the Airline Industry - in 2008

115m

Rya
nair
Spi
ceJ
et
111m 95m

Jap
an A
irlin
87m
91m

Asi es
ana
Airl
Cat ines
hay
85m 76m

Pac
Sou JetB ific*
thwe lue
st A Airw
irlin ays
Sing es
NOT EXHAUSTIVE
179m

apo
re A
ir lin
* Jan-Jun08
Source: Bloomberg

** Jan-Sep08

es
1.1b
 Secret No. 2:
Anchoring on the P&L
(2) P & L Anchorage
4 Decompose the company P&L into individual route
P&Ls

4 Make each country manager accountable to the

personalised route P&L

4 We want innovative solutions which deliver

financial results

4 The whole organisation should focus on the P&L

4 Rigorously challenge strategies & activities
4 Reward people who improve the P&L

4 THE P&L IS NOT A PLACE TO HIDE

 Secret No. 3:
The Discipline of Action
(3) The Discipline of Action

4 Agree what constitutes success and measure

4 Plan and track results (alongside action plan)
4 Report and communicate results
4 Roll your sleeves and get into the details
4 Innovation needs solid implementation to
achieve results

4 THIS IS REALLY HARD WORK BUT

EXCITING!
We use the lab as a tool to force
Discipline of Action

* Weekly frequencies
 Secret No. 4:
Situational Leadership
Situational Leadership
Change leadership style based on team development

Orientation Dissatisfaction Resolution Production

Productivity (Competence)

Morale (Commitment)

STAGE 1 STAGE 2 STAGE 3 STAGE 4

Directive Style Empowering Style

Leaders must nurture and develop innovation
Secret No. 5:
Winning Coalition
(5) Winning Coalition
No man is an island

4 GLC – Conflicting shareholders’ requirement i.e.

government versus investors; business versus
politics

4 Investor Relations
4 Staff Engagement
4 Collaboration with competitors
4 Innovation surface when people work together

4 IT’S ALL ABOUT MANAGING POLARITY

Secret No. 6:
Divine Intervention
2 Experiential Human Paradigms

(1)
1 Human beings have
limited control / influence
over what happens 40% 60%
controllable uncontrollable

(1)
2 Life is a continuous
reduction of options time
How do you get divine intervention ?

1 On values and actions – Be a Good

Human Being

2 Ethics – Operate from the “White” not

from the “Black” / “Grey”

3 Self Renewal – Solitude & Reflection

(Theory of Enough)
Thank You