Dato' Seri Idris Jala, MD of Malaysia Airlines shares the 6 Secrets of Business Turn-Around & Transformation

1. Transformational Leadership
6 Secrets of Business Transformation
Dato’ Sri Idris Jala
MD/CEO Malaysia Airlines
April 2009

2. 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

3. Secret No. 1:
The Game of The Impossible

4. (1) The Game of The Impossible
Steps to making the ‘impossible’ happen:
Set “Olympic” targets (very few precedence,
difficult to justify)
Conquer the fear of failure – conversations!
Create a game so large it will consume you
People innovate when their backs are against
the wall

5. Many thought it was impossible to save
MAS….
News Strait Times
(1st Dec 2005)

6. 01 02
Cash Crisis Profit Crisis
Critical
Level
1b RM600m
2005 2006
(9 months) Full Year
End ‘05 Apr ‘06
-1.3b
-1.7b

7. 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

8. 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

9. 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

10. 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 Airw
Airw ays
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

11. Secret No. 2:
Anchoring on the P&L

12. (2) P & L Anchorage
Decompose the company P&L into individual route
P&Ls
Make each country manager accountable to the
personalised route P&L
We want innovative solutions which deliver
financial results
The whole organisation should focus on the P&L
Rigorously challenge strategies & activities
Reward people who improve the P&L
THE P&L IS NOT A PLACE TO HIDE

13. Secret No. 3:
The Discipline of Action

14. (3) The Discipline of Action
Agree what constitutes success and measure
Plan and track results (alongside action plan)
Report and communicate results
Roll your sleeves and get into the details
Innovation needs solid implementation to
achieve results
THIS IS REALLY HARD WORK BUT
EXCITING!

15. We use the lab as a tool to force
Discipline of Action
* Weekly frequencies

16. Secret No. 4:
Situational Leadership

17. 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

18. Secret No. 5:
Winning Coalition

19. (5) Winning Coalition
No man is an island
GLC – Conflicting shareholders’ requirement i.e.
government versus investors; business versus
politics
Investor Relations
Staff Engagement
Collaboration with competitors
Innovation surface when people work together
IT’S ALL ABOUT MANAGING POLARITY

20. Secret No. 6:
Divine Intervention

21. 2 Experiential Human Paradigms
(1) Human beings have
1
limited control / influence
over what happens 40% 60%
controllable uncontrollable
(1) Life is a continuous
2
reduction of options time

22. 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)

23. Thank You