Transformational Leadership

6 Secrets of Business Transformation

Dato Sri Idris Jala

MD/CEO Malaysia Airlines
April 2009

The 6 Secrets of Business Transformation

Divine
Intervention
6
Winning
Coalitions

Game of the
Impossible
1
2

5
4

Situational
Leadership

P&L
Anchorage

3
Discipline
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

1b

End 05

Critical
Level
RM600m

2005
(9 months)

2006
Full Year

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

288

261

222
112

151 154
111

337

326

233

144
(1,252)
7

Dec05

01/02

98/99

00/01

99/00

97/98

Dec07

Dec06

04/05

03/04

(134)
02/03

96/97

95/96

94/95

93/94

92/93

91/92

90/91

89/90

88/89

87/88

86/87

(260) (700) (259) (417) (836)

MAS remained profitable for FY08 despite

tough operating environment

RM

364m

240m

242m

122m

133m

120m

113m

40m

38m

46m

1QFY06 2QFY06
3QFY06 4QFY06

1QFY07

2QFY07

3QFY07

4QFY07 1QFY08

2QFY08 3QFY08 4QFY08

-177m
-321m

-177m

(FY08)
RM 244 m

10th Consecutive Quarter of Profits

-321m

138m 135m

283m

435m

8.9b
400m
338m

591m 585m

894m

5.3b
5.3b

(Net income in US$)

115m
91m
111m 95m

87m

nair
Spi
ceJ
et
Jap
an A
irlin
es
Asi
ana
Airl
ines
Cat
hay
Pac
ific*
JetB
Sou
thwe
lue
Airw
st A
irlin
ays
Sing
es
apo
re A
ir lin
es

213m

Rya

Air
Li n
Uni
es
ted
Airl
ines
Nor
thw
est
Airl
Am
ines
eric
an A
Kor
ir lin
ean
es
Air
Air
Fra
nce
-KL
Air
M
Can
ada
Tha
i Ai
rwa
ys**
Con
tine
ntal
Airl
All
ines
Nip
pon
Airw
Chi
ays
na A
irlin
es**
EVA
Air*
*
Kin
gfis
her
Air
line
Brit
s
ish
A
i
r
Jet
wa y
Airw
s
ays
Air
Asi
a

De
lta

State of the Airline Industry - in 2008

1.1b

179m

85m 76m

1.8b
1.2b

2.1b

4.8b
NOT EXHAUSTIVE

Source: Bloomberg
* Jan-Jun08
** Jan-Sep08

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

Directive Style

STAGE 3

STAGE 4

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 ITS ALL ABOUT MANAGING POLARITY

Secret No. 6:
Divine Intervention

2 Experiential Human Paradigms

(1)
1 Human beings have
limited control / influence
over what happens

(1)
2 Life is a continuous
reduction of options

40%

60%

controllable

uncontrollable

time

How do you get divine intervention ?

On values and actions Be a Good

Human Being

Ethics Operate from the White not

from the Black / Grey

Self Renewal Solitude & Reflection

(Theory of Enough)

Thank You