March 22, 2006: Perspective
against the odds
By Barbara Cassani *84
Barbara Cassani *84 was founder and CEO of Go Fly Ltd., a European low-cost airline — an experience chronicled in her book Go: An Airline Adventure (with Kenny Kemp). The airline was later sold. Cassani also launched London’s successful bid to stage the 2012 Olympic and Paralympic Games. She is now working on new business ideas.
As the founder of an airline, I know that the line between success and failure is finely drawn. This venture easily could have failed. But it succeeded against very high odds.
The low-cost airline Go, which started up in 1998 as a subsidiary of British Airways, was fourth in the London market. Detractors abounded in the British press and within the parent company, which had a poor record of success with subsidiaries. No one thought traditionally schooled managers had the creativity, guts, or resilience to make it in the cutthroat world of low-cost airlines. Our competitors tried to take us to court to stop the airline from flying. It was not an auspicious start.
Nonetheless, the airline went on to make profits in less than three years, turning the $44 million initial investment into $654 million in four years. Not coincidentally, the airline was voted the best low-cost airline in the United Kingdom by customers.
The visible reasons for success — some strategic and fundamental — were the sorts of things you read about in business-school journals. But other, less tangible, factors involving people and how they work together were equally important. In my mind, only by aligning the strategic issues with these less-understood factors did we achieve success in our highly competitive arena.
Though it may seem odd, we encapsulated the essence of our airline in a whimsically derived equation, “3x + y.” The idea came about when we were trying to define who we were. As fourth in the market, it was important to be clear about that in our own minds, so that customers and our people were, too. The “3x” referred to our near-religious fervor for creating a low-cost airline. “3x” referred to productivity in the operation: quick aircraft turnarounds, flying the planes more, linking crew pay to how many hours they worked, and outsourcing key areas like maintenance and check-in when it was more efficient to do so. Getting rid of frills and middlemen was also part of “3x,” so we sold more than 90 percent of our seats on the Internet and charged people to eat and drink on the aircraft. Relentlessly lowering the cost of flying was vital to our survival.
But let’s face it: Relentlessly lowering costs isn’t very motivating to the average employee. The finance department and senior management may find it exciting, but to most people it sounds more like working at a jail. That’s where the “y” came in. “Y’s” were the little differences that would set Go apart from other airlines — to customers and employees.
There couldn’t be too many “y’s” and they couldn’t cost a lot, but they were the reasons you felt proud of the product and the company. In our early days, the “y’s” were things like freshly made high-quality pastries and coffee sold on board and our bright, distinctive branding, including a name that tells customers exactly what we do. As time passed, we realized that our employees and how we worked together were actually our most important “y’s,” and things our competitors could not copy.
We chose people for their personalities, even in roles requiring a high degree of skill. Once we were happy with their flying skills, we asked pilot recruits to undergo personality profiling and a group task. Watching a group of nervous prospective pilots undertake a trivial group task separated the loners and bullies from the team players. We did the same thing with cabin crew, but required even more empathy and caring. Hurtling through the air with just two other colleagues and 148 customers requires humor, teamwork, and unflappability. We didn’t hire for looks and legs.
The same principles were in force in choosing the executive team. We were all different in terms of gender, nationality, education, professional background, and personality characteristics. But we all had a will to win, a sense of humor, and respect for each other.
We succeeded only because everyone behaved as though he or she owned the company. Here’s one example: When the baggage-handlers disappeared at an Italian airport, the captain unloaded all the bags single-handedly — not a common occurrence at most airlines.
I cannot explain precisely how we created a culture where everyone felt part of our adventure to build a great airline that would break even financially in three years. It may have had something to do with sharing financial secrets — like which routes were losing or making money — with employees. We welcomed employees’ ideas for improvements. Star employees were applauded each month through a recognition program that offered the winners colleague adulation and a dinner for two, or free passes on the airline. We also divided profits into equal payments among all employees, having shared the pain of a pay freeze in the first three years. When we did a management buyout of the company from British Airways, every single employee owned shares or options.
The leadership was honest about making mistakes and fixing them. Early on, we realized that our business plan wasn’t working: Demand was growing, but too slowly to justify the new planes we had ordered. We needed a survival plan, and drafted ideas from all quarters. We learned from employees with different perspectives that there could be massive growth in demand for travel to Spain with low, low prices. But to start flying to these new destinations in just a few weeks required much goodwill: Pilots and cabin crew had to change their agreed-upon flying schedules, the maintenance team needed to juggle engineering work, and the marketing team had to craft a hard-hitting campaign.
The lessons were clear. It’s OK to make mistakes to keep moving forward. Innovating means taking risks. Finding solutions means working together. Without this type of culture, our airline would have failed. Without flexibility, initiative, and commitment, we wouldn’t have met our goal of breaking even in three years, let alone become profitable.
Success against the odds is much more elusive than one would suspect from reading newspaper business sections and academic journals. Without a doubt, conceiving a sensible business plan and competitive strategy is crucial. My experiences offer a twist on commonly accepted wisdom for explaining success. Our strategic positioning was not enough to win. Factors less well understood and discussed — like the culture, decision-making, and the personalities of the people — were as much a part of the success as a ruthlessly well-developed business plan.
This essay was adapted from a longer essay, “Success Against the Odds,” to be included in A&C Black Business Database, a compendium of business thinking to be published later this year.