Alan Joyce took over as chief executive at Qantas Airways in November 2008. The then-42-year-old leader had just completed a successful five-year run as founding chief executive of Jetstar, Qantas’s low-cost carrier. He was being called upon to spin his magic at the parent company, no easy trick during the darkest days of the Great Recession. Air travel was in decline, and Qantas—the second oldest airline in the world—was not nearly as nimble and entrepreneurial as Jetstar.
Despite this challenging start, Qantas reported pre-tax profit of U.S.$146 million for the fiscal year ending June 2009 and U.S.$81 million for the first half of fiscal year 2010. (By comparison, the global airline industry was projected to lose several billion dollars in 2009.)
As chief executive of both a start-up and an incumbent, Joyce has relied on classic leadership qualities—decisiveness, communication, accountability, and teamwork—to drive results. Decisions may take longer at Qantas than at Jetstar, but Joyce says he's used the same leadership style at both firms.
Over the next several years, Joyce has ambitious goals to boost the level of employee engagement and innovation at Qantas. He does not want simply to import what worked at Jetstar but to call upon the traditional strengths and proud heritage of Qantas.
In his conversation with Andrew Dyer, a senior partner and managing director of The Boston Consulting Group and global leader of its Organization practice, Joyce discusses leadership challenges. Excerpts from their conversation follow.
In your 20 or so years as a business leader, what are some of the leadership qualities that have helped guide you?
The aviation industry is subject to, as one of my predecessors said, constant shock syndrome. Something is always changing. One of my philosophies—and one of Qantas’s—has been to maintain flexibility and the ability to adapt. Those two characteristics have helped both Qantas and my own personal development. I am also a big believer in people and in the need to communicate. You cannot overcommunicate. An important part of my job is bringing together great people and giving them the ability to do their jobs.
How have you managed to think about the balance between the longer-term perspective and the here-and-now urgency of deflating demand and rising fuel prices?
When you go through a crisis, it is your immediate concern. We are very good at handling crises. Qantas is probably one of the best airlines in the world at dealing with adversity because we have been in business 90 years, longer than any other airline.
In crises, you need to make quick and rapid decisions without perfect information. You need to make decisions and then correct them, if necessary. There needs to be clear direction on what the organization needs to do.
At the same time, as President Barack Obama’s chief of staff said, “You never want a serious crisis to go to waste.” It gives you an opportunity to make significant changes in the business. The crisis was a great opportunity for us to accelerate our people agenda, our change agenda, and several important strategic issues.
A lot of organizations may go into their shells during crisis, but we made big, long-term strategic investments while managing the cash and profit-and-loss position of the airline.
How did you get alignment with your board and your management team to make those bigger, bolder, longer-term decisions?
During this period, I had the opportunity to enhance the management team. A few people had retired, so we hired some people and also leveraged the existing team. That helped in building a collaborative approach. Our executive committee was the decision making body, and we had long and fruitful debates about the right direction for the company. Once we had reached a decision—and we reached decisions pretty fast—everybody got behind it, even the dissenters. We did not have anybody behind the scenes trying to undermine it.
The board was unbelievably supportive. When management presented a proposal, the board did what a board should do: They pressure-tested it and gave their view of what they were hearing from other businesses, but they did not try to interfere in day-to-day management. Through this process we reached even better conclusions.
The global economy seems to be in an upturn, but there is still a lot of uncertainty. Developed markets are growing more slowly than developing markets. How will this affect the way you lead Qantas?
We are trying to maintain that flexibility I talked about earlier. The Australian economy is performing well, and our brands are making money in the Australian domestic market. But internationally, there’s still a lot of uncertainty. Our international operations are losing money, so we are not assuming that the worst is over. We think that the global economy will get stronger, and we have the flexibility to grow if that occurs. But if things do get worse, we are also capable of being able to manage it.
We believe that, compared with our competitors, we have a robust business model and a lot of strengths. We have a clear vision of where we want to go. That vision is to be the world’s best premium and low-fare airline. We feel that we are unique in that we can have both, and we have created a strategy for how we are going to get there while also dealing with the crisis.
You run a global organization with more than 35,000 employees. How do you bring them along with your bold plans when the business environment has been so hard?
For us to achieve our vision of running the world’s best premium airline and best low-fare airline, we need a great people strategy and engaged people. We are a large organization, with more than 35,000 employees spread out geographically. We have been flying for 90 years. Big organizations like our own sometimes lose engagement, and we did. We had gone through industrial relations disputes with engineers and had problems with some of the other employee groups. Over the last 18 months, we have begun to focus on engagement and have begun to turn it around.
We conducted a big benchmarking study to understand how engaged our people were across different job categories and age groups. In overall engagement, we were ranked in the lowest quartile among thousands of companies. We said, “We can do better than that.”
In terms of pride and passion, we were actually in the top quartile. We had people who felt extremely passionate and had great pride in the company. We felt that we could tap into that pride and turn overall engagement around.
We have given ourselves the target that, over the next four years, we will go from the bottom quartile to the top quartile in overall engagement. We are developing a wide range of strategies, focusing particularly on communications. If we can do this, we believe absolutely that it will massively help us and will be a core part of our achieving our vision.
You’ve talked about the importance of bringing your people along and the need to raise engagement levels. Are there values and behavioral issues that are also absolutely critical to the next leg of success of Qantas?
We have been working on what we believe are the right sets of behaviors and leadership styles that the business should demonstrate. We have identified the characteristics of Darth Vader, the manager who you do not want, and of the ideal manager. Historically, we have been an outcome-driven business. We still demand excellence but we also want people to have some level of enjoyment in what they do. This is a critical leadership issue that we spend a lot of time on.
You came from a start-up, Jetstar, where the team was young and dynamic and had an attacker mentality. At Qantas, you inherited a very proud organization with a rich history. Can you talk about your transition and how the expectations and leadership styles may be different at the two companies?
It is like moving from driving a speedboat to being captain of the Queen Mary. They are very different in several ways but also similar. They are both airlines. They both have industrial relations, people communications, and people management issues that are similar. But Qantas is a lot bigger and more complex. Given its legacy, you have to recognize that things move a little bit slower, in some cases a lot slower. That can be frustrating at times.
The exciting thing is that the Qantas brand is very well known. Qantas is one of the top ten airlines in the world. There is no other airline that I would want to run, particularly through the environment that we have gone through. Why? We have the flexibility and ability to adapt. We have unbelievably great people, and we have two brands, which gives us more strategic options than any other airline in that top-ten category.
Have you had to change your leadership style or your decision-making style, or has Qantas caught up with the nimbleness that was the hallmark of your success at Jetstar?
The styles are the same. Your leadership style is your leadership style. You need a fantastic team. You need to have a clear vision. And you need collaboration and teamwork. And you need to reward people for being decisive. In a start-up organization, it’s very easy to assign accountability and responsibility. In an organization that has existed for 90 years, there are people who have made an art form of avoiding accountability and responsibility. It’s very important that you hold people responsible for what they’re doing and you give them the ability to make the decisions.
I am very big believer in innovation and creativity in business. Jetstar has a great philosophy of innovation, and it’s there in spades in certain areas at Qantas. People forget our history. Qantas was the first airline to create business class. Qantas has been at the forefront of the design of aircraft. The innovation’s there in the organization. We need to tap into it and take it to the next level.
There’s a trend toward a greater role for government in regulating business activities. How do you balance your time between managing these internal issues and the external environment?
The aviation industry is probably still one of the world’s most regulated industries. Many nations are still protecting and regulating their own national airlines. Qantas does not have governmental support, so it is important that we have a level playing field. We have been continuously talking to governments in different jurisdictions about our belief in open skies.
You have many things to do as the CEO. Stakeholder management—dealing with customers, government regulators, employees, unions, and the general media—is a big part of the job. But so is making sure that the team has the right environment in which to thrive to take the organization in the right direction. That’s the part that I like the most; actually, that’s the part I think is the most exciting, because it is the core of running an airline.