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Prize winner
Published by:
INSEAD (2002)
Version:
02.2015
Revision date:
09-Mar-2016
Length:
26 pages
Data source:
Published sources

Abstract

This case considers the transition at the head of British Airways (BA) from Lord Marshall, key architect of BA's spectacular restructuring and revitalisation in the 1980s, to his chosen successor Robert Ayling. In an increasingly deregulated market, Ayling's challenge is to sustain BA's position of leadership in the airline industry. He pursues an ambitious strategic alliance, a massive cost cutting drive and initiates a controversial change of corporate identity. Although the stock market initially approves of most of his strategy, he runs into trouble on the industrial relations front. A cabin crew strike in the summer of 1997 hits employee morale and triggers a sustained dive in the airline's share price. For all Ayling's efforts over the following three years, he does not manage to redress the slump and his eventual removal does not come as much of a surprise. What is surprising is the insistence by BA's chairman that Ayling had set the right strategy, but was the wrong person to implement it. The case explores what went wrong. This is a very rich case that can be tackled from several angles. On the leadership succession side it illustrates the difficulties of making one's mark when taking over a highly successful company, especially coming after a very respected leader. On the leadership style angle, the case highlights the various roles of the leader - as strategist, architect and mobiliser - and the difficulties of building or rebuilding credibility and trust. It also raises questions on why leaders often become more abrasive as time passes and how much their style is shaped by their initial background and leadership experiences. The case can be used to examine how to bring about radical change, particularly when the company is doing well at the outset and staff's sense of urgency is correspondingly low. It also illustrates the importance of fair process in radical change efforts. Last but not least the case raises questions on the causes and consequences of company culture. As CEO Marshall had created a culture of employee and customer care that was widely admired even beyond the airline sector, that culture seemed to go away fairly quickly as service levels dropped and employees felt no longer cared for. What happened? The case can be used as a stand alone case, or following a discussion of the case 'Becoming the World's Favourite Airline: British Airways 1980-93' (which covers the King-Marshall years). Note: The first 18 months of Ayling's tenure (and hence of the period covered in this case) were discussed in the case 'Remaining the World's Favourite Airline: British Airways 1993-97'. That case was focused mainly on leadership succession and fair process. This new case builds on this initial period and covers the next three years, culminating in the removal of Robert Ayling. These additional three years were very eventful and result in a much richer set of teaching issues. If you want to centre the discussion on fair process, we recommend using the case 'Remaining the World's Favourite Airline: British Airways 1993-97'. This present case will support a broader discussion.

Topics

Leadership; Succession; Radical change; Corporate renewal; Implementing a new strategy; Fair process; Corporate culture; Customer service; Industrial relations; Cost cutting; Service sector
Location:
Industry:
Size:
Over 60,000 employees
Other setting(s):
1996-2000

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