Aviation Management: Challenges and solutions

Part 1 – the scenario

Terry shook his head, based on his observations he suspected things were not great when he accepted the job as CEO of Northwest Aero Manufacturing Ltd (NAM) but after his meeting with Andrea the CFO. She indicated that revenue was falling and that the company had not been successful in winning any new production contracts for some time now. Terry realized that he needed to move faster than he had planned. The writing was on the wall, he had just inherited an organization that was at one time an industry leader, but was now very much living-off its past reputation.
Background: The company was formed in 1978 as a supplier of airframe components and sub assemblies for large airframe manufacturers. NAM earned its reputation by producing quality components on time and on budget. The company was founded by Garry Little. His connections in the aerospace community were legendary. He served on a number of industry advocacy groups but in reality his reputation was a key part of the company’s success.

The company production focused almost entirely on traditional sheet metal and machined components. Garry had realized that the aerospace industry was shifting to more and more composite work along with additive machining but his workforce were skilled metalworkers who lacked the knowledge to make the transition.
Unfortunately, two years ago, Garry had come down with a medical condition which prevented him from being involved in the company any longer. Since that time Garry’s family had attempted to continue running the company but, in the end, realized they needed to hire a new CEO. This is where Terry came in. Terry had spent years in the aviation manufacturing sector as an operations manager. He had been headhunted by an executive recruitment company into the role but the reality was that this was his first CEO level position.

Terry had spent time on the production floor and noticed two things – The production processes were dated and the workforce was definitely closer to retirement than he would have liked to see. But in speaking to the frontline workers he definitely noticed a pride in their work which was demonstrated by an incredibly low rejection rate during the final inspection.

During the meeting with the Andrea, Terry learned that there was an important meeting with the company’s primary financial institution next month. The company was using its line of credit more often and Andrea was worried that the bank was going to seek some sort of increased security – something which would be difficult with reducing revenues. Terry realized that he needed to do something quickly – but what?

What should Terry do?

When reviewing a scenario, we ask a few questions like: who are the players? What are the primary / secondary issues here? What could happen? And what are the possible solutions to the problem? Take some time to write down some of the challenges and ideas for correcting the challenges.

Part 2 – Problem identification

When reviewing a scenario we ask a few questions like: who are the players? What are the primary / secondary issues here – root causes? What could happen? And what are the possible solutions to the problem? (Not unlike doing a corrective action plan)
Players: Terry – the new CEO, Andrea – CFO, Garry – company founder, Garry’s Family – the shareholders, employees, Customers

On the surface the issues /challenge here appears to be based around a few themes:

1. The company has not adapted to technological changes in the aerospace manufacturing industry.

2. The company is facing a cash crunch in the near future.
3. The company lacks the ability to change?
4. The company lacks the knowledge and the equipment to be able to bid on technologically advanced work.
5. Succession planning, what is the plan for the replacement of key personnel

All organizations need to be constantly strategically scanning for changes to their competitive landscape. Change is a reality for all organizations, an organization that cannot adapt to change will not survive.

What could possibly happen? What is at stake for the company and for the players?

The writing is on the wall for Northwest Aero Manufacturing the company needs to adapt or it will disappear. Think of all the organizations which used to be household names which just don’t exist today due to technological change or more likely the failure to adapt to technological change. If change does not happen rapidly it is likely that the one of three option will occur;
1. The company fails financially and ceases to exist
2. The weakened company is purchased by a rival at a discounted price and stripped of any remaining value
3. The company continues to struggle along in a much smaller and weakened state where much of the company is laid off

Part 3 Building a Solution

We have reviewed the scenario, identified the players, what is at stake, and proposed a couple possible issues. Now what should Terry or the leadership group do at this point / and in the long term to correct the current challenge?

Terry has a challenge, he needs the organization to adapt to a changing competitive landscape. In reading the case it appears that NAM is a stable company that produces high quality products but has not adapted to technological changes within the aerospace industry.

He also has the challenge of decreasing revenue and a financial partner who is starting to become concerned with falling revenues.

Through any process of organizational change, it will be completely normal to encounter resistance to change from individual members of the team as well as from the organization itself. Identifying the sources of resistance will be important – he needs to carefully think through the possible implications.

Resistance to change can come from a lack of trust, or lack of understanding of why the change is necessary or perhaps the individual just does not like change. On an organizational level perhaps one department sees change as a threat to resource allocation, perhaps there is group inertia, or in this case perhaps a change of technology is seen as a threat to expertise.

Moving forward rapidly without identifying the challenges could easily result in an early failure which will give the naysayers evidence for not changing.

Before Terry leaps into making rapid changes with the organization, he would be wise to do some research into how to make changes to the organization.

Management theorists such as Kurt Lewin (Lewin’s three step model) and John Kotter (Kotter’s Eight Step Plan for Implementing change) offer us some insight into how organizations can make changes. Looking at what the theorists offer can help us to build a plan for moving forward. Kotter’s model provides a bit more guidance for the manager and would be appropriate in this scenario. The following is a brief summary of Kotter’s Eight step plan for implementing change from his 1996 book Leading Change.

1. Establish a sense of urgency by creating a compelling reason for why change is needed.

• Bring the employees to the table, let them know why the changes need to happen, give them the big picture of where the company needs to be.

• Include the financial challenges , employees need to know the truth.

2. Form a coalition with enough power to lead the change.

• Identify who your biggest naysayers will be, get them on board and the others will follow.

3. Create a new vision to direct the change and strategies for achieving the vision

• Build a culture that focuses on the future

4. Communicate the vision through the organization

5. Empower others to act on the vision by removing barriers to change and encouraging risk taking and creative problem solving.

6. Celebrate the short-term gains and improvement.

7. Consolidate improvements, reassess changes, and fine tune the changes.

8. Reinforce the changes by showing how the changes positively benefit the organization.

Terry has his work cut out for himself and for the entire company. This organization has a strong history and an excellent reputation if the organization can adapt to the changing technologies it should be able leverage its positive attributes into a great future.

This plan speaks to how the organization can make changes but don’t forget the other stakeholders. The customers and the financial institutions need to be factored in as well. Bring them to the table earlier than later – your customers can help drive your future vision and your finance people will be more likely to be supportive if they see a successful turnaround plan in action.

Summary:

Change is a reality for any business. Change can be driven by a number of areas such as: Technological change, Competition, Social trends, Regulation, Generational workforce changes, or Economic shocks. Any organization needs to build resiliency and adaptability to these changes into their corporate culture – this can be accomplished through a number of ways. Build resiliency into your teams by building a learning culture that seeks out knowledge and uses it to adapt to change. Welcome new ideas, don’t fear changes – identify how your organization can use new tech. Some enjoy change some fear it but the reality is change will occur regardless so let’s get the team onboard.

Hierarchies by nature are designed to maintain the status quo – in a world of constant change we need to remove barriers to change – what structure will allow your organization to adapt to a changing world.

Change Management