Subscribe / Unsubscribe Enewsletters | Login | Register

Pencil Banner


Divina Paredes | Aug. 20, 2013
For Rob Fyfe, innovation and risk management go hand in hand, and he shares how this was demonstrated during his term as CIO and then chief executive at Air New Zealand.

Risky business
Fyfe states if there is one thing he has learned as a New Zealander, "You learn to exist in a space where you never got the scale, the global presence and the influence."

"You are always a small player, and you have to compensate to that by being more nimble, being able to adopt more quickly, being more innovative, and ultimately taking a little bit more risk."

This thinking, he says, can be applied even to very risk averse organisations like airlines.

"Airlines are dealing with flight safety and the risks to human lives if those safety principles are compromised," explains Fyfe. "Yet when you look at commercial decisions and a number of other decisions we make, there are many parts of our business where we can take a lot of risks without putting lives at risk."

"So I set out to try and create a level of confidence in the organisation to run two different risk profiles — a very risk averse flight and ground operation business; and a much higher appetite for risk in terms of the commercial side of the business."

"If we make a decision that may have risk attached, as long as it is not betting the entire business then we should be prepared to at least explore taking a high level of risk."

This means also accepting that mistakes can happen. "As long as you learn from those mistakes and adjust really quickly, then often you get more credit from your customers for being prepared to try and push the boundary," he says.

In the same vein, Fyfe does not shy away from naming some of the "mistakes" they made. One of the early ones, he discloses, was deciding to serve the same meal to business class and economy class customers. At that time, there were only eight business class seats out of 150 seats in the aircraft, and the cost to produce the meal was more than the cost of the food.

"It was a disaster," he admits, "and we got a very negative reaction from the business customers, because most were travelling to Australia and back in a day and that was the only time to get a decent meal."

When he relayed this incident at a conference for travel agents, they told him it was the first time they heard Air New Zealand admit a mistake. "I came back to our marketing team and said, 'We need to make more mistakes.'"

Another miscalculation was when they decided to put an extra row of seats on their 737 planes. Business class passengers were "outraged", because they could not open their laptops any more in flight. "Not only did we take out that extra row of seats, we took out half of a row of seats," says Fyfe. "We learned from that and now we have a march on our competitors and our customers are prepared to pay a premium, because we discovered this insight."


Previous Page  1  2  3  4  5  6  Next Page 

Sign up for CIO Asia eNewsletters.