Transformational Leadership

6 Secrets of Business Transformation

Dato’ Sri Idris Jala MD/CEO Malaysia Airlines

April 2009

The 6 Secrets of Business Transformation

Game of theImpossible

P&LAnchorage

DisciplineOf Action

SituationalLeadership

WinningCoalitions

DivineIntervention

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2

34

5

6

Secret No. 1:The Game of The Impossible

(1) The Game of The Impossible

Steps to making the ‘impossible’ happen:

Set “Olympic” targets (very few precedence, difficult to justify)

Conquer the fear of failure – conversations!

Create a game so large it will consume you

People innovate when their backs are against the wall

Many thought it was impossible to save MAS….

News Strait Times(1st Dec 2005)

01

1b

End ‘05 Apr ‘06

CriticalLevel

RM600m

Cash Crisis

02

-1.3b

-1.7b

2005(9 months)

2006 Full Year

Profit Crisis

We will solve our own problem(PM: “No bail out”)

2005: -RM1.3b loss

BTP 1 Target 2006: -RM 620m2007: +RM 50m2008: +RM 500m

Record profits, record turnaround!Highest profits in 60-year history

’86/

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91/9

2

88/8

9

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(1,252)

(134)

851

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3

93/9

4

94/9

5

95/9

6

96/9

7

97/9

8

98/9

9

99/0

0

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1

01/0

2

02/0

3

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Dec

05D

ec06

Dec

07

RM million

-321m

1QFY06

-321m

-177m

240m

122m 133m 113m

364m

242m

120m

2QFY063QFY06 4QFY06 1QFY07 2QFY07 3QFY07 4QFY07 1QFY08 2QFY08

40m 38m

3QFY08 4QFY08

46m

-177m

RM

MAS remained profitable for FY08 despite tough operating environment

(FY08)RM 244 m

10th Consecutive Quarter of Profits

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Source: Bloomberg

State of the Airline Industry - in 2008

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Spic

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5.3b

(Net income in US$)8.9b

5.3b

4.8b

2.1b

1.8b1.2b

894m585m

435m 400m338m

283m213m

591m

115m111m 95m 91m

87m

85m 76m

179m

1.1b

NOT EXHAUSTIVE

138m135m

Secret No. 2:Anchoring on the P&L

(2) P & L Anchorage

Decompose the company P&L into individual route P&Ls

Make each country manager accountable to the personalised route P&L

We want innovative solutions which deliver financial results

The whole organisation should focus on the P&L

Rigorously challenge strategies & activities

Reward people who improve the P&L

THE P&L IS NOT A PLACE TO HIDE

Secret No. 3:The Discipline of Action

(3) The Discipline of Action

Agree what constitutes success and measure

Plan and track results (alongside action plan)

Report and communicate results

Roll your sleeves and get into the details

Innovation needs solid implementation to achieve results

THIS IS REALLY HARD WORK BUT EXCITING!

* Weekly frequencies

We use the lab as a tool to force

Discipline of Action

Secret No. 4:Situational Leadership

Change leadership style based on team development

Dissatisfaction

STAGE 2 STAGE 3 STAGE 4

Resolution ProductionOrientation

STAGE 1

Productivity (Competence)

Morale (Commitment)

Directive Style Empowering Style

Situational Leadership

Leaders must nurture and develop innovation

Secret No. 5:Winning Coalition

(5) Winning Coalition

No man is an island

GLC – Conflicting shareholders’ requirement i.e. government versus investors; business versus politics

Investor Relations

Staff Engagement

Collaboration with competitors

Innovation surface when people work together

IT’S ALL ABOUT MANAGING POLARITY

Secret No. 6:Divine Intervention

2 Experiential Human Paradigms

(1) Human beings have limited control / influence over what happens

(1) Life is a continuous reduction of options time

1

2

40%controllable

60%uncontrollable

How do you get divine intervention ?

On values and actions – Be a Good Human Being

Ethics – Operate from the “White” not from the “Black” / “Grey”

Self Renewal – Solitude & Reflection (Theory of Enough)

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2

3

Thank You