Analysis Of The Success Of Cultural Change Within British Airways

1.1INTRODUCTION

British Airways came into existence in 1935, when smaller privately owned UK airlines merged. Another change occurred when the Government nationalised British Airways and Imperial Airways to form BOAC - The British Overseas Airways Corporation.

During this period, external markets were more stable and predictable and there was no real need for BA to adopt competitive strategies, being that there was little competition from rivals. There appears to be little in the way of strategy formulation and strategy implementation. This was mainly due to the established strategy and organisation environment remaining largely unchanged. Any change in BA's strategy would have developed in an incremental fashion, an almost natural progression. However, due to nationalisation in 1935, this resulted in a fundamental change imposing strategy within BA, and therefore subject to Government policies and machinations of the time.

In 1946, BE was established as a separate statutory corporation, its main core competency being a domestic network.

In 1973, the BOAC and BEA merged to form British Airways, leaving the airline over-staffed.

Between 1981 and 1983 BA response to this was strategic downsizing which reduced staff numbers by 40%. This included senior staff (Barsoux & Manzoni 1997a). Until 1984 BA operated a reactive style of operational and personnel management.

Pre-privatisation (1987) BA faced little competition on many routes. It controlled 60% of the UK domestic markets and only experienced competition on 9% of routes in and out of the UK (Monopolies and Mergers Commission 1987). This was mainly due to European markets being tightly regulated and market share was often dependent on negotiation skills as opposed to competitive success. Thus BA was able to charge customers what they liked.

However, all was not well within BA. In 1980, a survey by the International Airline Passenger Association put BA at the top of the list of airlines to be avoided (Blyton & Turnball 1998). This customer satisfaction was mainly due to uncomfortable journeys and lack of punctuality. Thus BA recorded financial losses of Ј140 million (Warhurst 1995). With BA's maturity, it had appeared to go into autopilot and had assumed that the strategies of the past would continue to prosper the company. They had clearly failed to recognise the necessity for change within this rigid organisation, the result being a decline in profitability due to its own assumptions about itself and its external environment.

It seemed that staff discontent

also matched customer dissatisfaction, as industrial disputes were now occurring. An organisation with reducing profits, the potential for conflict is likely to be intensified (Mullins 2002).

1.2 CHANGE STRATEGIES

Organisations need to change to adapt to the changing internal and external environment. Organisations need to change to adapt to their environment. The factors which bring about change vary in intensity, but can be grouped into internal and external categories.

External sources of change include competitor strategies, technological innovation, deregulation of industry, labour costs, access to resources, economic changes (national and international) and changes in government policy.

Internal change factors tend to follow on from the external ones, and include adapting to shifts in corporate missions, changes in technological equipment and processes, shifts in employee attitudes and behaviour and corporate culture.

Change strategies can be the result of reaction to some force or by managers anticipating the environment and being proactive. The proactive approach, when it proves accurate, allows more time planning and implementing change processes. It is fair to say, also, that change can be applied radically (resulting in major upheavals throughout the company) or incrementally (which involves minimal changes applied strategically throughout the firm). The circumstances will dictate the level of "panic" when applying changes. The more serious the situation, the more radical the change required. It follows that the attitudes of all the company's employees have to adapt in harmony with the structural and operational changes in order for change to be implemented successfully.

The bulk of BA's history has been spent as a nationalised industry in a fairly stable environment.

1.3 CORPORATE CULTURE DEFINED

Management researchers seem to agree that the things that companies do called "corporate culture" is an intangible concept and hence difficult to define. Among the attempts to define "corporate culture", the following definition is useful as a starting point:- "culture represents an interdependent set of values and ways of behaving that are common in a community and that tend to perpetuate themselves, sometimes over long periods of time" (Kotter and Heskett,1992,141) Peters and Watermann argue that changing a culture cannot be accomplished.

1.4 CHANGES WITH BA DUE TO EXTERNAL PRESSURES

The story of British Airways is one of the most widely used inspirational accounts of changing culture (Heller 1992). BA faced two external pressures. The Thatcher government was threatening to privatise it and also the deregulation of the industry worldwide. Within Lundberg's model of the organisational learning cycle, he suggests that in order for cultural change to occur the requisite external and internal circumstances must occur. He describes the two external enabling conditions. These are known as domain forgiveness - the degree of threat due to instability of the environment and organisation; and domain congruence - where change is likely to occur if the degree of congruence is perceived as relatively modest.

1.5 UNFREEZING

Lewin's process of organisational change begins with the unfreezing stage. Brown 1998 discusses this initial process begins when a senior manager develops a 'felt' need for change, generally in response to a decline in profitability. BA at this point was showing financial losses of Ј140 million (Warhurst 1995). Thus Lord King was appointed Chairman 1981, and Colin Marshall 1984, who recognised that a major cultural change was required. Bibeault found in his research that you almost always have to do organisational surgery by selecting a new chief executive. Schein