JetBlue Case Study

Introduction

JetBlue was founded as a small entrepreneurial company. Authority was centralized with the CEO having making almost all decisions. Delegation of power was almost non-existent.

The CEO basically controlled all operations at the firm. Since its inception, the CEO cultivated the entrepreneurial spirit which saw the company grow tremendously but at the same time reflecting the original image of a small low-cost airline. At JetBlue, the CEO has cultivated a culture of being unique; standing out from the competitors. Being a low-cost airline, it itself does not offer the uniqueness since there are others in the category. What made it unique was the high quality of passenger services and comfort.

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The company CEO always insisted on three things: low-cost, great product and capitalization. With this experience, talent and expertise, Neeleman saw the company’s profit grow tremendously and this success may have contributed to the growth of the uniqueness culture. It is not easy to operate in the low-cost range and yet offer high quality services. This made the company’s strategy difficult to imitate and hence it stood out.

Strategic Change

Goals of the new Project

There are two major goals in this project: first is Enacting growth in a cost effective manner while, at the same time, maintaining the entrepreneurial culture. Second is to maintain the image of a low-cost airline that is Jet Blue.

Ethical issues and Social responsibility

Jet Blue’s business is in an industry where ethicality is a key issue to be considered direct interaction with the customers, calls for good moral values and integrity. The airline is an entity in itself and should be given a personality. The personality of the airline is reflected in its employees.

In the case study, when the CEO apologized to the passengers who suffered the impact of flight delays, he did so on behalf of the company. This shows that the company values its customers and will not wish to inconvenience them. The move to compensate customers and give them a free full round trip in addition to the profuse apologies was another way to bring out the ethical nature of JetBlue. It is in best Interest to accept one’s mistake and rectify than to point a blaming finger on someone else.

JetBlue knew this too well and hence had the courtesy to agree that the flight ought to have been cancelled like in the other airlines; and instead of blaming it on the bad weather, JetBlue apologized and made it up for the stranded customers. This goes along way in building customer trust and in return earns their loyalty.

As a social being, JetBlue faces the responsibility of ensuring the wellbeing of those that it interacts with. The first thing that is notable at JetBlue is the low cost of their flights. It has ventured into the unexploited routes and offered fairly affordable flights that encourage even non-flyers to enjoy the luxury of flying. Secondly, the services offered are reasonably prestigious considering the cost.

Classy refreshments, comfortable seats and individual seatback TVs is far too much for a low-cost flight. Again by letting the passengers communicate their feelings concerning the 2/14 flight delay publicly shows that the customers’ feelings are catered for. Another responsibility facing JetBlue is being profitable. The owners should boast of a return on their investments.

Strategic Approach

The project at hand is aimed to substantially cut down cost while increasing profitability and enacting growth. A strategic approach that aims at minimizing production cost yet offer appealing services to the customers will best suit JetBlue.

Looking at Porters generic strategies, the low cost leadership Strategy offers the best strategic measures that can help JetBlue achieve its goals. For instance, the decision by the New CEO to drop the idea of adding more jets to their fleet is a way of avoiding additional cost and this is suggested by Porter, 1985 in this generic strategy.

He further argues that access to a large capital investment at entry creates a barrier that may not be crossed by any other company. Initially, JetBlue started off with huge investment capital but now that it is recovering from a blow, it is like a fresh entry altogether and the new COO is strategizing and implementing ways in which to accumulate capital for an effective comeback.

The strategic plan to cut down the number of current flights and introduce a new route is an assured way reduces cost incurrence. By reducing the number of flights, we introduce some free hours of labor and idle jetliners. These can be transferred to the new route meaning that there will be a new route at no extra cost.

Decentralization

With the founder CEO out of the scene, and having been faced with great challenges and losses, it is time JetBlue modified its operational strategy. The company needs to break up from the old culture of centralization, and diversify the decision making process. Lewin’s Model of change management, unfreezing, changing and then refreezing can be used to implement the required changes.

The starting point is to break up the system that has been since inception; that is the lines of authority and power. Construct them once again but this time in a different form. The conventional hierarchical model of organization can be used in this case.

The company is small and this works in favor of the model since even the topmost managers will have an idea of what is happening in the lower levels. This hierarchy provides a means of power delegation from the topmost position to the lowest in the ranking. The CEO who is ranked highest in this case will have the overall decision making authority but there are other levels of decision making that can be made in the lower level authority. In this organizational structure, every leadership position is assigned specific roles.

This is a particularly important as it enhances accountability and stimulates the urge to work harder to achieve the goals that are expected of the leadership position held. During this change-over, there may be a lot of confusion as employees learn to work in the new system and it may cause a drop I productivity. The new organizational form may be implemented in the current design. This may make things easier for the employees when it comes to adapting to the change.

Now that change is underway, it is hard to determine how the new system will be welcome but one thing is for sure, there has to be some amount of resistance to this change. This resistance is manageable with a little effort. This is where leadership qualities are evidently required. Communicating effectively the underlying change; its benefits and challenges and the reason why it needs to be implemented prior to implementation is particularly important (McShane & Glinow 2009).

This may not be a means of avoiding resistance but a way of managing the inevitable resistance. Making every member of the organization a part of the change process by holding healthy discussions, listening to their views and sharing in their fears makes each individual support the change positively with the feeling that he is making it happen and it is in his favor. Such communication issues require a strong leader.

Delegation of power and Duties

Now that there are different levels of authority and power, delegation of duties comes into play. The question of grouping these duties appropriately and assigning them to the relevant department is quite challenging in many cases. However, the implementation of the organizational form should put into consideration the professional background of each person before assigning them to the different department.

The most effective way is to create departments based on expertise and professional or educational foundations. Advertising, for example, should be allocated to the marketing department together with issues such as when to offer discounts on trips and the like. In other words related tasks should be grouped together. When it comes to authority, orders should flow from above, however, every level of authority has its decision making capabilities. Each person should be answerable to the one directly above him.

The organizational goals can only be met if the parties involved work collaboratively towards them. However, with the delegation of authority, delegation came of duties as well.

This means that every player in the process has got a role to play towards achieving the organizational goal, (Wonnacott and Wonnacott, 1986) There are needs to be a benchmark against which achievements can be measured. The benchmarks can be created by setting departmental goals.

These will form a basis on which success will be measured. As an example, setting target sales may be a goal in the marketing department. The target can be based upon sale projections from previous years or the appropriate trading period. If they are not met, the person in-charge will be answerable.

This accountability will translate to commitment towards realizing the set goals and objectives. Also, to determine if goals are being met, performance is measured (Sumanth, 1984). Measures of performance are based on feedback collected from customers as well as deliverables made to stake holders. Performance is measured by the following metric drivers. (House of Commons Committee of Public Accounts)

Effectiveness = Actual output/ Expected output x 100%

Efficiency = Resource actually used/ Resources planned to be used x 100%

Productivity = Outputs/ Inputs this can also be expressed as

Expected productivity = Expected output/ Resources expected to be consumed or

Actual productivity = Actual output/ Resources actually consumed.

Project monitoring is done by the CEO who should feed the Board of Directors with all relevant information and feed back from the employees under his command.

Quality Control

Quality control should be implemented in three levels; first is the incoming Quality Control, In-Process Quality Control and Outgoing quality assurance. In our case, we are dealing with a service industry and the input is mostly in terms of ideas. The ideas presented by different stake holders should be thoroughly scrutinized to determine whether they are worthy implementing.

Secondly, if an idea is to be implemented, continuous analysis should be carried out on the implementation process to find out if it is likely to yield the anticipated results. Finally, the services and other deliverables should be of the highest possible quality.

In the control of quality of any business process, we need to look at all dimensions of quality. The first Dimension is experience. It has got the ability to translate a vision into a reality. Without experience, all visionary plans are bound to fail. Experience also brings about learning in an organization. An organization whose quality management process is done by a person with experience will acquire its own experience during the process and with time eliminate consultancy services.

The second dimension is measurement. This is a characteristic of quality that enables the assessment of thee fact that something was done and the degree to which it was well done. The third dimension is relationship and system thinking. Relationships are seen in using such tools as graphs and charts where one variable is plotted against another to see how one affects the other.

System thinking translates a two dimensional quality system to a multidimensional, integrated, dynamic and leveraged system. There are two types of thinking, dynamic and static thinking. Dynamic thinking covers the interrelationship among all the dynamically interactive parts of the system. Static thinking captures a single point in time of a process. It shows the process’s logical flow.

Static thinking shows the relationship between one part of a system and the other parts. The point wise view of a process is more suitable in showing how the system is working at that particular point in time. The fourth dimension of quality is Interconnectivity and Paradigm logic.

A system has three basic parts, inputs, processes and outputs all of which are interconnected to produce results. This fourth dimension looks at the interconnectivity in systems. That is how the parts of a system are connected and thus understand the guiding rules and principles that make the system not only work but work in a certain way. His dimension explains the logic that drives a system.

The last dimension of Quality is value sharing. In relational economics theory, the value of sharing defines that if a party A gives party B something that is more valuable to party B than it is to party A then they are better off together as a result of the trade. When it comes to quality, value sharing is used to mean that you should give the customer more than what he is paying for, (Winder, 1993).

Risks and Benefits

This strategic change process may face opposition from the management who feel that their power positions are threatened. Also, as noted earlier, employees are most likely going to resist this change especially for fear of the unknown.

Communication is the key tool that can help in management of these crises, (Robbins, 2003). The Board of Directors and shareholders may be opposed to the change in fear of failure but if properly discussed and the benefits of the new system in comparison to the shortcomings of the old one clearly defined, they will support it.

If the project is successful, the shareholder’s will be the first beneficiaries as the get good returns on their investments; employees may have pay rises and the security that comes with working in a successful company. Due to the diverse views in decision making process, more productive decisions are likely to be made and also with diversity in culture, come employee satisfaction as everybody fits in.

Conclusion

In conclusion, the project may be summarized as an organizational change induced by change in management and the need to be more profitable. Changes are inevitable, what is most important is how the change is implemented and the benefits that come with the new system in comparison to the old system do benefits out do the risk.

References

House of Commons Committee of Public Accounts. Department of Trade and Industry: Regulation of weights and measures. Retrieved from http://www.publications.parliament.uk/pa/cm200203/cmselect/cmpubacc/581/581.pdf

McShane, S., & Glinow, M. (2009).Organizational Behavior. (5th ed.). New York: McGraw-Hill/Irwin.

Porter, M. (1985) Competitive Advantage. New York: The Free Press.

Winder E. Richard. (1993) Fulfilling Quality’s Five Dimensions. Retrieved from
http://www.ldri.com/articles/93aqcfillqual5dim.html

Robbins, S. (2003). Organizational Behavior. 10th ed. Upper Saddle River, NJ: Prentice Hall.

Sumanth, D. J. (1984) Productivity Engineering and Management. New York: McGraw-Hill.

Wonnacott, P., and Wonnacott, R. (1986). Economics. 3rd ed. New York McGraw-Hill.