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Taking on the World
“How many shifts are you running?” I asked
“Two,” came the response.
I made a mental note that output could/might be
increased by 50% by adding another shift. However, there is always a
reason for why things are what they are. I needed to know more.
“How many bays do you have?”
“One.”
I was talking with the Head of Heavy Maintenance
for Scandinavian Airlines System (SAS), Thor Karstensen. Adding another
bay could double their current capacity, but would likely require
significant investment in equipment, tools and training.
Heavy maintenance is different from line and base
maintenance in that the entire plane is practically taken apart and
reassembled. The process is called a “‘D Check” and takes place every
four to eight years during the life of each and every commercial plane.
Each check takes about fifteen person-years to complete. Since Mr.
Karstensen’s shop was located at Fornebu, near Oslo, SAS Technical
Services (STS) paid the workers some of the highest wages in the world.
Expanding capacity would just add more cost if worker productivity did
not improve. Planes can be flown anywhere in the world for this
particularly complete and thorough maintenance, and SAS could cut its
costs dramatically by having heavy maintenance done in a low-wage
country.
SAS was facing a problem that is increasingly
common in developed countries. If productivity could not be
dramatically increased, high-paying Scandinavian jobs would be lost to
low-wage countries.
I had assured the CEO, the legendary Jan Carlzon,
that I had never been in a production environment where productivity
could not be increased by at least three hundred percent, and where
investment in people and technology would not yield a return of 100:1 in
five years or less.
Mr. Carlzon had already achieved wonders with the
airline. After only a year on the job, SAS was the most on-time airline
in Europe. The year after, SAS was chosen Airline of the Year. Mr.
Carlzon had achieved this by investing heavily in his people – all of
this described in two excellent books: Moments of Truth and
Tear Down the Pyramids!. Heavy maintenance was his biggest
headache, and while his airline was renowned for its safety and
exemplary maintenance, the cost of the latter now threatened hundreds of
jobs in Oslo.
Could SAS Heavy Maintenance become productive
enough to compete with low-wage maintenance operations in Central
America? In Eastern Europe? In Ireland?
I thought so. So did Thor Karstensen.
He and his crew quickly diagnosed the logjam that
had kept heavy maintenance from being competitive. They identified the
key log, found the root causes of it and the other logs, and agreed upon
the changes that would be necessary to usher in a new era for their
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For each step in the process, we went
back to everyone and asked, “This is what we
have found so far; have we got it right?”
In the end, everyone agreed on what
should be done. Management approved the plan. We asked for
nominations for those who should serve on the various task
forces that would so the work and implement the plan.
Funny thing, that — asking for
volunteers to serve. That creates a voluntary
organization! In such an organization, the right people
will step forward because everyone knows who they are. They
will do the right thing in the right way because they are on
a noble quest on behalf of their fellow workers. And when
they are done, everyone will know if they have succeeded.
Succeeding is then a matter of honor —
and of pride.
In my experience, I have seen that much
more will be delivered by such an organization than what was
ever thought to be possible at the beginning of the project.
Not only did the Norwegian mechanics
become sufficiently cost effective to keep their jobs. They
also were able to compete for, and win bids to do heavy
maintenance for other airlines.
In fact, SAS Technical Services is now
the tenth largest operation in Europe, and among the fifteen
largest in the world. When Oslo moved its airport from
Fornebu to Gardermoen, the Fornebu Heavy Maintenance
Operation followed.
The cost savings are documented in the
SAS books. But no one could put a value on the increase in
human capital that Thor Karstensen and his work force had
added, invisibly, to the SAS Consolidated Balance Sheet. If
that were possible, it would instantly become clear that
human capital, just like physical capital and equipment,
depreciates over time if investments are not made in
training, safety and, yes, rewards and appreciation.
It was Curt Nicolin who chaired the SAS
Board when Jan Carlzon was hired. Mr. Nicolin knew that Mr.
Carlzon was the right person for the job. Jan Carlzon told
me about his first encounter with the Linjeflyg airline
where he worked before he was offered the job at SAS:
“Why are so
many of these planes flying empty?” he asked.
“They go to
places that people don’t want to go to, at times that are
inconvenient,
and at prices they can’t afford.”
Mr. Carlzon decided to fill his planes
by going where people wanted to go at times that were
convenient for them, and at prices they could afford. He did
the same for SAS.
And I’m sure that he is pleased today,
when he has moved on to other pursuits, that at Gardermoen
Airport, the highest paid mechanics in the world are doing
what should be done, faster, better, and more affordably
than their competitors.
I know I am.
And I think we could all learn from the impressive
experience of the productive, and proud, air craft mechanics
of Oslo, Norway.
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