Virgin_Blue_Case

Introduction Virgin Blue started operating its business in 2000 to serve the leisure travellers across Australia. They had good business until the economic crisis emerged and their target market started to decline. So they focused on corporate flyers and planned further activity accordingly. Now for the brand name and more advanced development, Virgin Blue is going to be Virgin Australia and expand their business in Asian economy within this year.   Dropping “Blue” from Virgin Blue Airlines There was a time when people tend to view change in an organization as something unwanted, something that put things out of comfort zone or something simply problematic. But now as the time passed more, the point of view on change modified and surely it became a way to develop and improve performance of an organization to compete in the advanced competitive global market. That is why Virgin Blue airlines needed to change; their target market and operation as well as their new name- Virgin Australia. Pressure for the change There are several reasons why Virgin Blue airlines had to change. First of all, the focus of Virgin Blue was on leisure travellers on domestic flight. But the emergence of economic crisis with consequential job losses and slow growth of market made it hard to compete. For the first time Virgin Blue's domestic operations faced losses since the airline was listed in 2002 and fuel prize was increasing. Their target market; domestic leisure travel sector were competitive with Jetstar and Tiger Airways. People were tending to cut off their extra travel cost in order to manage finance in this economical crisis. Virgin Blue could not increase market anymore based on only leisure travellers. Second, Virgin Blue lost several partnership agreements with different companies. Its V Australia partnership agreement with Delta on Pacific and US routes was rejected by US Department of Transportation (DoT); and a proposed code share and mini-partnership with Air New Zealand on Australia-New Zealand routes was rejection by Australia’s competition body, the ACCC (CAPA,2010). Third, there was an unexpected incident on September 2010 that hampered Virgin’s reputation; which was the outage reservation system that interrupted its operation for a number of days. As a result, thousands of passengers of Virgin were stranded at the airports causing not only financial damage but also much more reputational damage. This catastrophe of Virgin provided opportunity for its competitors to take advantage on it. And so did Qantas, on that moment reminded the travellers that they are reliable as well as performs on-time (CAPA, 2010) As Virgin Blue was trying to transform from low-cost operators to full service operation; it was becoming a fully fledged business operator, they were facing such critical job of managing IT platforms. For example, Virgin Blue did choose a new upgraded Navitaire system “New Skies”. On September 26th, it went down and the back-up mechanism failed temporarily and service operator was in doubt (CAPA, 2010). All these unanticipated occurrences were forcing Virgin Blue to change into a stronger and well operated airline company. This is why the CEO, John Borghetti was determined to bring a change all over the organization. Current changes in Virgin Blue Airlines 1. When Virgin Blue realized the declining market of leisure travellers, they decided to expand their entire target market. Their new target was corporate flyers that fly more often. In this case customer seeks for more cheap fair and convenient transportation rather than superior service or luxury. 2. Based on that decision, Virgin Blue introduced wide-body Airbus A330 aircraft for the service. The aircraft featured a new business class cabin and a “superior economy class” with reasonable prize that was lower than the competitors. 3. For improvement, CEO John Borghetti showed interest to be in partnership with Skywest for turboprop aircraft. 4. The airline changed the uniform of cabin crew and ground staff that were designed by renowned designer Project Runway winner Juli Grbac, and presented by supermodel Elle Macpherson. 5. Launched two more lounges to expand more. 6. They had an online system "application program interface", which can also be used by travel agents, allows organisations to peruse and purchase Virgin Blue flights through their own systems, as well as check for information regarding flight schedule changes and billing. More than 40 groups, including the Queensland Government, had signed up there. Kotter’s eight step Models application on Virgin Blue Establish the need for urgency This is the first step of Kotter’s model to start the need for urgency. It helps a lot more if the entire organization is willing to work for the change to occur. For this reason, a sense of urgency can be made all over the internal environment. In this way, employees will be motivated to start working towards change. But it is not an easy task to do as it sounds. It is not just stating the poor performance or declaring new move to compete in the market. It is about making it talk of the organization, making employees want the change and finally feel the urgency. This step is the most important than others because to make the change start, managers play a significant role in this entire process. If the managers believe that the change is obvious, only then it can be successful. Everyone must work hard to bring the change smoothly in the organization. Because if the process is rushed, there will be short-term losses ahead in the future and no one will be prepared to handle such trouble. So taking small steps and slow progress is expected. Market analysis- To start the process, potential threats for the organization should be analyzed in order to develop scenarios for future. According to the Virgin Blue CEO John Borghetti, the airline is intended to expand business in Asia with its new target on corporate flyers (CAPA, 2011). Determine problems & opportunities- Virgin Blue's domestic operations faced losses, lost several partnership agreements with different companies, faced IT problem, market deckling etc was causing Virgin Blue to change. The main problem that Virgin will be facing that in Asia there is already large competitors like Singapore Airlines, Qantas, Cathay Pacific, Qatar Airways, Thai Airways and so on (Khan, 2007). So it will not be an easy market to enter. On the other hand, Asia is a potential market for economy class passengers. There are lot of people who will be interested for the prize that Virgin Blue offers for its superior economy class. Then, opportunities that can be exploited or undertaken, suppose to be examined. For the starter Virgin Blue can conduct an online survey in Asia to understand the market demand as they are trying to upgrade their online services. Techniques to ensure employees focus on change- As Virgin Blue is changing into Virgin Australia, first it should create such buzz around the organization and among the stakeholders as well as others. There should be proper communication. Communicating and explaining the valid reasons to make the employees used to think and talk about the change more is essential. Occasional meetings and other incidents must contain this topic to acknowledge the employees of Virgin Blue. Feedback- Taking opinion from customer is much more helpful as well as the opinion of the internal members. Virgin Blue can contact with their current regular customers for understanding of the customer demand. They can provide new ideas for further improvement for change. Ensure there is a power change group to guide the change It is essential to convince the employees to bring the change and it requires strong leadership and support from manager and top level within the organization. It is a systematic process that should be leaded and followed. The leaders within the organization who already proved their standard can be assigned to lead the change throughout the association. Selecting several remarkable leaders to form a group will be the best idea they will hold the power from their position to lead swiftly. After formation the team will continue to spread the awareness for the need of change. Create team structure to drive change- for a long time Virgin Blue served for leisure travellers. So serving corporate travellers will definitely be a little bit different than the other because they seek on time service and more concerned about fare than comfort. So a team should be construct who would better understand the target market and will be able to manage effectively. Identifying capable leaders- It is the main task in this step. As the leaders will be chosen from different level, it will be diversified and have ideas to serve the corporate level travellers a new experience that they never experienced. Leaders suppose to be emotionally attached with the change process- if the leaders are committed for a successful change over Virgin Blue than subordinates will not have such problem to work accordingly. Ensure teams have sufficient power to achieve desired change- but the team must be given enough power to make the work done before Virgin Blue faces anymore trouble. All the leaders must work as a team in order to bring better co-ordination within the team. Finding and removing team’s weaknesses will make the team stronger to lead better. On the other hand, blending different experts from different level will be a good mix for a team building. Develop a vision It is a common mistake to start a process without setting the target. For an organization, vision is the main target that will drive the entire activity towards the achievement of it. There will be so many ideas and solutions but it is mandatory to sort out the entire ideas first and find right path to solve the problem. For employees it will be easy to understand a clear vision to follow. They will know what they need to do and what they will achieve. Their activities will be more important to them and they will be encouraged to bring the change. As the Virgin Blue it going to be Virgin Australia, this move should be summarized and stated in a fixed vision for the employees. It should be known from the beginning what will be achieved from this change and the values that are central to the change- by changing so, this organizations employee will get much more effective operation and customer satisfaction. A summery should be made of the future according to the vision. It can be expressed as the tag line for the entire change process in the organization. Fulfil the vision all together without any drawbacks, a strategy should be structured- Virgin Blue had so many losses but Virgin Australia will not follow the same path, as their new product purchase and new business plans are made. As the CEO Borhgetti said Virgin Blue was “not going to leave that part of the world uncovered” (Flynn, 2011). The change team leaders should be able to understand the entire change process and the motive in a sense so that they can explain that in a very short time, for say less than five minutes- The CEO John Borghetti said the Asian economy will expand up to 50% according to IMF, and will be comparable with USA or other economy and on that place Virgin Blue is going to play (Bruce, 2011) Communicate the vision A vision is the foundation of a change process. As it is said before it drives the activities towards achievement. Communicating the massages of this vision should be different than regular massages because it will be more powerful and strong containing every instruction required. Only conducting occasional meetings will not help to convey the massage but spreading the massage by word-of-mouth internally will be effective. Regular communication on the vision and pros and cons of it will keep the massage fresh on employees mind and bring positive response. It is also important to make everyone believe what they say about the vision rather than just talking about it or response. Change team must openly and honestly tackle peoples' concerns and anxieties- As the CEO John Borghetti gave an interview, it is a very clear way to communicate massively (CAPA, 2010) The vision should reflect on every aspect of the organization’s operation and bind the vision with its activities. Managers must set example of change through their own activities- current CEO of Virgin, John stated that “You won’t see us, or you probably won’t see us, move to one brand but I can guarantee a rationalisation" (Flynn, 2011) There should be extraordinary or out of the box thinking to use multiple channels to reinforce the change massage or the vision. Empower stuff To empower stuff, removing obstacles is essential. When the barrier is lifted, employee can work with their skill using their full energy and interest. They will be able to execute the vision with accurate tasks and responsibilities and move forward faster. Remove organizational policies that inhibit the change process. Encourage risk taking and identify and select change leaders whose main concerns are to deliver the change. The change leaders must be on the same page to ensure their reliability with the vision Employees who start contributing to the change should be identified and rewarded for making change happen. People who are resisting the change should be taken care of to make them understand the prosperous future of this change and help them see what's needed. No matter if it is the policy of the organization or an employee by which or whom change process is disrupted should be removed immediately. Ensure there are short term wins Efficient performance and appraisal is the key to motivate employees. When performance is better and result is positive, employees will feel victorious and this feeling will increase their interest to work more. These short term wins can bring such result that can not be achieved by criticism or negative thinking. To achieve short term wins, vision must be divided into small portions from the long process and those small portions will be targeted to accomplish. The divisions should be the change team’s responsibility to enhance activity- for example, Virgin Blue and subsidiary V Australia have been acknowledged as members of the International Air Transport Association (IATA) in order to enhance its brand and international operations (CAPA, 2011). Some easy projects should be chosen to implement without any strong criticism of the change. Expense should be a big consideration as the investment is important. Choosing targets in a rush that are expensive will cause trouble if failed. Investment should be justified in each project. Analyzing the potential pros and cons of targets entirely is must. If failed with an early goal, it can hurt the entire change initiative. Rewarding the employees who help to meet the target of the change will motivate. Vocalize wins which support the change policy, so every single success no matter how small they are should be informed to every employee. Consolidate gains As the victory still continuous, it is a common mistake to take it for granted that target is reached. But in real action, achieving long term vision takes more time to set in an organization. So afterward, many organizations fail to continue. Being able to do a task is not as same as completion of the task. So the change process must be held by the change leader as long as needed. Improvement is a constant process in this system. Every win leads to a new improvement for the organization. Every mistakes and achievements should be analyzed for improvement- there was an unexpected incident on September 2010 that hampered Virgin’s reputation; which was the outage reservation system that interrupted its operation for a number of days. As a result, thousands of passengers of Virgin were stranded at the airports causing not only financial damage but also much more reputational damage. This catastrophe of Virgin provided opportunity for its competitors to take advantage on it. And so did Qantas, on that moment reminded the travellers that they are reliable as well as performs on-time (CAPA, 2010). Target should be set afterward completion of a task to change for constant development. Continue to remove policies which inhibit the progress of change Reward employees who positively embrace the change Establish new projects related to the change program Embedded the change in the culture Link change to organizational performance and leadership In the end, when a change is required to be sealed in the organizations culture it should be placed in the core of the organizations corporate culture. The value of the vision must reflect in the regular activities of the organization to freeze the change in it. The change team leader’s continuous support is also the important factor of sealing the change inside. If they stop supporting the change can be faded over time. Constantly remind the employees about the progress of change. Spreading the success stories about the change process, and repeat other stories will help to remember the struggle as well as gain publicity. Educating and training new staff while hiring new culture of the organization- Virgin Blue changed their cabin crew and stuff uniform to change their culture and behaviour toward the corporate travellers. Contribution of every employee should be remembered and rewarded to encourage the future generation. Replacing key leaders of change as they move on will help ensure that their legacy is not lost or forgotten over time.   Conclusion Virgin Blue has not been that much successful as an airlines industry comparing to its competitors. They faced several difficulties and decided to change from Virgin Blue to Virgin Australia. Even though such reasons forcing these airlines to change, they are still planning to improve and expand the company. The changes are supported by its strategy and forecast. Suggested Kotter’s eight step model provides a clear instruction on how the change occurs and how organization can manage it. A change is always welcome as long as the employees are easy with the entire process.