Flight path to CEO

Flight path to CEO

Rob Fyfe’s rise to Air New Zealand chief executive included a brief stop as its CIO. As such, ICT plays a critical role in helping make the airline one of the country’s most admired brands.

Rob Fyfe is one of the few chief executive officers with a CIO role on his CV. However, in Fyfe’s case, his ascent from ICT chief to the top table has been swift, at just under three years, and within the same enterprise.

Fyfe was managing director of ITV Digital in London when he joined Air New Zealand in early 2003 as chief information officer. He became general manager of airlines in October that year and two years later was appointed chief executive. Fyfe was chosen after a global search for the replacement of Ralph Norris, who joined the Commonwealth Bank of Australia as chief executive.

Seated in his fifth floor office at Air New Zealand, Fyfe smiles as he notes his CIO stint was “relatively short… less than a year”. But that layover had definitely ingrained into Fyfe one vital insight that he is harnessing — no, fully exploiting — and that is to ensure ICT plays a role in the business success of the company.

“Technology is such a critical part of our business at Air New Zealand,” he says. “We carry 12 million passengers a year. Each of those has a complex transaction that sits behind their travel and the opportunities for technology across our business are just enormous — from the selling of a ticket to the way a customer checks in to the ability to identify and deliver unique experiences to customers on board the aircraft and so on.

“Coming from the more technical side of the business has helped me foster my sense of innovation and the possibilities that exist, which just kind of need to be unleashed inside the organisation.

“It has helped me to always push the boundaries,” he adds. “Some of the most talented people we have in our IT function stressed to me when I was in the CIO role that basically anything is possible.

“You have a much greater sense of what is possible and I think that is really critical. Quite often as a CEO you try to pursue particular strategies or initiatives and you find blockages across the organisation. People give all sorts of reasons why something is not possible.”

A real partnership

“We have a great relationship between IT and the rest of the company,” he says. “It is a real partnership. It is not about the business dictating to [the] IT team, or IT dictating to the business.”

Getting this balance between resources and priorities is one of the biggest parts of his chief executive role, he says. “There are so many things we want to do as a company. We don’t have the resources nor would it make sense for us to diversify our capital and human resources across too many things simultaneously, so you have got to prioritise, focus and allocate your resources.”

As CIO, he tackled the same issues within the ICT function. The biggest challenge, he says, was “to identify what resources were available to us and how much money it makes sense for us as a business to spend in developing new technologies. Then we determine an efficient way for us to prioritise projects and determine what we could do and couldn’t do and invest more energy and time managing stakeholder expectations.”

There were, however, some other issues to deal with. “When I first came here I found there were huge, huge expectations on the information and communication technology arm of the business.”

But the team had difficulty delivering on all those expectations, he says. “Quite often, rather than being seen as an enabler, the IT team was seen as almost an inhibitor, because they couldn’t deliver the capability and speed that the business wanted. It probably [was] the biggest challenge and it is a skill and a lesson that has certainly helped me in my current role,” says Fyfe.

Another goal, he says, was building a “strong base of integrity within our professional relationships”.

Air New Zealand, he says, is a huge user of external resources and has relationships with big and small suppliers. “It is absolutely critical if we are going to get the very best suppliers for the Air New Zealand business [that] they perceive we have a high degree of integrity and professionalism and the relationship with our suppliers and how we evaluate business proposals and so on.

He says he and his successors, referring to current CIO Julia Raue and Alastair Grigg, now chief operating officer of accounting software firm Zero, “Worked very hard to ensure we build strong integrity and professionalism both inside the company as well as externally.

“And I think as a consequence of that we get a lot more value out of our suppliers wanting to contribute a lot more to the organisation because they have a trust and confidence in the sort of relationships they will get with Air New Zealand.”

Innovative endeavours

Another major item Fyfe focused on as CIO was “innovation and creativity,” and this continues through to his current role.

“One of challenges in the IT sense is that you can get so focused on maintaining existing applications supporting the needs of the business, you don’t allocate enough resources and enough flexibility to actually think outside the square.

“Having an appetite for a degree of risk is something we promote within the organisation,” he says, but clarifies this has a nuanced meaning for Air New Zealand.

“An airline is a risk-averse organisation. In an operational sense we take absolutely no risk whatsoever. Our passengers want to know when they hop on the aircraft we do everything we do to minimise the risk and maximise the safety of the passengers and crew of our aircraft.

“Our challenge in the business is to maintain a risk averse operational culture, but accept a degree of risk within the commercial orientation of the business,” he says. “I am quite comfortable with making the odd mistake, if it comes in the pursuit of new opportunities and new ideas.”

Indeed, Air New Zealand is a rare company where innovation and ventures is part of the ICT portfolio, which was a development that occurred within his term as CEO.

Fyfe says it was “quite radical” to position innovation and ventures under ICT, but he says a strong motivation as CEO was to “get much more innovation and creativity in the company.

“We created an innovation and ventures capability and quarantined it from the rest of the IT division to some degree.”

The team’s brief? “We said there are no rules. You are not constrained by existing architectures, existing protocols.”

This team was tested when the airline focused on its website. “We were outsourcing our work and we weren’t happy with the speed of development and we weren’t happy with the competitive advantage we were getting in that area,” says Fyfe.

So the team was told, “Just dream and build the most amazing airline website you can imagine.”

He says: “You have to give those guys the freedom to push against the traditional boundaries. Those boundaries may be there for good reasons, but if you allow them to push and innovate they come up with ideas that are so compelling you will modify the boundaries to be able to accommodate that idea or innovation.”

One of the results was Grab a Seat, Air New Zealand’s online channel for cheap air fares that changes daily. Fyfe calls it the airline’s most successful product launch ever. The website, he says, used to get 30,000 visitors a day and this is now up to 120,000. Online revenues from four or five years ago were around $150 million. Today, it is more than $1 billion a year.

Grab a Seat, he says, is one example of the kind of risks Air New Zealand was prepared to take.

He admits some staff had severe reservations on whether the product would work. One concern was that too many people would buy the cheap seats and not buy the normal price seats.

Fyfe says Grab a Seat did cannibalise the other businesses, but “in a very positive way”, and one in which they were comfortable with. “It has cannibalised both the telephone channel and it has cannibalised people going into travel agents as well.” Fyfe says they still get big telephone volumes from offshore, but the internet has become the dominant channel for booking domestic airline services.

There were also concerns about the robustness of the architecture to be able to manage the transaction volumes it would generate, how to control the distribution of seats and how to ensure other websites will not “scrape” the site and take the inventory away to their sites. “So there was a range of issues. I said let us put our heads together and do it.”

He smiles as he relates how thousands of people have now made Grab a Seat their homepage.

Like Trade Me? Fyfe laughs and concurs, “Certainly in terms of traffic as well as revenue on the site, we are a big player like Trade Me. If you look at transaction-oriented sites and revenue flows, we certainly are.”

Innovation everywhere

While innovation and ventures is under the purview of the ICT function, Fyfe is emphatic about the need to create an environment where people from across the business are encouraged to contribute to share their

innovative ideas.

One way is through Air New Zealand’s “Test Flight” programme, where employees from across all departments can pitch ideas and proposals to the executive team. “Test Flight is almost an internal marketing technique,” says Fyfe. “What it does is give a lot of profile to innovation. We give away a lot of prizes, we make videos of those sessions, and we circulate them around the company. There is a real culture here that is promoting innovation. What we are actually trying to get to is less about big ideas, it is a lot more about hundreds and hundreds of little ideas continually improving what we do.”

Some of the innovations, he says, are on “simple things” such as cabin crew suggesting replacing the packet coffee they used in flights, to changes in check-in and baggage handling processes.

“We don’t have to centralise it all,” he says of the innovation function. “Otherwise it becomes a bottleneck [and] you find you can’t move quickly enough.

“One of the most important assets of any business is speed,” he stresses. “If you have a competing business with the same input in terms of data or information, you quickly make the same decisions. What differentiates you is how quickly you can implement and if you can get a new product to market before your competitors.”

‘Can do’ attitude

These days Fyfe is pleased with the positive branding Air New Zealand has in the competitive marketplace. He credits this to the company creating a distinct culture celebrating the positive aspects of being a New Zealander.

“I strongly believe that if you are in a service-oriented business, the essence of your success is your people. It is easy for that to be a cliché, but we worked really hard for that to mean something here in Air New Zealand.”

A ‘can do’ attitude is one of the things that Fyfe says is being fostered in the airline. Locally, he says, this attitude often means “cobbling things together with limited resources with the No. 8 wire.

“The reality in this day and age, [is that] ‘can do’ is quite a sophisticated notion,” he says. “It is not about cobbling together home-grown solutions. It is, we are competing in the world stage as a small country and punching above our weight… whether it is the leading edge technology in the America’s Cup boat… Navman being created out of New Zealand… or winning the Grammy.”

He chuckles at the last, as the Kiwi band Flight of the Conchords, which recently won the Grammy, is a favourite. “I love them,” he says. “The kids are in stitches whenever they see hear those guys sing.”

This ‘can do’ attitude was also translated in a different way last year, with a couple on a flight from Christchurch to visit their daughter in Invercargill. The crew got a message that the daughter, who was critically ill, has been shifted to Dunedin. The crew made the quick decision to divert the aircraft to Dunedin to drop off the couple, then carried on to the original destination. The crew also arranged for a taxi to take the couple to the hospital.

“That is the sense of what ‘can do’ means to our organisation,” says Fyfe, who recalled this story in his weekly email sent every Friday to all Air New Zealand staff.

A different walkabout

There is another leadership philosophy he applies, which he says works whether one is a CIO or a CEO. One day a month, he works somewhere in the business.

A recent stint saw him donning overalls as a night-shift engineer in Nelson, “changing wheels and brakes”. This stint is no surprise as Fyfe graduated at Canterbury University in Christchurch with a bachelor of engineering (mechanical) degree and worked at the Royal New Zealand Air Force prior to moving to enterprise roles. He has also joined a sales team member visiting airline customers and worked as a flight attendant, a baggage handler at Wellington Airport and a flight line engineer at Christchurch. “That is an opportunity for me to be there to understand our business so that when I make a business decision as a CEO or CIO, I have an understanding of the real world.”

Once a month the role is reversed and Fyfe asks a staff member to join him for a day, which could include sitting in meetings with other airline executives, or with politicians and customers.

He stresses the importance of taking time out for these meetings. “If you are in a service industry it is about people,” he says. “Someone said to me early on in my career if you don’t love people, if you don’t have a real passion for people, don’t work in the service industry because you will stuff it up.”

Reporting lines

When it comes to the ideal reporting structure for the CIO, Fyfe asserts who the CIO reports to is not the main issue.

“What matters is the relationship framework that the CIO operates in,” he says. “So in any business for the CIO to be effective, he or she has to have open and direct access to every single member of the executive team.

“Building those relationships and making sure there is a shared collaboration between the business and IT is the role of the CIO and it needs to transcend whatever reporting lines they have. So being part of that and having access to the team is absolutely key to the CIO.”

At Air New Zealand, the CIO Julia Raue reports to the CFO. “But when it comes to setting our priorities, when it comes to figuring out how we allocate our resources and our budgets, she will interact directly with the executive team. If Julia had an issue, she would feel comfortable to walk into my office today and talk to me about that issue.”

But in “more traditional organisations”, he says it is probably more important for a CIO to be reporting to the CEO “to make sure they have access to the key decisions around resource allocations and prioritisations”.

So what advice would he give to an ICT professional keen to succeed in the sector and beyond?

“The danger I see [is] some talented ICT professionals that can’t, that don’t, relate particularly well to people,” he says.

“Probably one of the biggest challenges in the ICT space is getting people to think in the context of people, not in the context of systems.

“A successful IT professional is one that can work collaboratively across all sorts of stakeholder groups. Technical specialists that isolate themselves from their communities to my mind, can never make it to the highest tier.”

© Fairfax Business Media

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