By: Nitin Pangarkar
Tuesday, 10 April 2012 16:16 | Comments (0)
But what is not so well-known is how the airline has weathered and emerged triumphant from a series of crises over the last 15 years.
Indeed in the case of SIA, the experience of challenging times has actually served to enhance its reputation or competitive advantage.
For instance, following the SQ006 crash in Taipei in October 2000 - the first and to date only deadly crash in the airline's history - within two years SIA was again winning industry awards.
And in the post-Asian financial crisis years of 1997-98, a challenging time for many regional airlines, SIA took the opportunity to widen its lead over its rivals.
In my recent book, High Performance Companies: Successful Strategies from the World's Top Achievers I cite SIA and Johnson & Johnson as two companies that have demonstrated effective crisis response.
On the other hand, Toyota and BP, both of which were much admired firms until recently, have found their reputations badly bruised by poor and ineffective crisis handling - with billions of dollars wiped off of shareholder value.
For a CEO, the first - and essential - step in a crisis situation is to take charge and not worry about apportioning blame. It is also a time for top managers to step up and show their mettle by truly being the person where the buck stops.
After the Tylenol painkiller poisoning crisis of 1982, Johnson and Johnson CEO Jim Burke took charge, acting decisively and forming a core crisis management team to tackle the problem and communicate information about the company's response.
In the same vein, after the SQ006 crash, SIA's then-CEO Cheong Choong Kong took personal charge of the many media conferences, travelling to Taiwan within hours of the crash, and taking on difficult questions about the airline's handling of the accident.
He was clear what SIA stood for as a company, what its priorities should be and how it should go about fulfilling its obligations. And he also accepted that the airline took full responsibility for the crash.
For example, responding to a reporter's question on whether SIA pilots were misled onto the wrong runway, Cheong said: "They are our pilots, it was our aircraft, and the aircraft should not have been on that runway."
His frankness and clarity was in sharp contrast to the approach of Toyota CEO Akio Toyoda in 2010, who was reportedly reluctant to face the grilling in the United States senate about the car maker's slow response to quality and safety problems.
In such situations companies must move beyond accepting responsibility and proactively address the situations created by crises.
In my book I argue that firms will deliver effective responses to crises when they have a high degree of commitment to deal with the situation, and the readiness to handle it.
While commitment shows the company's desire to do the right thing for key stakeholders such as customers, readiness shows the company's ability to act on this desire or commitment.
Commitment relates mostly to factors such as the stated goals of the organisation (e.g. to provide high quality service to customers), while readiness includes 'soft' (organisational) factors such as the shared beliefs in the goals of the organisation and standard operating procedures (or SOPs).
Being ready also means having tangible factors such as financial resources, or even people resources, that can be mobilised quickly. Gaps in SOPs can hamper and delay a company's response to crisis, potentially badly damaging its reputation.
SIA's excellent response to the SQ006 Taiwan crash can be attributed to its high commitment to stakeholders as well as readiness.
With regard to commitment, providing high quality customer service is one of SIA's key goals.
All of the airline's CEOs have been internally groomed, and believe in the goals of the organisation. More importantly, through their actions over the years, they have communicated the importance of putting the customer first, sometimes at the expense of short-term profits.
For instance, they have continuously upgraded equipment, including undertaking a $500 million overhaul during the middle of the Asian financial crisis.
With regard to readiness, SIA had resources such as cash which enabled it to quickly offer compensation to the victims of the crash or their families.
In addition, SIA had made extensive preparations for crises.
Though it had no history of any accidents, SIA had trained several hundred employees to be 'buddies' for affected passengers or their families in the event of an accident.
It was therefore quickly able to deploy several hundred such staff to Taiwan to help grieving relatives and injured passengers or crew. Many were on their way to Taiwan within a few hours of the crash.
It was also able to activate its Crisis Management Centre at Singapore's Changi Airport, which served as a physical nerve centre for organising the response to the crisis, very quickly.
In conclusion, crises are commonplace and can affect almost any company.
With that in mind SIA's example shows the importance of having not only the will to do the right thing in a difficult situation, but also of being prepared to handle a difficult situation.
Top managers play a vital role by setting the context - i.e. the goals - but also and importantly by getting stuck in 'walking the talk'.
A version of this article first appeared in the Business Times on April 10, 2010