‘The CIO can be an incredibly powerful position’ – the relentless pressures of the job are also opportunities to forge a great career and help the organisation outrank the competition.
Six weeks after joining a company, the CEO asks you to do a strategic review of the business – concurrently with your work as CIO. Rob Fyfe found himself in this situation when he joined Air New Zealand in 2003.
“The reason he asked me was not per se because I was CIO, I think it was largely because I was just the newest person on the team with the freshest set of eyes,” says Fyfe of the directive from the CEO, Sir Ralph Norris.
“The challenge he gave me was to say, ‘What sort of airline should Air New Zealand become if we were to have a viable future?’”
At that time he conducted the review, the economics of the airline industry and the
Air New Zealand business itself was “quite challenging”. Fuel has doubled in price in the last four years, which added another $600 odd million of costs the airlines had to absorb without any significant rise in fares.
In this situation, it was easy for the CEO or the executive team to spend all their time focused on the bottom line, he says. This is particularly true for Air New Zealand, a “subscale operator sitting at the bottom of the world” and flying some of the longest airline routes.
“We were never going to be able to create a competitive advantage through purely managing the financial metrics. We just didn't have the scale, and the airline business is a scale business.”
Sir Ralph Norris told him to “put the economics aside and start the strategic review”.
Page Break
The review led to a raft of programmes at Air New Zealand, including the retention of its core reservation system that initially required over $250 million to be replaced.
Today, the reservation system remains the “heart” of Air New Zealand’s competitive advantage, he says, and has made several innovations its competitors have struggled to match. These include grab a seat, and “revolutionary changes” in the check-in and boarding processes.
“All those innovations and many more we would not have been able to address if we hadn’t retained our capability in managing our own reservation system,” says Fyfe.
You are in a perfect position to get a really broad understanding and perspective of the business.
Rob Fyfe
“Now, typically 70 percent of development expenditure is spent on customer facing and operational systems rather than corporate systems. And by the time I left, I was hardly ever hearing any complaints from people about project priorities or dissatisfaction with IT’s performance.”
Fyfe stayed as CIO for less than a year before becoming general manager of airlines. When Sir Ralph Norris moved to Commonwealth Bank in Australia, Fyfe took on the top job.
Fyfe therefore knows the push and pull demands placed on the CIO, and he also knows how it can be a very good position to vault into other executive roles. For this, he looked no further than his former boss Sir Ralph Norris, who started as a computer programmer, progressed to CIO and then CEO at ASB Bank, before taking the top role at Air New Zealand and Commonwealth Bank of Australia, the parent company of ASB.
Related:What is the next challenge for Sir Ralph Norris?Sir Ralph Norris has been chief executive of three companies (ASB Bank, Air New Zealand and Commonwealth Bank of Australia) in two decades. His name is invariably linked to any references to CIO to CEO ascent in this part of the world.
Being a CIO can be an “uncomfortable position”, says Fyfe. “You have your foot on each side of the fence."
As well, he says, “It can be an incredibly powerful position if you can act as that connection point that ties the opportunity together with the need.
“Use that opportunity to engage with and learn about the challenges, the dynamics
going on and all those other functions in the business,” he states. “You are in a
perfect position to get a really broad understanding and perspective of the business
and that is a great way to position yourself from moving potentially into one of those
roles or moving across the organisation rather than staying within the IT and
communications space.”
At a recent CIO Leaders’ Luncheon in Auckland sponsored by Fronde, Fyfe shares his experience as one of a handful of CIOs who have made the leap to the top role.
Fyfe was CEO of Air New Zealand from 2005 to 2012, and at the time of the interview, was on sabbatical from a full-time role. He is also executive chairperson at Icebreaker, and is on the board of jewellery chain Michael Hill and Antarctica New Zealand.
Rapid prototyping
Fyfe says the airline industry is very conservative and risk averse, but at Air New
Zealand, the mantra for taking on new projects is this: “If they are not actually
potentially fatal to the business, if they don’t risk flight safety, let us be prepared to
take some risks, try some things and prototype and adapt quickly if we find those
things don’t work.”
“If we are prepared to rapidly prototype and use trial and error, we can make
material progress far faster than our competitors."
“It is about rapid prototyping,” he says. “Being prepared to make mistakes and learn [from these]
is absolutely critical.”
Related: CEO-plusFor Rob Fyfe, innovation and risk management go hand in hand, and he shares how this was demonstrated during his term as CIO and then chief executive at Air New Zealand.
One of Air New Zealand’s most successful products, grab a seat, started, for instance, as a pilot.
Fyfe flew Irish budget airline Ryanair on the way to a wedding in the UK. Back in New Zealand, he asked the local team why they cannot offer similar “one pound fares”.
After two weeks, the marketing team came out with a plan that is now known as grab a seat. The finance team, however, disagreed with the concept, as people may think every seat should be between 10 to 20 dollars. “With a 1 or 2 percent profit margin, there will not be a lot of room for error, it will be a disaster,” they told Fyfe.
He got the two teams in the room and discussed the worst that can happen if they push through with the idea. They decided to run the idea for eight weeks. After that period, if the finance team was right, “and we are haemorrhaging revenue, then we can call it quits and say it is a promotion.”
But what followed was one of the “pivotal moments” for Air New Zealand, particularly the growth of its online channel, says Fyfe. The visitors to the website grew from 30,000 visitors a day before grab a seat to about half a million visitors when running a promotion. The revenue from online sales grew from $150 million a year to $1.3 billion.
More importantly, he says, Air New Zealand was able to position itself in the budget fare territory before competitors like Jetstar and Pacific Blue (now Virgin Australia) entered the market.
Moving from CIO to CEO
When he moved to CEO, Fyfe says the most transferrable skill he had from his CIO days was related to his engineering background. “The systems thinking was really, really valuable to me,” he says.
“It was bringing a systems approach to engineering and problem solving,” he explains. “While we were very humanistic in our approach, we were always looking for method, in particular how we can accelerate the development process and the implementation process.
Fyfe says it is critical for a CIO to be the change agent in the organisation.
“The vast majority of people don’t like change,” he says. “They like change if they are creating it, they don’t like it if they are on the receiving end.
“You have to be comfortable with change both as an agent of change but also as someone that can adapt and change in your own style and your own approach.”
So how can CIOs lead through unrelenting, unceasing speed of change in technology?
You have to be comfortable with change both as an agent of change but also as someone that can adapt and change in your own style and your own approach.
Rob Fyfe
“You do really have to be a Jack or Jill of all trades,” he says. “If you are too firmly
entrenched in an IT view of the world, then you won’t necessarily be as successful
as those that have a very customer and business commercial context and approach.
“The key for me is having a CIO who has enough understanding of the business to
help interpret the business requirements in an IT context, and has enough
understanding of IT to be able to present opportunities to the business that they may
not have perceived in terms of capabilities of information technology to support their
needs,” he says.
“It is about figuring out how to harness the knowledge and intellect of your people,”
he adds. “You may not be the most avid user of Twitter or Facebook or LinkedIn or
whatever [new technology], but you will be surrounded by people that are.
“Being a leader is not about having all the answers,” he concludes. “It is about creating an
environment where people can fulfil their potential, figuring out how to harness that
and focus on in support of the organisation’s goals.” (Photos by Ian Sharp and Jason Creaghan)
Send news tips and comments to divina_paredes@idg.co.nz
