Title: Tale of Two Airlines in the Network Age: Or Why the Spirit of King George III is Alive and Well
1Tale of Two Airlines in the Network Age Or Why
the Spirit of King George III is Alive and Well!
Jason C. H. Chen, Ph.D. Professor of MIS School
of Business Administration Gonzaga
University Spokane, WA 99223 chen_at_jepson.gonzaga.e
du
2The Case
- Description Describes an airline service
incident that ought not to have happened in the
network (information/knowledge) age. Inadequate
use of available technology creates service
problems - Learning Objective Introduces issues of new
service standards in an information-intensive
world. - Subjects Covered Information technology,
Operations management, Service management. - Setting United States Airline industry 2002
3The Case
- This is an introductory case that surfaces the
complex issues relating to increased service
standards in the network age. - The student comes to understand that
inter-organization information systems, databases
and global interconnectivity together create
platforms for higher service levels and more
complex tradeoffs which a firm ignores at its
peril.
4General Environment
- Bad weather conditions with fog always holding
the possibility of airport being closed. - Significant flight delays. Probably flight
cancellations, thousands of confused, angry
passengers in terminal. - Atlanta Hartsfield is one of the nation's busiest
airport. - General stress and pressure on all staff of
airlines. Difficult decisions will have to be
made. - The key theme is it is a very difficult
environment, with substantial pressures and
opportunities to win long-term customer loyalty
or remembered hostility through your performance
5Two Airlines
- London-based Airline (in Reality, British
Airways) - Atlanta-based Airline (in Reality, Delta)
- Q/A
6The Bottom Line of the case is
- The bottom line of this case is that in the
information age, the expectation of what
constitutes good service have increased
dramatically. - Making it happen seamlessly requires the
integration of a large amount of different
technologies and databases being passed across
organizations in a seamless fashion, where there
are always opportunities for abuse by another
party. - The new technologies require fundamental changes
in training and attitudes. One airline had done
it and the other had experienced a collapse in an
outlying region.
7INTRODUCTION
- 2001 Expansion Internet - Old economy companies
the future - .com much harder - Digital convergence video - audio text (and
different industries converged vision right -
timing an issue) - Explosion of broadband and wireless availability,
plunging costs. A provider war.
8INTRODUCTION
- Massive growth digitally comfortable globally
(2004 China passes USA) - Entrepreneurialism - the bloom is gone Business
as usual - Societal resistance, bricks clicks
- Corporate culture "The Innovator's Dilemma"
- First mover, fast follower
- 15 vision - 85 implementation
9Application Areas
- Company boundary and value-chain decomposition
- Electronic commerce
- Service transformation
- Product transformation
- Organization transformation
10Business Model Framework
Performance Drivers
Financial Returns
Investor Returns
Strategy
Capabilities
Value
11Business Model Framework
Performance Drivers
Financial Returns
Investor Returns
Strategy
Revenue
Earnings
Costs
Capabilities
Value
Assets
12Business Model Framework
Financial capital (, Assets that can be
converted to ) Knowledge Capital (Information,
expertise, Intellectual property) Social capital
(stakeholder lifetime value and loyalty, band,
reputation)
13Business Model Framework
Financial capital (, Assets that can be
converted to ) Knowledge Capital (Information,
expertise, Intellectual property) Social capital
(stakeholder lifetime value and loyalty, band,
reputation)
14The Economics Of Computer
15Suggested Study Questions
- 1. What assumptions did Professor McPherson make
about information technology support at the
London-based airlines? Do you believe those are
realistic assumptions in the technology
environment of the mid-1990s? - 2. What factors do you suppose lead to the
difference between Professor McPherson's
expectations and the reality? What alternate
approaches could have been taken to resolve the
situation? - 3. What were the differences between the
Atlanta-based airline's approach and that of the
London airline? Did the Atlanta-based airline
have any special advantages in approaching the
problem? - 4. What advice would you give the London-based
airline's management?