The airline industry is hemorrhaging in the aftershock of the Covid-19 pandemic. Warren Buffett's Berkshire Hathaway divested its holdings from three major U.S. airlines. Delta airlines started 2020 announcing that 2019 had been its most successful year yet, but four months later Delta had to remove 10 airports from its network, reduce schedules, and ask employees to opt in to lower pay and early retirement. And, outside of the United States, Latin American airline networks reduced their capacity.
This mammoth industry is shaking in its boots. And it is a cautionary tale for the small-business owner about preparation and perspective. How do you tend to react in a crisis?
There are helpful lessons from the airline industry from which every entrepreneur can learn. My own experience in advising leaders on prioritizing what really matters and applying foresight has surfaced the following three tips.
1. Practice Foresight
Uncertainty is a given. So get into the habit of being super observant of your present state. Often when a company is part of a legacy sector--like the airline industry--it becomes easy to get complacent and lapse into a too-big-to-fail attitude. Foresight is about assessing what's happening now, and identifying multiple possible future scenarios. It is important to hold foresight sessions regularly--not just in times of panic.
Consider it a type of preventive medicine, in the same way that getting your teeth cleaned twice a year can ensure good health down the line.
2. Just Say No
Back in 2007, one of Buffett's admonitions to the airline industry was that it needed to be "repelled by growth." An injection of capital isn't always the answer. So identify what areas in your business you could stop trying to grow.
"No" is a complete sentence. And when we say no to one request or opportunity, we are saying yes to another stakeholder, yes to time, or yes to the seed of an idea that needs cultivation. Try implementing what Greg McKeown, author of Essentialism, calls a "reverse prototype." Test the elimination of an expenditure of money or time for a period of one month and see if anyone notices. And, more important, see if it spurs resourcefulness in some other area of the business.
3. Reframe and Optimize Being the Little Guy
With changes among the major airline carriers, there will be incredible opportunities for the smaller players in the airline industry. Avi Meir, CEO and co-founder of TravelPerk, is optimistic that we will inch back into travel, but it will have a lot more barriers to entry: longer lines, more costly, and some unevenness in quality. I believe that the smaller and private airline carriers that market voraciously to executive leadership will win. Their size and scale will allow them to be nimble and to customize their offerings.
Within your own company, reframe by adopting a systems design approach so that you zoom out with perspective and reframe your current situation. Using a "systems approach" means that you make decisions in context, by anticipating the cascading effects of one choice over another. You see the interconnectedness and networked nature of your business as part of a larger whole. This harks to Edward Lorenz's "butterfly effect" in chaos theory, where the flapping of a butterfly's wings in the Amazon jungle can cause a tsunami in Sri Lanka.
Be sure to pay attention to the macro-environment. Identify areas in your sector where there is an over-saturation and go the opposite direction. Zig where everyone else is zagging. Analyze and anticipate where in the network your business lies and identify cascading effects of bad news either up or down the supply chain.
Crisis cannot be avoided--but we can put practices into play to soften the disruption.