Every business emphasizes innovation. For the airline industry, which operates on slim margins, successful innovation is even more critical to staying profitable and ahead of the competition.
Alexandre de Juniac, the current Director General and CEO of IATA, states that transformative innovation in the airline industry “cannot happen quickly enough.” While there have been plenty of advancements in recent years, for an industry that began with the Wright Brothers’ groundbreaking invention of the airplane, there needs to be a more concerted effort to innovate.
As de Juniac says, airlines aren’t only in a race to meet changing passenger needs. They also have to figure out how to successfully prepare for "a doubling in passenger numbers over the next two decades.”
Indeed, according to IATA, roughly 7.2 billion passengers will use air travel in 2035. There is no time to wait. The time to innovate is now. Here are four ways airlines can develop an innovation mindset today.
1. Instill the Right Behaviors
Innovation is a process which requires the adoption of specific behaviors and best practices. For airlines to implement an innovation mindset, leadership must be transparent and communicative about what they want changed, as the entire team must be clear on the direction and goals of the operational shift.
Jon Katzenbach, an expert on organizational culture, asserts that to change a company’s mindset, there should be a focus on a “small number of important behaviors that would have great impact if put into practice by a significant number of people.” These include:
- Building collaboration across your ecosystem
- Measuring and motivating your intrapreneurs
- Emphasizing speed and agility
- Thinking like a venture capitalist
- Balancing operational excellence with innovation
Some airlines have instilled such behaviors early, which is a good sign for their sustainability. For instance, on Boston Consulting Group’s rankings of the most innovative companies, Southwest Airlines is rated 12th most innovative company overall, and is the first airline on the list. This is a testament to the airline’s continued commitment to the disruptive innovation that led to its initial rapid rise.
2. Develop the Right Strategies
Stephen Wunker, a business growth expert and entrepreneur, has written a lot about strategies that allow innovative behavior to flourish in companies like airlines. These include:
- Grasping the type of innovation needed
- Creating a safe space for research and experimentation
- Empowering internal innovators to push back against any roadblocks
- Redefining performance metrics and how incentives are given to employees
Airlines must make sure these strategies are communicated and executed throughout the entire organization. As Wunker attests, there also needs to be a removal of obstacles to innovation, such as an unwillingness to take risk out of fear of missing revenue targets. In this sense, airlines must strategize like entrepreneurs and startups. They have to go all in on innovation and disruption.
JetBlue is a good model to look to for inspiration. Eash Sundaram, Executive Vice President - Innovation and CIO at JetBlue, has built on the carrier's technology-driven legacy by pioneering new ideas from all fronts, including a new venture-capital arm.
3. Collaborate Everywhere
Rob Shelton, a global innovation expert, believes that “innovation is a team sport.” It rarely comes from some lone genius engineer. To successfully progress forward, airlines need to break down silos—both internally and externally. As Shelton notes, “finding the best resources inside and outside your organization and combining them is a hallmark of successful innovation.”
A great example of an airline that’s using collaboration to innovate is Delta Airlines. Delta has opened a collaborative research center with Georgia Tech, with the goal of improving everything from operational efficiency to the travel experience. The idea is to leave no stone unturned so that Delta can figure out how to run seamlessly and perfect the customer experience.
For Delta’s research center to have the success it envisions, everybody needs to be working together on the same page. As Matt Muta, the vice president of IT innovation and commercial technology at Delta, notes, innovation at the airline is “not about a single team but rather the collective Delta team.”
4. Make Innovation a Business
Peter Drucker, a management guru, believes innovation is what should hold any business organization together. He attests that companies “must see innovation as a business.”
To successfully use innovation as a business (rather than a function), Drucker believes airlines should establish autonomous units. Such units should have the right environment, right incentives, and right culture to research, develop, and create innovations.
One airline that’s executing the strategy Drucker suggests well is Lufthansa. Germany’s largest airline has set up an innovation hub in Berlin. The Lufthansa Innovation Hub, as it’s called, does provide startups with capital in the hopes of innovating in all areas of air travel. But the end goal is to enable Lufthansa to better serve its travelers. The group, which includes a mix of Lufthansa employees and external talents, is freely working on things like virtual reality, door-to-door services, airplane seating, and more.
The good news is that all sorts of air travel players, from Boeing and Airbus to Panasonic, are working with aviation startups at innovation hubs in an effort to produce the next groundbreaking invention. More airlines need to get in the game like Lufthansa, though.
Advancing Innovation in the Airline Industry
In an era of intense competition and a challenging environment surrounding the airline industry, carriers are seeking new ways to gain an advantage through innovation. Kieron Branagan, CEO, OpenJaw Technologies recently stated, "I believe that understanding innovation has to be a critical focus for every airline, and managing and understanding innovation will increasingly become the challenge and test of an airline’s value in the marketplace."