Airbus leadership challenge

Airbus delays put company at risk

According to a BBC report, delays to delivery of its new super A380 plane have put Europe’s major international airplane business at risk. Earlier dismissals of project executives suggests that the Board is opting for a leader bringing political rather than engineering skills to the rescue.

Earlier this year, A380 project executives, including Airbus CEO Gustav Humbert, were dismissed. Humbert was blamed for the failure to deal effectively with the project delays, but also was accused of concealing the seriousness of the problems.
In a short space of time, Humbert’s replacement, Christian Streiff resigned, and a third leader, Louis Gallois was brought in. Streiff was believed to have failed to secure backing for a financial package he believed necessary to turn things around with the A380.

Gallois is a much admired leader with a track record of top-level negotiating skills as well as industry experience. According to a recent Louis Gallois bio

‘In some respects, Mr Gallois’ career reads like that of a typical French bureaucrat ..He studied at the Ecole National D’Administration, the country’s elite college for administrators..[and] has since held a series of top jobs including running engine maker Snecma, as well as heading Aerospatiale and SNCF .. However, it has been his ability to combine strong management skills with a popular touch which has made him valued by politicians from both sides of the spectrum’.

The delays are leading to heavy compensation claims and problems for parent company EADS. Customers have contracts that make switching to competitors costly, and Boeing has such a full order book that they could not offer much in the way of short term replacements, however much they would like to do so.

However, the financial losses put Airbus under considerable threat. Job cuts, particularly in the UK seem likely.

Leaders we deserve?

To paraphrase Oscar Wilde: To lose one leader may be regarded as a misfortune…to lose both seems like carelessness. If we take a simple view of leadership, the company has acted against mounting evidence of poor delivery record and future problems when they removed Gustav Humbert. The decision was linked to the departing executive’s concealment of the seriousness of the situation. This appears to be a cut-and-dried illustration of Board decisiveness, in face of a disappointing betrayal of faith by Humbert. The company was misled, but successfully gets the (new) leader it deserves – i.e. one who is to be trusted to implement the policy of the company.

But in a short space of time, Christian Streiff, the new would-be rescuer resigns. Why? The alleged explanation is that he could not win Board backing for his plans. At this stage we might be excused for recalling Wilde’s dictum, and wondering whether the Board had been doubly unfortunate, or maybe a little careless.

The company may have been seeking the sort of heroic leader who would implement a strategic goal with inadequate resources. Streiff’s resignation would be consistent with a pragmatic view that the problems require more funding, not heroic leadership.

The General leadership point

A board dismisses senior members of a major project which is failing to meet its targets. A new leader is brought in. The leader outlines a recovery plan. The Board faces a dilemma: Board members do not have faith in the plan. They reject what they see as an infeasible plan financially. The CEO resigns. An experienced ‘safe pair of hands’ is brought in to lead the company. Is the rescue of the company dependent on obtaining the sort of leader the board believes necessary to implement their original project strategy? Or does the situation require a different sort of strategy?

[Marginal stylistic editing of the original Blog, January 24th 2006]

2 Responses to Airbus leadership challenge

  1. Den Hooi says:

    Leaders are indeed important, not just for who they are and their background, but for their ability to mould an organisation’s culture that befits the business landscape. Herein lies one of the greatest challenges, particularly for a company that has been very successful and in a pretty much duopolistic kind of environment.

  2. […] strategic issues under Louis Gallois and also its leadership challenges have been […]

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