Metrics in Project SAA: What you measure matters

By Dale van der Lingen

Inspired by the recent movie Ford vs. Ferrari, which retells Ford Racing’s overthrow of the ever-dominant Ferrari in the 1960s at Le Mans, and the Springbok’s epic turnaround to win last year’s Rugby World Cup, I’ve written this series of pieces to show that not all is lost with our beleaguered state-owned enterprises. I’ve looked to these turnaround stories for lessons that might apply and what would be needed for a truly cinema-, or nation-inspiring, turnaround story. This is my third piece for Thought Leader, the previous two focused firstly on the importance of the airline’s ownership and management structure (here), and secondly on the critical importance of driving a dogged determination to attracting talent in this globally competitive age (here).

However, while an improved structure, making the airline nimbler, and a dogged drive for better talent attraction would go a very long way, it likely still would fall just short of crafting a Cinderella story for SAA. If we use the 80:20 principle, which you got a small taste of in my last piece, then we should concentrate the airlines very limited resources on the most critical components of long-term organisational success, as this would account for the vast majority of getting us to our own Cinderella story.

To catch-up to its global competitors, SAA, with its limited resources will need to focus then on what matters most to organisational competitiveness and long-term success. In a well-functioning organisation this is seemingly simple, it’s not ground-breaking, or anything new in management science, but failure to get it right costs organisations dearly. SAA’s ownership and management structure makes this extremely difficult. In a SOE, the informational feedback loops, resulting in action are blurred, putting SAA on the backfoot compared to its global, and even local competitors. Feedback and the correct use of information is not lost on SAA’s competitors, we don’t even have to invoke any of the large global airline names.

We can look on our doorstep to FlySafair, who even at the basic use of analytics seems to outperform SAA in how they use it to change the way they operate. They respond to the market and target what is important to consumers, because if they don’t, they fail. I flew with them several times over 2018 and 2019 and have nearly always been impressed, to the point where I now would pay a slight premium to fly with them over SAA’s low-cost airline, Mango. The last time I flew with FlySafair I spoke with one of the ground staff and asked her how her job, and happiness on that job, compares to the other domestic airline staff. She said that they were far better off than the others. I tend to believe this given the conduct and difference in demeanour of the staff I’ve experienced on the different airlines. It seems that FlySafair knows that attracting and retaining staff is one of the critical factors to success, it probably knows this for the other factors as well.

SAA would do well to get these basics done well, but to compete with its large global competitors, it’ll have to go beyond these basics of feedback. In looking where SAA must go, we cast our gaze back to the silver screen. This time to a movie called Moneyball, based on the book by Michael Lewis. Here Brad Pitt stars as the General Manager of a Major League Baseball team struggling in the early 2000s, the Oakland Athletics. In an attempt to compete with better resourced competitors, he doggedly embraced the use of data and statistical analysis to change the way their team recruited and deployed players. That was almost 20 years ago, and eventually all other teams would catch up. But for a time, the use of data science gave the Oakland A’s a head start and enabled the team to perform far better than its budget predicted it would. This drive for an edge through data has sped up in the information age and filtered into other sports. In the NBA, the Houston Rockets (see here for more on their use of analytics) was the first to embrace this approach. Now nearly every team in the NBA possesses an analytics unit. But progression rarely slows and according to Mark Cuban, technology entrepreneur and owner of the Dallas Mavericks, the analytics departments are already starting to make way for AI, machine learning, deep learning, neural networking approaches as teams look for that next advantage.

Metrics are messy, but they’re the keys to the kingdom; you’ve got to master the ones that matter. And they’re fluid. Smart organisations are flexible enough to shift the ways they keep score. Leading airlines figured this out a while ago and adjusted their frequent flyer programs to emphasise monetary spend over miles travelled or segments flown. In both baseball and basketball, a common thread repeatedly comes through when talking about the use and future of analytics. First, you need a management team and structure that embraces and thrives off it, and secondly, the right staff and players to implement it. The same is true for SAA. They either change and innovate, or they are destined to remain bottom of the table.

Dale is trained as an economist and has eight years’ experience as a policy and strategy analyst with specialisations in strategic foresight and behavioural insights. He holds a master’s in economics from Stellenbosch University and more recently completed the Scenario Planning Programme at the Said Business School, Oxford University. He writes in his capacity as a former Mandela Rhodes Scholar.