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Leadership in crisis: JetBlue case study

Case Study: Stakeholder Reactions to an Operational Disruption at JetBlue

The Stakeholder Reaction model helped leaders at JetBlue predict how Customers would respond to the actions the airline would typically take ahead of a pending winter storm crisis. Hopefully, you found the descriptions of the model and how a group of high stakes leaders might use it to be helpful.

To give you a couple more examples of how a model like this could be beneficial for pre-crisis planning, let’s continue with the JetBlue winter storm example and look at two more stakeholder groups: Employees and Investors, in the same way that we looked at the Customer group in the previous video. The following represents how JetBlue leaders could use the model to predict stakeholder reactions during a winter storm event when JetBlue implements their pre-emptive flight cancellation plan. The model could also be used to predict stakeholder reactions if the company does nothing except let a given crisis play out, but that’s not how we are going to use the model here. We know that JetBlue leaders will want to pro-actively implement a plan that allows the airline to minimize the impact of the winter storm, so the stakeholder reaction model can help these leaders predict how the plan will likely be received.

Employees. For JetBlue Employees, or Crewmembers, as they are called at the airline, if a winter storm was brewing that might threaten their upcoming work plans, many would begin processing the potential crisis early. “This is a big earnings holiday coming up for me”, they might be thinking, “and I really need these hours.” As most JetBlue crewmembers are also stockholders, as participants in the company stock purchase plan, and as the company has a very generous profit sharing plan, they may also be thinking “This is a really big earnings period for the airline, so we need to deliver some great performance this weekend – the airplanes are going to be packed with customers.” From these statements, you have a sense of how JetBlue employees are beginning to frame their contract expectations. “JetBlue better have a great weekend!”

As the notional storm approaches and JetBlue decides to implement its pre-storm cancellation plan, how will JetBlue employees respond when flights are cancelled and work shifts are shortened or eliminated as a result of the reduction in the flight schedule? Will they happily accept JetBlue’s decisions and chalk up their loss to simply bad luck? Probably not. This is where the potential violation of contract expectations will become an issue – and the point at which we enter our model and can use it to work through an employee’s processing of the situation.

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When employees discover that JetBlue has cancelled flights and reduced the work schedule, failing to meet their expectations, they begin their evaluation process. Was JetBlue at fault? “Well, there is a storm coming” they might think, “but why did they have to cancel MY shift? Why did they decide that I would have to suffer because they don’t know how to work around this weather?” “This is clearly their fault. They shouldn’t have taken ME off of the schedule.” In the context of employees as stockholders, they might be thinking: “How are they so sure that we shouldn’t try to operate?” Or, “How can we afford to cancel like this? We’re cancelling way too many flights!”

So, responsibility has been established. In the eyes of the employees that had these thoughts, JetBlue is clearly at fault.

How might these employees evaluate the severity of the damage? It will depend on their perception of their loss. Some employees will find this to be a positive crisis. Perhaps they will greatly appreciate the time off. Sure, they may lose out on some profit-sharing, but the desire for some instant gratification may offset this loss. Employees might also appreciate the opportunity to stay home and care for their families. For many others, however, the cancellation may mean lost wages and lost profit-sharing or cause some other major disappointment. In these cases, the impact of the cancellations would feel severe.

From here in our model, JetBlue leaders could estimate the degree of moral outrage that may develop within each employee segment (there are many different employee groups at JetBlue, each of which may process the crisis differently). If the perceived damage was severe and it was JetBlue’s fault, the outrage may be extreme. It would be easy for JetBlue leaders to expect that, in some employees’ eyes, JetBlue would be perceived as a having failed to live up to their commitments. “This company never thinks of my needs when they make changes to my schedule” is something that, sadly, employees have been known to say – even when mother nature didn’t give company leadership many options.

The value of working through the model in this scenario can be found not simply in the production of a reasonable prediction of employee reactions to the crisis and crisis management plan, but also in that these predictions can help JetBlue leadership develop a targeted communication plan – well before an actual crisis – that acknowledges the feelings crewmembers will likely have and engages them pre-emptively in ways that reduce the impact they will be asked to endure. Investors. For JetBlue investors, if a winter storm was brewing that might threaten company profitability, many would begin processing the potential crisis early. “This is a big earnings holiday coming up for the company, myself, and my clients”, they might be thinking, “and JetBlue really needs to knock this holiday out of the park.” As with the thinking of JetBlue employees mentioned earlier, Investors are also beginning to frame their contract expectations. “JetBlue better have a great weekend!”

As the notional storm approaches and JetBlue decides to implement its pre-storm cancellation plan, how will JetBlue investors respond when flights are cancelled and earnings opportunities are removed from the equation? Will the investor group happily accept JetBlue’s decisions and acquiesce to a simple run of cold cards? Probably not. This is where the potential violation of contract expectations will become an issue – and the point at which we enter our model and can use it to work through an investor’s processing of the situation.

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When investors discover that JetBlue is cancelling a significant number of flights, failing to meet their expectations, they begin their evaluation process. Was JetBlue at fault? “Well, there is a storm coming” they might think, “but they didn’t have to cancel flights this early.” Or, “They didn’t have to cancel so many flights.” Or, “Why didn’t they just move these flights to other routes and avoid the NY area rather than fly in and out of it?” To this last point, which is very close to an operational impossibility, it’s worth noting that the initial reactions of stakeholders don’t have to be rational or executable. Stakeholders will react in a wide variety of ways, which is why a brainstorming model such as this can be so useful.

So, responsibility has been established. In the eyes of the investors that had these thoughts, JetBlue is clearly at fault – at least at fault for the extent of their cancellation plan, which will always seem extreme to stakeholders other than organizational leadership (and sometimes, even to some organizational leaders!). How might these investors evaluate the severity of the damage? It will depend on their perception of their loss. Some investors may find that, despite the lost short-term revenues, the crisis has created cost savings opportunities and time to complete other activities, such as aircraft maintenance. They may even see other ways to turn this short-term loss into a long-term gain. For many others, however, the lost opportunities may lead to major disappointment and a lack of confidence in company leadership. In these cases, the impact of the cancellations would feel severe. From here in our model, JetBlue leaders could estimate the degree of moral outrage that may develop within the investor group. As stated earlier, if the perceived damage was severe and it was JetBlue’s fault, the outrage may be extreme. It would be easy for JetBlue leaders to expect that, in some investors’ eyes, leadership will have failed to live up to their commitments. “Leaders at this company just don’t understand business. Sure, they are a great fair-weather airline, but they struggle to make the right call when they have to make difficult decisions. Of course it’s easier to cancel a bunch of flights when the weather is bad. But great companies find ways to make things happen, to snatch victory from the jaws of defeat!” If JetBlue leaders are able to predict how these investors will respond – to predict their level of ‘moral outrage’ – they will be in a much better position to predict how they will think of the brand going forward, and their intentions regarding stock purchases (or sales), recommendations, and support of the company with others in the investment community.

Having completed these stakeholder reaction predictions using the model, JetBlue leaders are now in a much better position to build a winter storm operations plan that includes pre-planned message templates to each of their stakeholder groups. These messages can be ready for tailoring to any specific scenario and would go a long way to pre-emptively addressing stakeholder concerns, even as the crisis is just beginning to appear.

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High Stakes Leadership: Leading in Times of Crisis

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