Davos Newbies Home

Lasting good  

“Out of the shadow of this evil should emerge lasting good.” UK prime minister Tony Blair delivered an extraordinary speech to the Labour party conference yesterday. It dealt with the coming battle against terrorism, but it ranged far beyond the obvious consequences of 11 September.

In Blair’s view, the war on terrorism is but one step in a battle for justice and equality throughout the world. He posed a daunting challenge to his own country, and to others.

Swiss miss  

If you had told me a month ago that Air Sudan, or perhaps even Air Lanka, had been forced to ground its planes because they couldn’t pay landing fees and fuel costs, I would have shrugged. That this happened yesterday to Swissair is beyond belief.

In addition to the raft of cancelled flights, Swissair’s financial plight is such that stranded travellers can expect no refund. If they can find another airline to fly them, they have to pay again. A Swiss friend told me this morning that many of her friends had booked their Christmas flights already (there still is a lot of efficiency in Switzerland). Now they have no flights and have lost their money.

How did this one-time pillar of efficiency and class fall so low? Part of it, as many analyses make clear, is the inherent problem of running an international airline from a country with only 7 million people. But the major fault surely lies in the evidently bizarre strategy of building expensive, minority stakes in lousy airlines (like Sabena). Swissair destroyed its equity base, piled up its debt, and had little actual control of this network of relationships.

The geniuses at McKinsey & Co, the world’s most storied management consultancy, dreamt up this masterplan for Swissair. The Swissair management must take the final blame, since they could have rejected the consultants’ advice (something too few executives understand is within their power). But I am astounded at how McKinsey seems to be escaping any blame for this commercial disaster.

2 thoughts on “Davos Newbies Home

  1. John Robb

    Lance,

    McKinsey has been doing this for a while. Have you ever seen a study that looked at the economic impact of McKinsey involvement in corporate decision making? I would love to see if this expensive advice is actually paying off. My gut tells me it isn’t.

    John

    Reply

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