Singapore Airlines (SIA) has made headlines once again. This time it upset consumers by automatically including travel insurance as part of the purchase, unless travellers carefully opt out. According to The Straits Times (ST), this new online booking feature was introduced in 2017 in Singapore, Hong Kong and Thailand.
The brand also saw a credit card debacle recently which caused a fair amount of uproar, and eventually caused SIA to scrap the idea of imposing a credit card service fees for selected classes of fare types – namely its Economy Lite fares -a day after being implemented.
However, the negative headlines did not stop SIA from making digital a focal point for 2018. In a New Year message to staff members, chief executive Goh Choon Phong said the airline will push forward with “digital transformation” that will not only be “significantly enhanced”, but foster a digital mindset and digital-first culture amongst its employees.
While “digital transformation” is probably one of the most over-used terms in the past few years, to embrace it, is not easy. Jeffrey Seah, partner at Mettle & Salt, and venture partner at INCUVEST and Quest Ventures, said transformation itself means restarting the business with a new mindset and operational structure. If SIA really has transformation in its agenda, it has to “depart from the established topping up mindset” that is prevalent among many government bodies and MNCs.
According to Seah, the “topping up” mindset comes from adopting best practices from other companies (or start-ups) to gain ideas, and add that to the current business model. But it doesn’t necessarily mean hitting the restart button as transformation ideally should. Seah said:
For SIA’s transformation to work, it requires the company to have the mindset that it is changing the business from the core.
Also, transformation has to occur across the board concurrently rather than by departments, Seah said, adding that all parts must move together, instead of prioritising and focusing only on the top three areas that require change.
The business process needs to be redesigned across all divisions, from the way SIA obtains market information to make decisions, to the speed of decision-making and the way decision-makers are involved in the process. While this might result in some losses and cannibalisation by smaller airline brands in the short-term, the benefits will pay off in the long-run, Seah explained. He added:
SIA is so focused on protecting its revenue that it shies away from having to carry out any initiatives that will require it to lose business in order to see results.
“However, it needs to realise that the whole business will be impacted if it does not change,” he said. Transformation, at the end of the day, requires companies to accept the hard truths. While such a move will not be easy for an established company with a strong operational culture such as SIA, the company has the financial girth and muscle to do so.
Agreeing with Seah is Luke Lim, CEO of A.S. Louken, who said that it is important for SIA to move away from its legacy framework and reorganise its workforce according to the user experience of consumers, as the existing organisational structure might not be ideal for a digital branded experience. When it comes to digital transformation, certain sacrifices such as getting out of one’s comfort zone and departing from the old service structure have to be made, Lim said.
Reorganisation, preparation, training and retraining, as well as testing the user experience are crucial elements that will enable digital transformation. Depending on what the purpose of the core transformation is, such as establishing a digital touchpoint from online to offline for example, SIA’s transformation focus needs to be on the area that will significantly change its customer experience and have it implemented across the board.
Unlike Seah, Lim said that once the focus has been established, the other areas can be progressively transformed.
“Value creation is important when it comes to remaining competitive against disruptors such as budget airlines. SIA needs to think about the type of values it is creating and building that consumers will appreciate,” Lim said. He added that continuous innovation is key to making a brand relevant and engaging in the market place, and that “SIA seems to be lacking in the area of innovation for the past few years”. He added:
Complacency can be a factor for brand leaders to lose their shine.