View from the top – How has OMOTENASHI been performed in the sky?

Omotenashi, a word famously used by Christel Takigawa during her final presentation for a bid for Tokyo Olympics 2020, means the hospitality in Japanese. All Nippon Airways has always emphasized the importance of the hospitality for its success.

It has been believed that you would be surrounded by Omotenashi once you arrive in Japan. However, All Nippon Airways (ANA) would rather argue that people experience the hospitality even BEFORE you touched down on the surface of the island county – it starts to entertain you as soon as you step into the airplane. ANA, however, seems to have failed to maximize its Omotenashi potential due to severe working condition and bureaucratic corporate culture upon which the ANA’s operation has been built.

ALL NIPPON AIRWAYS

Picture2

ANA, a member of Star Alliance, is the biggest commercial airline in Japan. A leading domestic airline, “ANA had surpassed Japan Airlines in its scale of international operations” [1] in 2014. In its annual report 2015, ANA stated that to “Continue to provide safe and comfortable services with Japanese-style hospitality, “OMOTENASHI.”” [2] is one of its main corporate strategies.

FLIGHT ATTENDANTS’ AGONY

3

ANA has been famous for its absolute pursuit to operational efficiency on board. However, the resulted working condition for its flight attendants (FAs) has left little leeway for them to perform with creativity and failed to provide any ground to maximize their hospitality.

Firstly, the required service cycle time seems to discourage FAs to focus on customer satisfaction. To streamline its operation, FAs sometimes have to serve passengers with less than one-minute cycle time per passenger. For example, only 15 FAs are on board when they fly with Boeing 777 with about 400 passengers. They are instructed to complete the first round of customer service such as meal service and in-flight sales during the first hour after taking off while four FAs must serve about 300 passengers in economy class . If it is a domestic flight, which takes at most 90 minutes, you have to keep serving people during the entire flight.

Secondly, the unrealistic “effective” utilization of FAs has almost completely depleted FAs’ willingness to perform. FAs are expected to be flexible to serve for unexpected flights and to withdraw from canceled ones. Since ANA tends to change lists of FAs for each flight based on the number of prospected passengers, FAs can not be sure weather or not they work on a particular day until a day before. To make matters worse, they are sometimes required to be under the company’s control even during their mandatory day-offs. FAs have to take two-day off between each flight that they serve. However, FAs sometimes have to take a flight during the day-off to get to a place where they are destined to take another flight the following day, on which they work. These unpaid hours have taken its toll on FAs.

Thirdly, the company’s incentive structure is not aligned with its corporate goal to provide Omotenashi. ANA’s FAs are not entitled to any sort of financial rewards no matter how hard they work and no matter how they make profit by their hospitality.

VIEW FROM THE “TOP”

Picture4

Ironically, ANA’s managerial decisions also have often undermined the quality of its Omotenashi. Despite the lack of customer insight, ANA’s top management not only would not listen to FAs’ voice, but also impose counter productive ideas and opinions on their operation.

First and foremost, while ANA’s management tends to lead the innovation for new services, they often turned out to be a complete failure due to its limited understanding of on-going customer needs. Several years ago, the management decided to introduce new draft beer server technology used on the plane. Customers, however, did not like the idea mainly because the price was too high ($10/glass). Leftover has to be abandoned after each flight, causing so much waste. This new service was terminated within a year before collecting less than half of its development cost.

Furthermore, there is no feedback mechanism with which FAs could communicate actual customer needs with the management and improve the level of Omotenashi. ANA has a corporate culture where employees can not give opinions and feedback directly to upper management. FAs normally would not share their thoughts on operational issues and customer insights unless customers force them to report their uncomfortable experience to the management.

Finally, the management tend to overreact to customers’ claims, which sometimes degrade the true mean of Omotenashi. There was an incident where a passenger went mad after finding that an item he had wanted to purchase on the plane was sold out and loudly and wildly expressed his dissatisfaction. (Obviously, there was a disclaimer stipulating products could be sold out.) Other passengers around him certainly became irritated and overall flight experience was far from ideal. The decision that ANA’ management made was to rather apologize the out-of-control customer instead of penalizing him. They considered their reaction to be a part of Omotenashi, while other passenger and FAs did not seem to agree.

HARD LANDING

In conclusion, ANA’s business model and operational model do not seem to align and support each other. True potential of ANA’s Omotenashi is largely sacrificed by ANA’s emphasis on operational efficiency while managerial decisions do not improve the situation at all. ANA’s success has been almost entirely based on FAs’ tireless work ethic and indispensable commitment. To retain them and remain successful in the long run, ANA’s management might have to shift its focus at least partially towards Omotenashi for its FAs.

 

Please check the famous Omotenashi speech below. The phrase comes up about 10 seconds after the clip starts.

 

Source:

[1] Harvard Business Review, “ANA (A)”, by Doug J. Chung and Mayuka Yamazaki

 

[2] Annual Report 2015 (http://www.anahd.co.jp/en/investors/data/pdf/annual/15/15_e_00.pdf)

 

Previous:

Rent the Runway – Fashionable Operations

Next:

McKinsey – A Lack of Structural Optimization

8 thoughts on “View from the top – How has OMOTENASHI been performed in the sky?

  1. Excellent stuff Yuta. Your post leaves me well prepared to experience, or perhaps not experience, OMOTENASHI when flying to Japan.

    I like the juxtaposition of management view and reality on the flight deck. I am curious if there any ways ANA management can improve their understanding of customer’s needs.

    Are you aware of any airlines, Japanese or other, who have managed to secure the OMOTENASHI alignment with business objectives?

    1. Thanks for the comment, Boris. I believe that the management’s ignorance about on the ground operation is pretty prevalent among traditional companies in Japan. I hope newer companies such as Rakuten would change the entire landscape of Japanese business world.

      For the 2nd question, I still believe Japanese airlines align Omotenashi with their business objective better than the other airlines and have better service and hospitality on the flight deck. However, I think they have to improve the working condition to be sustainable because actually the retention rate of FAs is not high for Japanese airlines.

  2. Yuta – super interesting post. How has the misalignment impacted ANA’s performance over time? Is it significant?

    1. Thank you very much for the comment, professor! I believe ANA’s performance have not been strongly impacted by the misalignment. However, I think it’s because the protectionism the government poses on Japanese airline industry has limited the competition for them and Japanese customers tend to choose their domestic airplanes over their cheaper foreign counterparts. This environment can change anytime.

  3. Great post Yuta. I wonder how ANA’s management has been so detached from the execution of its corporate strategy. I still cannot believe that ANA wants to promote customer satisfaction by not taking care of its FAs. I wonder how successful the airline is with employee retention and how they can make sure that the Omotenashi culture is maintained over time.

    Do you know whether ANA is outcompeting other Japanese airlines at both tourist and business segments? Looking at the reasons you described, I understand that the Omotenashi lends itself better for long-haul flights with more time for the FAs to perform. That would explain how ANA has surpassed Japan Airlines in international operations. And that can well be a consequence of the great service FA can provide with more in-flight time and less pressure to serve customers.

    1. Alfonso, you spot on. The retention rate is actually low at ANA and this is a growing concern for them. I think they really reconsider the treatment of its employees. The reason why ANA has been so successful, I think, is that the protectionism in the Japanese airline industry have done a favor for established Japanese airlines such as ANA and its only rival, Japan Airlines, went bankrupt and was delisted about 10 years ago. Since the competition is getting more and more intense now and customers are getting more and more familiar with other option such as LLC, I think that the competitive edge that ANA has had is now at risk.

  4. Thanks for the great post, Yuta. Would be curious to hear from you about labor laws in Japan. In the U.S. and Europe, airlines suffer quite a bit from unionized employees, but they seem to be (at the very least) treated more decently by the management as a result. Does Japan have any union equivalents or do FAs have no recourse against poor treatment by management? Cheers!

    1. Japanese airlines also have unions and FAs do have a right to speak up. But it’s in Japan. Like most of the other Japanese companies, ANA established the union just for formality and it doesn’t function as it does in the US and Europe. Informal pressure from the management and unsuccessful track record of these unions have inhibited employees’ willingness to speak up and raise the pressing issues surrounding them. That must be a part of the reasons that the working condition has persisted for so long.

Leave a comment