by Dr Mark Pegg
For several years I’ve had great fun using Michael O’Leary CEO of Ryanair in my teaching. My provocation was ‘everything they teach you in business school is wrong’: here was a man who became a multi-millionaire by openly doing the opposite of the recommended path to business success. He displays contempt for his ground staff, his flight crew, the customers, the regulators, and sometimes entire nations. He is unkind to people with weak bladders and even politically incorrect with his indifference to the old and infirm, and passengers with disabilities.
I challenged my students to disprove my hypothesis and, bless them, they usually come up with a range of solid business virtues hidden beneath the O’Leary rhetoric:
- Clear offer to the consumer – low cost, a ‘no frills’ brand
- Sweat the assets – work the aircraft very hard, no excess capacity
- Genuinely low cost – stripping out everything possible, and then doing it again
- Business growth and shareholder value – fantastic growth in revenues and profits, building from nothing to a leading European airline in less than 20 years.
But this chapter in the story seems to be ending and his tale may have to be retold. Mr O’Leary seems to have changed his tune. He has been on Twitter for the first time, and changed some of the customer unfriendly aspects of his website. He plans to stop penalising passengers for minor infringements of the Ryanair rules – no more large ‘fines’ for bags that are millimetres over the approved size. A new team will be created to actually reply to customer emails for the first time and the Ryanair app can now be downloaded for free.
Mr O’Leary told shareholders at their annual general meeting he is ‘… very happy to take the blame or responsibility if we have a macho or abrupt culture’ and that ‘some of that may well be my own personal character deformities.’ Voted the worst for customer service of Britain’s 100 biggest brands by the consumer magazine Which?, shareholders complained that the airline’s aggressive and unfriendly image is harming its business. They protested that members of their own families were offended and upset by Ryanair and ‘reduced to tears’ – so that even they refuse to travel on the airline any longer. Mr O’Leary acknowledged that rival EasyJet led by Carolyn McCall, (one of only two women CEOs leading a FTSE 100 index company) bases its marketing and public relations almost entirely around customer service that is better than Ryanair.
So what has caused this change of heart? Simple. Ryanair profits have dipped, growth has stalled, aircraft are mothballed, and ambitions to annex Aer Lingus have fallen foul of the Irish authorities on competition grounds. Easyjet is gaining market share. That is why Mr O’Leary now seems to be eating humble pie in this public act of contrition. He told shareholders with characteristic pithiness: “We should try to eliminate things that unnecessarily piss people off,”
But is Mr O’Leary really a changed man? I am unconvinced. This may just be a cosmetic conversion along the road: a naked tactic to keep shareholders at bay while revenues are depressed. I suspect the moment there is any sign of revival in business performance, he will be back to his bad old ways. Management Today called him ‘Icarus Ascending’ with the witty inference that the wax holding the wings together might just melt. In fact, he seems to have been more Daedalus than Icarus in the last 20+ years and there may just be a few more years left in the authentic Mr O’Leary. Maybe, just maybe, my favourite bête noire case study can run for a little while longer.
Dr Mark Pegg is the chief executive of the Leadership Foundation.