7-1 Discussion: Performance And Organizational Capabilities Consider the following statement: “The best-performing companies worry less about performance and more about their organizational capabilities” (Bititci, 2015).
Now, review the interview notes memos for Company A and Company B. Then think about organizational performance in relation to organizational capabilities and address the following in your:
Do you agree with the statement above? Why or why not?
How does organizational culture affect capability and performance? For example, an active, participative culture is essential for encouraging organizational learning.
What do you think about the organizational culture and capabilities of Companies A and B and their role in the two companies’ performances? Page 1 of 3 pages Confidential – For Internal Distribution Only
TransGlobal Confidential Internal Memo
Interviews with Company Leaders: Company B
The notes below are a summary of recent conversations with company leaders at Company B. As much
as possible, I have summarized these in a question-and-answer format. I tried to transcribe actual
statements as they were made, but I was unable to capture every detail of each conversation. I’ve also
included some background from recent messages and last quarter’s reports.
As an introductory note, I’ll observe that smaller firms tend to be far less structured and less
bureaucratic than TransGlobal. This sometimes translates into quicker and more flexible decision
making. It also can result in some elements of good management falling through the cracks to some
degree. Also, I’ll note that my opportunities for discussions were quite limited, so these notes are not
Interview #1: President
The Company B president is a new arrival to the company. She had prior experience in some high-tech
fields, but not in commercial aviation. Her strongest beliefs are that the way to move the company
forward is through the adoption of an agile culture, empowering employees, and placing emphasis on
innovation. She’s thrilled that the firm has recently entered into a strategic partnership with a software
company and that they will soon bring new levels of travel convenience to the customers right in the
palms of their hands. The IT team believes this will be a five-year effort; the president is hoping for one
It seems that she’s been hired to make corrections in the financial trajectory of the company. About two
years ago, some costs got out of hand and resulted in a small loss for the year; the past 12 months have
been more favorable.
She’s not an expert on aircraft, but she did express interest and enthusiasm for new planes, with a
specific focus on the Bombardier line. Company B has used the Bombardier CRJ-700 and CRJ-200 in the
past with very good records of performance, safety, and reliability. She feels that it would be
advantageous to continue using those aircraft and possibly investigate alternative (newer) Bombardier
At times, she expresses some truly visionary perspectives. Enhancing hand-held passenger convenience
and integrating the flight experience with other aspects of travel seem like excellent new directions.
Page 2 of 3 pages Confidential – For Internal Distribution Only
She’s also committed to the overall notion of environmental stewardship and moving toward net-zero
carbon as soon as possible.
On the other hand, a few of her ideas seem a bit like science fiction. As a hobby interest, she’s
interested in ornithopters, for example, and she’s actually asked the engineers in maintenance to look
into electric airplanes! A few folks have even heard her mention drones as a possible future business
line. Some employees wonder if she’s perhaps a bit offbeat.
Interview #2: Sales
The Company B sales team is relatively complacent. They perceive their marketplace and their routes as
mostly fixed and not likely to shift much in the coming decade. Passenger volumes over the past few
years have generally remained flat, plus or minus a few percentage points.
The last two quarters have shown a 5% decline in overall seat occupancy compared to the prior year.
Interview #3: IT Manager
The IT manager is a transplant from a much larger airline and also has experience working at Disney.
He’s always willing to try something new, and he has recently pushed the company into a business
relationship with a software company. They hope to reimagine vacation travel, bringing an integrated
and seamless experience from start to finish for the customer.
Others in the company have been skeptical and sometimes describe his approach as reckless and
fraught with excess costs. They were also a bit perturbed with the expense associated with the software
partnership, since a year ago, many of them had taken an obligatory temporary pay reduction. He
insists that “we need to be strategic and skate to where the puck is going to be,” using a strategic
metaphor of some kind involving Wayne Gretzky.
Interview #4: Operations and Maintenance
Page 3 of 3 pages Confidential – For Internal Distribution Only
The company has some very seasoned individuals in the maintenance and operations areas, several of
whom have prior military experience. They pride themselves on a positive performance record,
especially pointing to the statistic that their aircraft, while older than many fleets, are well maintained
and average a 90% availability rate, consistent with industry averages. The crew is innovative and hard
working, but there has been substantial turnover in recent years. Several current mechanics are in
probationary status, still acquiring their technical certification credentials. There is some concern that
the core of expertise resides in the employees that are approaching retirement age and that there is
inadequate knowledge transfer.
Interview #5: Human Resources
Company B employs an outside provider to handle most of its HR functions. The firm is located in
Orlando and handles a variety of travel-related clients. Their strengths are in union negotiations and