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Innovation Comes In Different Forms

Thabo has been my official airport transfer resource in Johannesburg for the last two or so years. With a medium build and dark brown complexion, his eyes are always dancing even when the rest of his face is cast in a serious expression. When Thabo first came to pick me up, we hit it off even before his Toyota Camry had left the gates of Oliver Tambo International Airport because his first question to me was “How do you think the Kenyan economy will perform with the new government?” I whipped my head to my right to take a keener look at this South African who, having just picked me up from the airport, was engaging me in an economic discussion about my own country. I couldn’t even get to the answer as curiosity abounded. “How do you know I am Kenyan?” was my intrigued reply. “Oh I usually like to Google my clients before they arrive so I can know what makes them tick. I found your website and I saw you write a lot about the Kenyan economy, so I thought I could learn some more from you.”

If you visit South Africa often, you will understand why this random conversation with an airport transfer driver would be generate a certain level of astonishment. Let me leave it there before I’m accused of hate speech. Within the first ten kilometers I came to understand that Thabo owns his own company with a fleet of cars that he prefers to lease rather than outright buy, as the cash flow benefits as well as tax efficiency from leasing were much higher. In the two years since I first met Thabo, his business has grown leaps and bounds simply because of his personal touch which I personally experience as he now ensures that he’s the one who always picks me from the airport, rather than his other drivers, whenever I visit Johannesburg for work. On my last visit in November, he proudly showed me his new app called “Africa Ride”. The app allows both him and his travel agent clients to show what time the passenger was picked up, what route the driver used and what time the passenger was dropped off. It then sends an invoice immediately to the client. In a city that experiences “Nairoberry” levels of insecurity, this app provides much peace of mind for his clients.

More importantly, the app gives Thabo greater control over his drivers all over the country. He chuckled as he told me that he can now see where the drivers are at any given time and the excuse that “I got lost” no longer washes with him as passenger destinations are automatically linked to Google maps which every driver’s smart phone has. I gently chided him for his hubris, as earlier in the year I had flown to Cape Town and used his driver there for the airport transfer in what ended up being a disastrous trip. The driver had no clue where my hotel was, despite it being on the iconic V&A waterfront and he got lost several times much to my chagrin (and mild panic at being in the company of a male driver late at night). “Ahh Kerol,” he drawled, “no worries, this app now fixes that nonsense the driver was giving you. And I fired that guy anyway, he was ruining my business!”

On a completely different innovative note, a close relative of mine lives and works in the United States. On my last visit there in 2015, he took a week off to spend time with us and completely switched off his phone. When we asked him whether his boss would be offended if he needed to reach him urgently, Close Relative shrugged his shoulders and said that he was on mandatory unpaid leave. “What’s that?” we asked. Apparently his employer was going through a fairly rough financial period. Sales were flat while costs were creeping up in line with inflation. The company had a mandated inflationary salary increments on everyone’s employment contracts. An effective way to manage these costs was simply to ensure that every single employee took about a month a year (broken down into maximum periods of one week at a time) of mandatory unpaid leave. The immediate effect would be to reduce the entire company’s payroll by the equivalent of one month by the year end. The overall impact would be to effectively cancel out the annual salary increment that had to be given to employees.

“So even if my boss calls, I don’t have to call him back or answer his emails because I am not being paid to,” was Close Relative’s defensive conclusion. “Even my own boss doesn’t answer his calls or emails when he’s on unpaid leave.” Close Relative is a smart one, and he ensured that he aligned his last 2016 unpaid leave week to the Christmas season. “How long can this last?” I asked him during a Christmas Day call. “Well, as a company we only have two choices. We can increase sales by either volume or innovation. Higher volume of sales of course leads to higher costs. Innovation is more desirable as new products have higher margins. But there’s no innovation taking place right now.” I chuckled. There was innovation taking place alright, specifically on the employee costs line. The mandatory unpaid leave was an excellent way of keeping that cost line flat while ensuring that the more unpleasant retrenchment option was kept at bay. The flip side of this innovation was its morale killing effect. While employees were relieved that there were no retrenchments – yet – the culture forming was one that if one was not being paid then one was simply not going to engage or be engaged whatsoever during such time. Innovation evidently takes many forms; some that lead to higher employee and client engagement and others leading to the exact opposite. Have an innovative 2017!

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JKIA As The Engine For Kenya’s Economic Growth

Last week a work trip led me to pass through my favorite airport Schiphol in the Netherlands. Coming in on the final descent into Amsterdam, I noted there were at least 4 other flights in the skies above us, leaving a tell tale trail of white jet stream in their wake and I marveled at the remarkable skills of the Dutch air traffic controllers in keeping all these planes safely in their own paths. About 5 kilometres to the west of our descending plane was another plane that was moving at the same speed and altitude as we were. The similarity of movement was certified when the landing gear for our plane was released in perfect synchronicity with the neighbouring plane. That’s when I realized that both planes would be landing at exactly the same time albeit on different runways. I didn’t see the plane again as we descended into heavy fog that clung to the ground rendering visibility next to zero and I assumed that the plane landed without incident.

I became very curious about the size of Schiphol airport thereafter if two planes could land simultaneously and never meet again. It took at least 10 minutes for the plane to trundle along the interconnected network of taxiways to the terminal. Often, the vehicular traffic on the Amsterdam highways ran under the taxiways, confirming the fact that the airport expansion was a continuous evolution in a neighborhood where land was a scarce resource. It bears noting that Amsterdam’s Schiphol is the 14th busiest airport in the world and the 4th busiest in Europe.

But the airport is specifically and strategically operated to connect Netherlands with all the important economic, political and cultural cities in the world. This goal has been a financial success as Schiphol’s aviation operations contribute €26 billion (Kshs 2.7 trillion) to the Dutch GDP, with 500 companies located at the airport employing 65,000 people. The airport is connected to 323 direct destinations, resulting in 52.6 million passengers and 1.5 million tonnes of cargo annually. There are 425,565 take-offs and landings – collectively called air movements annually. This translates to 1,166 daily air movements. Total real estate on the terminal side is 650,000 m2 with 5 runways all of which are on 6,886 acres. On the revenue side, the airport generated €1.4 billion (Kshs 145 billion) in 2013 with a net profit of €227m (Kshs 23.6 billion).

It’s not difficult to see how the operating company – Schiphol Group – manages to generate good revenues through the execution of their business strategy. The business is run as a combination of four main operations: Aviation, Consumer Products & Services, Real Estate and Alliances & Participations. The Aviation business area operates at Amsterdam Airport Schiphol and provides services and facilities to airlines, passengers and handling agents. It generates 57% of the total revenue for the group.
The Consumer Products & Services business area develops and manages the range of products and services available at Amsterdam Airport Schiphol, the key objective of which is to ensure that passengers enjoy a carefree and
comfortable journey. The business area grants concessions for retail and catering outlets, services and entertainment facilities, and operates retail outlets and car parks. It also creates advertising possibilities at Amsterdam Airport Schiphol. This generates 25% of total revenues. Real Estate develops, manages, operates and invests in property at and around Schiphol and other airports and generates 10% of total revenues. From the property under management, 33% are used as offices while 44% are used as industrial units. Alliances & Participations, which generates 8% of total revenues, consists of Schiphol Group’s interests in the regional airports in the Netherlands and its interests in airports abroad.

If you ever have the pleasure of flying into Schiphol airport, you will attest to the fact that it is the gateway to Dutch culture and plays an extremely prominent role in promoting the country as a tourist destination. Apart from the fact that the shops, restaurants, lounges and rest areas are of the highest quality with very friendly and professional staff, the visual layout of the airport is a constant reminder that there is more that lies to the country outside the confines of the terminal buildings. The success of the customer experience at Schiphol means that there are several repeat customers. 67% of the total passenger throughput in Schiphol are from outside the Netherlands.
What does this all mean? Airports can be big business. Kenya’s geographical location in right in the middle of the continent continues to undoubtedly place us, and Kenya Airways in particular, as the principal hub for intra Africa travel. Which is why the success of our national airline is symbiotically related to the success of Nairobi’s Jomo Kenyatta International Airport (JKIA). However, our airport lets us down. But then again, it’s not like we have jaw dropping or awe inspiring stories from the other competing airports such as Ethiopia’s Bole and Johannesburg’s Oliver Tambo. The two have relatively newer facilities, but the (sad, bad and sometimes mad) attitude of their employees and the general perception of being a weary traveller’s pit stop is completely lacking. It is also noteworthy that not a single African airport appears in the top 50 list of busiest airports in the world. Yet, if you look at any global map, Africa sits plum in the centre and should naturally be the centre of global aviation paths. But then pigs would fly and other supernatural stories. It also bears noting that Schiphol Group’s shareholders are: State of the Netherlands 69.8%, Municipality of Amsterdam 20.0%, Aérports de Paris 8.0% and the Municipality of Rotterdam 2.2%. A Central and two Municipal governments own one of the most successful airport businesses in the world.

Politics can be set aside to provide a world class institution, run on world class business principles and delivering a world class experience. With the right management and incentives, JKIA can and should be a key driver of our economic growth engine.