Aircraft Paradigm for Business Management

In the previous section, I covered financial models – tools that you will need to achieve your first fundamental business management objective – maximizing financial value of your company.

In this section, I will present a tool that will help you achieve your second fundamental objective – transform your company into a powerful money-making (value-generating) machine. The visualization tool.  

Building (engineering) a powerful value-generating machine is a very challenging and ambitious project. In which you will need all help that you can possibly get. Every bit of it. And a vivid and emotionally rich picture, model, paradigm or metaphor that you can constantly see in your mind, can be very, very helpful. Both functionally and emotionally (as the permanent source of motivation and drive). And, therefore, valuable.

Why? Because it allows you to better understand the essence, structure and behavior of your company; to better communicate it; measure it; manage it; and, finally, to maximize its performance. In other words, to be more efficient in making a quantum leap. And, quite possible, to make a bigger quantum leap.

After working for 15 years on new, radically more efficient corporate management methodology, I discovered (it is probably the right word) that the best corporate (not only business) management paradigm is the aircraft paradigm.

The essence of this discovery is that any organization (business enterprise, government entity, NGO/NCO, academic institution, etc.) is conceptually identical to an aircraft. In case of a business entity – a fighter aircraft (competition in the marketplace is quite a war, isn’t it?). Hence the ‘corporate cockpit’ concept, by the way (I will cover it in detail in the section on BDL).

I found absolutely crucial similarities between an aircraft and an organization. An aircraft is made of physical components – engine, wings, landing gear, radar, etc. An organization is made of corporate objects – products, brands, assets, etc. In order for an aircraft to operate at its maximum performance, (1) each component must do the same and (2) all components must fit together perfectly. For an organization to operate at its maximum performance, (1) each corporate object must do the same and (2) all objects must fit together perfectly (in other words, exhibit a perfect synergy).

Aircraft components are involved in a number of physical processes. Likewise, corporate objects are involved in a number of corporate processes. For an aircraft to operate at its maximum performance, all of its physical processes must do the same. For an organization to operate at its maximum performance, all of its corporate processes must do the same.

Furthermore, an aircraft undertakes flights (or sorties - for a military one). An organization undertakes corporate projects. Civilian aircraft hauls passengers – or cargo for its owners. An organization works for its clients (customers).

An aircraft can not operate without satisfying the requirements of its stakeholders – airport officials, government regulators, fuel suppliers, etc. Likewise, an organization has to satisfy the needs and requirements of its stakeholders – suppliers, partners, government entities, etc. In addition, a military aircraft has adversaries – enemy aircraft, AA guns, surface-to-air missiles, etc.

An aircraft is flown by pilots, navigators and other crew members and serviced on the ground by technicians. An organization is managed by executives, middle managers and supervisors and ‘serviced’ by professionals (specialists).

To maximize aircraft performance at all times, pilots and technicians must measure the performance of each key aircraft component and process, of an aircraft as a whole and take corrective action – if necessary. To maximize corporate performance at all times, corporate managers and specialists must measure the performance of each key corporate object and process, their synergy (‘quality-of-fit’) of an organization as a whole and take corrective action – if necessary.

To measure the performance of aircraft components and processes, pilots use the corresponding performance indicators (PI). Likewise, to measure the performance of corporate objects, processes and their synergy, corporate managers and specialists use the corresponding key performance indicators (KPI). In the aircraft, values of PI are visualized on a computer screen in a ‘glass cockpit’.

In an organization, KPI values are visualized on a computer screen (‘corporate cockpit’) in front of the manager or specialist responsible for the object or process in question. The only difference is that an aircraft has 1-3 computer screens inside the ‘glass cockpit’ while in an organization every manager and specialist has his or her own ‘corporate cockpit’ provided according to the all-important ‘need-to-know’ principle. 

The aircraft paradigm is, indeed, very visual. You can fly a cutting-edge, top-of-the line, fifth-generation fighter – or a WW2 relic. You can fly fast and climb high – or barely stay airborne. Your aircraft can be in perfect condition – or a total mess.

You can have complete air superiority – or barely venture outside your airfield for the fear of enemy fighters. You can be armed with sophisticated air-to-air missiles and a high-performance Gatling gun – or with a vintage cannon. You can be murderously stealthy – or a sitting duck. 

The choice is yours.