Organisations that seek to gain a competitive advantage in the future need to focus on mechanisms of changing their manner of conducting their businesses. The most desired change is the one that enables an organisation to become more profitable. Geopolitical changes, demographic changes, changes in technology, and even the intense pressure on the physical environment of an organisation pose the need for organisational change in a bid to meet the emerging needs. According to Bruch and Gerber, such changes also need to be combined with various security concerns together with governance issues that help to generate pressures that drive organisational change1.
Development of awareness for technological needs, political, sociological, and economic characteristics of the external operational environment of organisations is crucial in the effort to drive strategic initiatives for their success. This underlines the significance of organisations to develop theoretical models for analysis of their operations. This paper proposes Nadler and Tushman’s model as one of such theoretical models.
In the effort to showcase how Nadler and Tushman’s model can be applied in the analysis of organisations, easyJet plc is used as the organisation whose operations environment and strategies of success can be analysed from the perspective of this model. However, a consideration is given to lay a background of both easyJet plc and Nadler and Tushman’s model. The report then categorises the key components of the environment, strategy, tasks, formal system, and key individuals to determine what outputs are desired, and whether they are achieved by easyJet plc. Secondly, an attempt is made to determine whether the strategies for easyJet plc are in line with organisation’s environmental inputs and whether the transformation process (the key tasks, the formal organisation, the informal organisation, and the key individuals) are well aligned with easyJet plc strategies.
The intention is to evaluate how these elements interact to produce the outputs. Thirdly, the report responds to the query of whether evaluating easyJet plc outputs at the organisational, group, and individual levels could reveal anything that might help in identifying issues that the organisation should address. In the last section of the report, the query of whether there are some aspects of how easyJet plc works that create difficulties in terms of understanding the operation of the organisation is considered. Should this query yield positive response, resources that one can access to help this analysis will be identified.
Background to easyJet plc
Based in Britain, and with its head offices in London-Luton airport, easyJet plc airline was inaugurated in 1995. As Millward reveals, the mission of the company is to supply “customers with safe, excellent, value, and point- to-point air services in the effort to effect and to provide consistent and reliable merchandise and fares that appeal to leisure and corporation markets on a variety of European routes.2” In an attempt to achieve the concern of its mission, the company aims at developing together with establishing long-term relationships with the organisation’s individuals. These individuals include employees and customers.
In terms of passenger carriage capacity, both internationally and domestically, the company emerges the biggest airline in the UK. Millward reveals how the organisation “serves 500 routes between 118 European, North Africa, and west Asian airports3.” The company had workforce exceeding 8000 people by September 2012. The main mode of expansion of the company is through acquisitions as Sumberg (2011) reveals4. Its main secret of growth is capitalisation of low-cost air transport demand. According to EasyJet plc, “the airline, along with subsidiary airline easyJet Switzerland, now operates over 200 aircraft, mostly Airbus A319.5” EasyJet comes second to Ryan airlines in terms of the cost of travel. With regard to EasyJet plc, in the fiscal year 2011, the company flew more than 55 million people6.
Like any other airline, the company is susceptible to operational challenges such as increasing the cost of fuel. To help cut on fuel costs, easyJet plc announced a decision to build her own airliner with Ecojet as its registered trademark. With propfan engine features, Ecojet aims to hike the fuel efficiency. In the quest of enhancing competitiveness in comparison with other competing airlines, in February 2011, the company “painted eight of its aircraft with a lightweight, thin revolutionary nanotechnology coating polymer.7” This coating reduces debris drag across the planes’ surfaces and hence the amount of power required in propelling aircrafts. This has the implication of reducing fuel bills. According to EasyJet plc (2011), through this strategy, the company saved about 1 to 2 percent of the total fuel costs (10). This saving amounts to about 14 million Euros.
Background to Nadler and Tushman’s Model
Nadler and Tushman’s congruence model for organisational analysis presents an organisation as a system, which draws various inputs from both external and internal sources. It then transforms all inputs into outputs via four chief components, alternatively called sub subsystems. Based on this model, Burke shows how these components are the work, people, formal organisation, and the informal organisation8. The fundamental basis of this model is to perceive an organisation as essentially an open system whose operations are influenced by external and internal environment in the extent that inputs are drawn from them and then changed into outputs (performance and/or organisational behaviour).
According to the Nadler and Tushman’s model for organisational analysis, transforming inputs into outputs is executed through interactions of the organisational subsystems. Work refers to all daily chores executed by all individuals that work for any organisation9. People are viewed in terms of the abilities and skills possessed by the staff members that are charged with running of the daily affairs of an organisation. These organisational subsystems also focus on emotive backgrounds together with expectations of any organisation10. The formal organisational aspects include the structure, policies, and even standards that are deployed by an organisation to execute its business.
Lastly, the informal organisation subsystems of Nadler and Tushman’s (1995) model implies the moral code of ethics, power, norms, and even political behaviours that are deployed by an organisation on matters involving the running of the business of an organisation especially subjective matters that may alter the operation of an organisation with time11. Upon using Nadler and Tushman’s model, effective change within an organisation occurs when all these fours subsystems are integrated.
Analysis of easyJet plc from the context of Nadler and Tushman’s Model
Key components of the environment, strategy, tasks, formal system, and key individuals
Nadler and Tushman’s congruence model considers several inputs in an organisation. Environment of operation is one of such inputs. According to the model, the environment comprises all factors, which act outside an organisation12. The environment houses the markets for an organisation, regulatory bodies, suppliers, and people with special interest to the operation of an organisation, competitors, and financial institutions. Hence, an organisation operates in the context of interactions of several elements comprising the larger environment such as other organisations, groups of people, and even individuals. All these forces influence the performance of organisations. The goal of organisational change is to ensure deployment of the appropriate strategies to ensure that these environmental forces act as a source of competitive advantage for organisations, as opposed to sources of troubles and challenges.
EasyJet plc’s environment agrees with the nature of the business environment of an organisation discussed by Nadler and Tushman’s congruence model. It comprises people (employees and customers) and other parties, which have vested interests in the operations of the company. This includes the share holders and the community within which the organisation is established. EasyJet plc has a duty to deliver value to shareholders through engaging in activities that increase the shareholders’ returns on investments. The organisation has the noble duty of ensuring that it acts in a socially corporate responsible manner. Unfortunately, rapidly fluctuating prices characterise the operational environment of the easyJet plc.
For instance, the increasing cost of fuel puts barriers to the margin of profits that the company can reinvest in its growth and/or channelling to CSR. The organisation also encounters other challenges such as declining to offer food services free of charge in case of flights taking more than two hours. There is also intensive competition from other service providers such as BMI Baby, Jet2, and Ryan. The competitive forces influence the company’s pricing policies, thus making some of the routes operated by it less profitable.
Operating in the above environment, easyJet plc pursues various strategies to enhance its competitive advantage and performance. Acquisitions and low-cost elements form the main strategies for success. However, for success of these strategies, the company focuses on promotion and improving its public image. EasyJet plc has developed a number of ways of communicating with clients effectively to retain the existing clients together with attracting new ones. One of the strategies for doing this task is by promoting easyJet’s product through “making flying as affordable as a pair of jeans”13 together with requesting its customers to “cut out the travel agent.14” This change is more innovative in promotion techniques. In a decade ago, the company only advertised through painting a booking telephone number on the side of their aircrafts.
The filming of airline TV series (1999 -2007) had the impact of making the easyJet plc appear like a household name within the UK. Although this film never portrayed the name of the company in a positive way, the company was highly promoted. Additionally, the company has changed from one business slogan to another. First, it was “the web’s favourite airline”, then “come on, let’s fly”, and later “to fly, to save” (Jones 2007, 47). Another slogan is “Europe by easyJet”. The most popular one is “business by easyJet”. In relation to price, the airline offers low travel cost.
EasyJet plc scans its environment in the effort to guide the process of making decisions that would make the organisation implement changes to its products due to environmental changes. For instance, in 2008 to 2009, the company encountered many challenges accruing from the global financial crisis. However, the low-cost strategy enabled the company to survive the recession. The strategy was effective in ensuring that the company retained its customers whose household incomes were greatly constrained by the global recession.
According to the Nadler and Tushman’s congruence model, organisational strategies are developed to enhance performance of the key tasks15. For the easyJet plc, its chief task is to move people conveniently, comfortably, and cheaply across all its destinations. In the performance of this task, easyJet plc emphasises efficient execution of this task irrespective of the organisation of various facets within the organisation that are established to fulfil the noble purpose for the existence of the organisation. Performance of the task of easyJet plc requires people.
Individuals and Groups
With regard to Nadler and Tushman’s congruence model, individuals are important aspects of organisational analysis. Their nature and traits affect the performance of any organisation. In the selection of cabin crew, easyJet plc considers the characteristics of its people in terms of knowledge and skills for handling people from diverse backgrounds. This task is important for the organisation since it serves people from different cultural backgrounds. Employees are also derived from different cultural backgrounds. Consequently, the management personnel in all departments should have the ability to deal with workforce from diverse backgrounds.
Formal and Informal Organisation
According to the Nadler and Tushman’s congruence model, the third and fourth components of an organisation are the formal and informal organisations. Formal organisations refer to the “range of structures, processes, methods, and procedures that are explicitly and formally developed to get individuals to perform tasks that are consistent with organisational strategies.16” EasyJet plc has a well-established formal structure, which spells out the roles of all staff members within the organisation. This role has to be done to eliminate the likelihood of conflicts of mandate, which may create organisational inconsistencies. For new recruits, the organisation conducts training and development programs to ensure that new employees settle quickly and efficiently. A major concern of the program is the training of people on organisational culture. The formal structure is bureaucratic in nature.
The organisation not only establishes formal, but also informal structures. According to Nadler and Tushman (1995), an informal organisation refers to “different structures, processes, and arrangements that emerge while the organisation is operating.17” Operating in a dynamic environment, easyJet plc is compelled to alter its structures to incorporate new regulations and the emerging perspectives such as social corporate responsibility. For example, the political environment via taxing policies affects the operation of easyJet plc. The company must pay charges while landing in various nations.
Regulatory bodies keep on reviewing the policies. This makes the organisation keep on altering its taxing management structures with time. The organisation must also comply with environmental regulations, tariffs, and employment laws that are established within the UK while also complying with trade restriction policies. Some of these requirements require the company to change its structures for their administration to meet the emerging changes for the regulation requirements.
Organisations operate to achieve specific desired outputs. Nadler and Tushman’s congruence model considers outputs as elements such as effectiveness, performance, and products or services produced18. As argued before, easyJet plc is a service company. However, it also sells various products through on-board programs. Some of the commodities are squash-in foods, mind-stimulating and squashy drinks, and chocolates among others. These sales act as an ancillary source of income for the company. EasyJet plc also sells products such as cosmetics, fragrances, and gadgets together with products branded with the company’s name.
For customers wishing to transfer to other airlines upon reaching their destinations, the company also offers airline-ticket sales services. Although the sale of these products earns the company additional income to the regular and the chief service on offer, the sales of the products are important in the effort to achieve the output of excellence comfort and satisfaction of customers incorporated in the company’s mission statement.
EasyJet plc is capable of achieving its main outputs. This claim is verified by its dominance in the market in terms of the carriage capacity. Indeed, it is the second biggest company in the UK in terms of carriage capacity. While it is the biggest intra-UK airline, it is also the 5th biggest airline operating within Europe. Therefore, it is highly competitive while compared with rival companies. The traditional low-cost airlines target different market segments in comparison with easyJet.
This makes them non-competitors to the company. In terms of low-cost business strategy, Ryan is the only company ahead of easyJet plc. In terms of effectiveness in delivery of comfortable services, the company provides in-flight entertainment on some planes in the form of drop-down screens. In some chosen flights, easyJet plc offered “passengers with the ability to rent portable Sony media players with movies and games in 2009 and 2010.19” In 2011 through 2012, the company availed mezzo devices for renting in some flights, namely Gatwick and Manchester.
Alignment of the Organisational Strategies
Upon analysing easyJet plc from the basis of congruence model, it is inferable that the company’s strategies of success such as pursuing low cost and growth through acquisitions are well aligned.
Alignment of Low-cost Strategy
For easyJet plc to capitalise on low fare as a growth and source of competitive advantage strategy, focusing on reduction of the operation cost is an incredible strategy. In earlier years of its establishment, easyJet plc only provided booking services through telephone. In the effort to minimise the cost of promotion and awareness of the booking telephone number, the company had the number painted on the planes’ body. Incentives in the form of a commission are not provided for sales of easyJet tickets. EasyJet plc embraces technology in cutting the human resource expenses. It deploys the internet to accomplish tasks such as booking and checking services.
With regard to EasyJet plc painting of the easyJet’s planes with a nanotechnology polymer coating to reduce frictional drag and hence the amount of fuel consumed is an attempt to keep at par with technology20. By utilising the weapon of low fares, the company is able to prevent its clients from seeking alternative service providers. In the economic sense, the lower the prices, the higher the demand. This effect is more effective for the case of easyJet plc since the company creates price awareness through the internet. Hence, whenever service consumers think of switching from one airline to another based on fare, the alternative is always easyJet plc.
EasyJet plc is also able to align its strategies of success through the selection of the types of aircraft it uses to deliver services to its clients. In the effort to comply with the inexpensive company idea, easyJet plc has a history of using only one category of planes. Before 2002, when an order for 120 units of Airbus A319 was placed, the company used Boeing 737. After the delivery of the units, the company has been operating A320 series. The A319 planes operated by the company are unique compared to the standard A319 planes. Millward supports this assertion by adding, “due to the toilet and galley configuration allowing the installation of more seats than a standard Airbus A319, easyJet’s Airbus A319 aircraft has two pairs of over-wing exits instead of the standard pair configuration to satisfy safety requirements.21” Deploying planes with better safety features implies that the organisation is able to align its strategy of comfort and satisfactory services to its customers travelling to various destinations aboard A319 airbuses.
Through acquisitions, the company has been able to add more high-capacity couriers into its fleets. For instance, following the attainment of GB planes, easyJet plc acquired several A321 and A320 aircrafts. For an organisation seeking to exploit the low-cost operational strategy, it must align its strategic objectives to mechanisms of enhancing its economies of scale22. One of such strategies deployed by easyJet plc is the use of couriers with higher carriage capacity such as A319, A320, and A321. Acquiring other local airlines to minimise the degree of competition for routes is yet another strategy of operation of easyJet plc. Since its establishment in 1995, the company has been acquiring various local airlines. In 1998, it bought a stake of 40 percent from Swiss charter airline called TEA Basle. The acquired company was rebranded as easyJet Switzerland.
The head office for the company was relocated to Geneva IA (international airport). This acquisition made the company acquire an operation base located outside the UK. In 2002, easyJet plc purchased ‘Go’ airline, thus further acquiring new operation bases. Apart from increasing the number of planes available to the company, this acquisition also increased the number of operation routes and bases. In 2007, easyJet plc acquired GB Airways. Through acquisitions, the company has been able to acquire large economies of scale, thus making it develop the capacity to exploit the low-cost strategy optimally in comparison with some other airlines in the UK.
The company continues to utilise past-success operational models. The business is derived from the southwest airlines. This model has proved effective in the US airline market. In the European market, the model has made both Ryan and the easyJet plc incredibly cut on their operation costs. Both companies do not “sell connecting flights or provide complimentary snacks on board” (Jones, 2007, p.43). Additionally, the model also provides the advantages of higher utilisation of the aircrafts. It also offers “quick turnaround times, charging for extras (such as priority boarding, hold baggage and food) and keeping operating costs low” (Jones, 2007, p.47).
The company has also experienced incidences of labour conflicts instigated by the criticism of denial of freedom and the rights to unionise. This posed a major challenge to the company in terms of delivering its outputs driven by the objective of moving people conveniently and immediately. Adopting the Southwest Airline’s operational model has helped align the strategies of easyJet plc with the company’s missions and objectives. Through the model, the company changed its employment strategy focusing on minimal involvements of unions to accommodation of unions. This focus is well aligned with the strategy of focusing on individuals as essential inputs for success as discussed by Nadler and Tushman’s model congruence model. Unions are important. They handle employee conflicts within an organisation. Hence, they reduce incidences of unplanned strikes. Through unions, easyJet is capable of handling employees’ concerns that may impair their productivity at an early stage.
Issues that easyJet plc should address
Upon analysing easyJet plc’s outputs, group, and individuals, the company deserves to address a number of things. Firstly, currently, easyJet plc operates through bureaucratic systems of management. This means that the main concern of the management is to make employees comply with the established procedure of work rather than influence them. At easyJet plc, everyone knows what he or she ought to do or not. The hierarchy of power in the organisation also reflects the remuneration differences. People who have the highest salaries at the company are also the people who have more power to make organisational decisions. The people making decisions at easyJet plc, mainly the directors, relay their decisions to managers, managers to the supervisors, and finally to the subordinates. The chain of command is significant at the organisation. It sets a particular ladder, which allows swift and efficient flow of information together with crucial decisions.
The danger in the above form of the internal structure of decision making deployed by easyJet plc is the failure to recognise the need to reward the efforts for organisational success. Possession of a high power within an organisation does not directly translate into having the capability to enhance the productivity of the organisation. Although the main strategy of success of easyJet plc is to explore the low-cost strategy and the deployment of people as sources of success, cutting costs aims at maintaining productivity while charging low fares on flights. Consequently, some subordinate staff may have good ideas that may lead to the creation of more competitive strategies.
Failure to give them an opportunity to participate in the decision-making process hinders cognition of the organisational potential. This has the effect of making easyJet plc turn away innovative and creative strategies of success such as development of new ways of improving service delivery on-board and off -board. Hence, while it is important for easyJet plc to consider people as the most important source of success as depicted in its missions statement, it is equally important for it to consider their innovative ideas as an additional benefit available to the company, which while well harnessed, may give the organisation even higher competitive advantage.
Scrutinising the operations of easyJet plc, people, and environment outputs, group, and individual levels makes it evident that customer service is central to the success of the organisation. Unfortunately, the process of delivering services is centrally arranged and monitored. At easyJet plc, customer service is organised such that all administrative personnel aid in enhancing compliance to strategic plans. Efficiency in the speed of delivery of services to easyJet plc’s clients implies that the bureaucracy at the organisation facilitates all aspects of administration of customer service structures to enhance reduction of clients’ attendance time.
Through the human resource, which is the employees’ compliance-enforcing arm of easyJet plc, every person who is charged with addressing human relations issues must ensure that both employees and customers are satisfied. In this context, the change that is desired is the alteration of the belief that employees have to deliver quality and speedy services to satisfy the demand placed on them by those occupying higher positions in the bureaucratic management ladder. Rather, employees should develop the culture that they are offering services to satisfy the customer’s utilities, and hence the noble reason why easyJet plc is able to retain them.
Difficulties in understanding aspects of organisational operation
EasyJet plc operation structure and strategies are so well developed that no aspect of how the organisation works creates difficulty in understanding. As revealed before, the formal management structure is bureaucratic. The hierarchical portfolio is so well defined that every level of management has a clear set of rules that define the function of the person occupying it.
Nadler and Tushman’s congruence model is a conceptual model for providing a means of studying an organisation’s external environment. Based on the discussion of the report, using easyJet plc as a case example of how Tushman’s model can be utilised to analyse an organisation, it was confirmed the model explains the fits between the various elements that make easyJet plc. These elements include people, the environment, formal, and informal systems. Through an appropriate combination of all these elements, the inputs are converted into outputs. From this position, the report held that Nadler and Tushman’s model provides relative complex analysis of an organisation while still ensuring maintenance of an action plan.
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