It’s common to hear about the high failure rates of digital transformation initiatives from leading consulting firms like McKinsey, BCG, KPMG, or Bain & Company. Experts all agree that around 70% of digital transformation initiatives fail to meet their goals. While the numbers can feel discouraging, there are still many examples of digital transformation success stories that offer hope. AirAsia’s fight for survival through its exemplary digital transformation journey during one of the most uncertain periods in this century serves as a testament to this fact. Amid the COVID-19 pandemic when the airline industry was forced to a standstill, AirAsia faced a crucial decision – adapt and survive or fall into obsolescence. It picked the former and pivoted from being merely an airline to a Digital Lifestyle Platform, diversifying its product offering and increasing revenues.
Through AirAsia's digital transformation success story, business leaders can learn four valuable lessons that ensure their organizations can unlock value from their transformation initiatives.
1. Adopt a Customer-First Approach
The key question for any successful digital transformation is not what technology to pick, but rather, “How will this initiative enhance customer experience?” The purpose of digital transformation is not to upgrade tech for the sake of it but to create more value for the customer. AirAsia understood that very well.
AirAsia started by identifying all customer touchpoints that could be improved. These extended beyond merely purchasing a ticket to include the airline's website or ticket counter, online ratings and reviews, customer service hotline, flight boarding, in-flight experience, handling of luggage, and post-trip surveys.
After identifying its touchpoints and their performance, AirAsia found ways to improve on the most important ones. The best example of this was its Fast Airport Clearance Experience System (FACES). AirAsia deployed facial recognition technology as part of customer identification verification during the boarding procedure, which made it extremely simple and convenient for customers to pass through security and board their flights.
2. Leverage Data to Understand Customer Needs
Don’t underestimate the importance of the data your organization has already collected. No other company will have the same experience, customer behavior patterns, and information that you have gathered over the years. By taking advantage of this data, you can identify strengths and areas for improvement within your organization. You can use these insights to streamline operations, plug performance gaps, and even create new business offerings.
AirAsia realized that its data was as valuable an asset as its aircrafts (if not more). By organizing and analyzing its data, AirAsia unearthed important insights about its customers that helped it develop new digital business offerings to increase revenues. It developed an ecosystem that offered its customers a one-stop shop for all their travel needs including, travel bookings, e-commerce, fintech, and lifestyle services, all accessible through a single app. This in turn gave AirAsia more data about customer behavior and trends to refine its offerings.
3. Collaborate with Experts to Plug Gaps
Digital transformation demands new skills, infrastructure, processes, and methods of management. Collaboration forms the core of a successful digital transformation, both within and outside of the organization. Strategic partnerships and collaboration with system integrators can help you speed up your change process and make sure that you avoid common digital transformation mistakes.
AirAsia acknowledged that it didn’t have the technical skills in its workforce to carry out this process independently. AirAsia's competency was not in IT, so it formed strategic partnerships with 500 startups to benefit from their tech talent. For AirAsia to transition into a Digital Lifestyle platform providing everything related to travel in one app, this collaboration was essential, especially when the company’s fleet was grounded and it was losing money every day.
4. Support Your Workforce Through the Transformation
Change can be scary, especially when too much change is thrown at employees who lack the necessary change management skills to thrive in an increasingly digital world. Therefore, it is no surprise that employee resistance remains one of the most significant barriers to achieving success in any digital transformation initiative. To overcome this obstacle, it is crucial to focus on the people side of change in your digital transformation in each phase of the process – from preparation to implementation to post-implementation.
For AirAsia, employee engagement was essential. While it was inevitable for AirAsia to lay off some of its workforce due to the pandemic, AirAsia minimized the layoffs by initiating a partner program with its allied companies. To keep its flight staff engaged during the lockdown, AirAsia offered its staff upskilling and reskilling opportunities in collaboration with Google. This helped the employees feel secure about their skills and their future in the organization.
More importantly, its investment in upskilling and reskilling employees created opportunities for internal talent mobility to plug its skills gap. In response to its growing demand for skilled IT talent, AirAsia turned to its existing workforce for solutions. Tony Fernandes, its CEO, stated at the end of 2020 that "many of our staff members are retraining to be data scientists, data engineers, and other things."
With this AirAsia demonstrated incredible commitment to investing in its employees' professional development, thereby amplifying employee’s trust in the organization while keeping the employees engaged and hopeful through tough times.
As a result of AirAsia’s successful digital transformation from being an airline to a digital lifestyle and travel group, the group was able to drive a 161% increase in year-on-year revenue by the second quarter of 2021. The AirAsia Group, now rebranded as Capital A, achieved an all-time high in profit after tax by the end of 2022. This marked a significant milestone for the company, as it represents the highest level of profitability since the second quarter of 2019.
AirAsia’s experience proves that digital transformation isn’t just possible, but necessary to help companies adapt and thrive in uncertain times. Further, the key elements of AirAsia’s digital transformation success story — adopting a customer-first approach, unleashing the power of data, building critical collaborations, and focusing on the people side of digital transformation — provide valuable lessons for other organizations to achieve digital transformation success.
If you’re looking for support in achieving a successful digital transformation, look no further than Volonte’s enterprise change management platform. Our platform is designed to help you streamline and track your digital implementation and provide the support your employees need to make the new ways of working stick. Learn more about how you can unlock the full potential of your digital transformation with Volonte.
Sources:
- Ecosystem Effectuation: Creating New Value Through Open Innovation During A Pandemic
- Digital Transformation at AirAsia
- Time to reskill and upskill with new digital skill sets at Redbeat Academy this MCO 3.0 — airasia newsroom
- Company and Employees as One Through the Pandemic Together — airasia newsroom
- Rehiring everyone laid off is my priority, says AirAsia boss | Free Malaysia Today (FMT)
