Extreme management: Behind Michael O'Leary's strategy pivot

Why the wildly successful and wildly controversial Ryanair CEO went from nasty to nice.

by Matt Cooper
Last Updated: 01 Oct 2018

Bucking conventional thinking has long been one of Michael O’Leary’s key managerial traits. He did things as he felt they should be done, not as others told him should be done either to make money or bolster the reputation of Ryanair, the Irish airline that has grown to become a phenomenon. It has helped him too to stand out from the pack, to become almost as famous – and admired and reviled in turn – as the airline he controls from the chief executive’s chair.

Here are just some of the ways in which he differed from his contemporaries. For years he rarely, if ever, observed the concept that the customer was always right and waded into disputes and conflicts with them. He argued over fare prices, the provision of additional services, charges for luggage, the non payment of compensation and the distance that airports were from the final destination, on occasion over the border in another country. He treated paying customers at times with an attitude that some complained bordered on contempt. He didn’t seem to care.

If people ran to the newspapers or broadcasters with complaints he dealt directly with the media, instead of hiding behind spin doctors, and confronted or charmed reporters according to the circumstances as he saw them. He would go on television and radio to make his points forcibly, but only on live broadcasts: he did not trust the media, most of whom he held in contempt, not to edit his comments. His straight talking made him a celebrity, a turn-to business voice for the Irish and British media – and in turn on continental  Europe – like Donald Trump was in his Apprentice, pre-Presidential days.

Aggression and belligerence were management tools O’Leary employed with effect, internally and externally. Some of his senior managers quickly developed thick skins and thrived in the hot house atmosphere, but others wilted quickly. There were those who came in from the outside to senior Ryanair positions and who didn’t last long. Some admired the energy and dynamism – if somewhat awed by how much coffee fuelled him – but others found the occasional bad language and denigration too much. It was not an environment for the sensitive.

It was a relief internally when O’Leary trained his sights on outside targets and took fire. He got into rows with the airports that he used to land his aircraft, baited competitors about their alleged inferior way of doing business, insulted politicians across multiple jurisdictions and rowed publicly with the aircraft manufacturers from whom he wanted to buy. He pulled off silly stunts – such as driving a tank to the gates of the HQ of his great rival easyJet – that might have embarrassed even Richard Branson, boasting that he showed no respect for his own dignity as long as it promoted Ryanair. Winning friends didn’t interest him even if others told him that was the way to influence people. He believed that nothing constituted bad publicity and had no truck with the experts who advised him on brand management and advertising strategy, thinking he knew it all better. And he probably did.

He wrote all the brand advertising personally, mainly to keep costs down but also partly to enjoy himself. One former executive described how Ryanair used to book a quarter page on the front page of the Observer every Sunday. It wasn’t that O’Leary liked the newspaper – in fact, he openly mocked the environmental credentials of the publication and its sister The Guardian – but he saw an opportunity for cheap television exposure. He had noted that pictures of the front page of the newspaper featured prominently each Sunday morning on the newspaper reviews that were a staple of the breakfast television coverage. He couldn’t afford – or didn’t want to spend the money on – television advertising so he saw this as a free way of getting Ryanair prominent positioning on channels with large audiences.

The management textbooks said this was not the way in which to do business, in any industry. Yet it worked for Ryanair. O’Leary built an airline that by 2013 was producing profits of over €500m per annum and flew over 80 million passengers each year.

And then he changed course.

It was one of the most significant and notable shifts in management strategy imaginable. O’Leary decided that customer service was going to be a priority. Both he and the airline were going to be 'nice'. He devised a policy called 'Always Getting Better' and enforced it was as much rigour as he had previously implemented what many regarded as nastiness.

But it was necessary.

O’Leary and his managers could see the data told them that easyJet was catching up quick on passengers and profits. It was benefiting from higher yielding traffic attracted by better service. Ryanair had a massive aircraft order in the pipeline, purchased at an exceptionally good discount from Boeing. But it was no use having aircraft if they weren’t full of passengers.

The strategy was an enormous success. Within five years, passenger numbers had increased to 130 million annually. That wasn’t what thrilled O’Leary though: that was an increase in profits to approaching €1.5bn and a market capitalisation that touched €20bn. It confirmed his personal status too as a billionaire.

O’Leary did it by spending money on technology, to reach his customers, and things like television advertising. But he spent carefully and his long standing devotion to keeping costs at the lowest level possible remained the most important item on any agenda he had. O’Leary spoke of €2bn in profits and 200 million passengers in a year. His ambitions seemed boundless.

But how long could it last?

Michael O’Leary: Turbulent Times for The Man Who Made Ryanair by Matt Cooper is published by Portfolio.

 

 

 

 

 

Tags:

Find this article useful?

Get more great articles like this in your inbox every lunchtime