Jan Carlzon: Ceo At Sas

Harvard Business School

9-392-149
Rev. June 8, 1993

Jan Carlzon: CEO at SAS (A)
The most powerful messages are those that are simple and direct and can serve as a battle cry for people at all organizational levels.... Anyone who is not given information cannot assume responsibility. But anyone who is given information cannot avoid assuming it. Jan Carlzon, CEO of SAS In the mid-1980s,airline industry analysts were almost universal in their praise of Scandinavia Airlines Systems—SAS. Jan Carlzon, the company's highly charismatic leader, had won his turnaround battle. Hands down. In the process of leading SAS from losses into profits, he had become an international business personality and close to a public hero in Scandinavia. SAS service, which had deteriorated so far throughcost cutting that even the flight attendants were embarrassed by it in the early 1980s, was now heralded by several polls as the best in the world for the business traveler. Through zealous attention to his front lines—those who daily interacted with SAS customers—Carlzon had seemingly wrought a miracle. "The first wave" of his transformation was an unqualified success. Yet once profit levels startedbeing reported in billions of Swedish kronor in the mid-1980s, new demands and concerns appeared. Employees grew more insistent that they should share in the new profitability. Even more troubling to Carlzon were new signs of complacency and bureaucracy—things he had fought so hard to eliminate. During the same period, major changes in the industry environment also posed a threat. Deregulation inthe U.S. airline industry had created a few "mega carriers" who now scrambled for European routes. And a similar trend towards deregulation in Europe was threatening to cause a major rationalization of the region's airlines. These clouds on the horizon had prompted Carlzon to institute a "second wave" of change at SAS. This time his focus would be on improving efficiency in an environment ofincreasing deregulation and consequent competitiveness. It was an open question, however, whether he could reignite the SAS spark around these new goals. Was the company a prisoner of its past achievements? Was it doomed to remain a mid-range carrier or could it emerge as a major player in the deregulated environment?

Professor Christopher A. Bartlett and Research Associates Kenton Elderkin andBarbara Feinberg prepared this case as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. The case was prepared from public sources, drawing primarily on Moments of Truth by Jan Carlzon (Ballinger Publishing, 1987), "Scandinavian Airline System (SAS) in 1988," by Professor Sumantra Ghoshal (INSEAD case, 1988), and"Scandinavian Airline System," by Professor John Kao (Harvard Business School case, No. 487-041). Other sources are listed at the end of the case. Copyright © 1992 by the President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part ofthis publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.

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Jan Carlzon: CEO at SAS (A)

SAS into 1980
Conceived in the late 1930s as a consortium of the national airlines of Denmark, Norway, andSweden, SAS was quickly buffeted by the dislocations of World War II. Not until 1951 did the three national airlines merge to create an entity owned by both state and private investors. Swedish interest held a 3/7 share with Norwegian and Danish interests holding 2/7 each. Within each country ownership of the national share was also divided 50:50 between government and private investors....