Back in the '80s, the once struggling SAS (Scandinavian Airlines – back then the airline was notorious for constant delays, losing $17 million per year), was on the brink of collapse. That's when Jan Carlzon (1941-), realized that the most valuable asset of a business wasn't its planes or offices, but its satisfied customers. For him, the company wasn't just a collection of physical assets but primarily the quality of interaction between the customer and frontline staff (e.g., flight attendants, baggage handlers, ticketing agents).
It's no coincidence that a 1981 survey ranked SAS 14th out of 17 airlines in terms of on-time departure accuracy, labeling it as " cumbersome," as decisions always came from the top rather than frontline staff.
Carlzon calculated that each year, SAS's 10 million passengers interacted on average with five of the company's employees, with each contact lasting 15 seconds. He termed these 50 million interactions "moments of truth," deriving from the decisive moments in bullfighting where one wrong move can be fatal, and they would largely determine the company's prosperity.
These are the moments, as he aptly put it, "where we must prove to our passengers that we are the best option they can have." They are the critical moments during which the passenger forms an impression of the company.
When Jan Carlzon took the helm of SAS in 1981, he made a series of bold moves: he created a separate Business Class cabin (aiming to become the preferred airline for frequent business travelers) and launched an educational program titled "Putting People First," which empowered frontline staff – as he put it: "Problems are solved on the spot, as soon as they arise. No front-line employee has to wait for a supervisor's permission."
He also adjusted aircraft departure times to fit the needs of business travelers, and for the first time, gave instructions to procure aircraft that would be "pleasant for the passenger" (Three-P Plane – Passenger-Pleasing Plane). These aircraft featured more space for carry-on luggage, wider aisles, lower cabin noise, and doors that facilitated disembarkation.
Just a year later, SAS was not only the "most punctual" airline in Europe but also returned to profitability ($54 million in 1982). And all this without layoffs or wage cuts and with operational expenses showing an upward trend (whatever the business traveler needed to feel satisfied, they had it – even olives in the martinis returned).
What Jan Carlzon achieved was to change-reverse the organizational chart of SAS, making it customer-centric, placing the customer at the top. For the first time, the 20,000 frontline staff, whose mission was direct customer contact, found themselves with more power, at the top of the organization's priorities.
Indeed, in an effort to encourage teamwork and customer focus, work priorities were set as follows: "If you are not serving a customer, your job is to serve someone who is."