Has Ryanair Discovered Dignity?

Last Updated Sep 29, 2010 2:57 PM EDT

Ryanair boss Michael O'Leary has made a name for himself with crass ads and an obnoxious public persona. It's gained him a lot of press coverage, and I'm sure he'd claim that this has boosted company revenues. I've always thought it was a pretty ugly strategy and haven't been a fan. But now I am. For once, O'Leary has let his smart side show. And it hasn't been with a stunt.

Instead, O'Leary has acknowledged that his airline will have to change. The average fare -- around $40 -- is unsustainable. And popular demands means moving more flights to major (meaning more expensive) airports. "We have to move away from being obsessed with having the lowest fares in the market," he said in a recent interview. "Every company has to move from being the high-growth Robin Hood."

Being the cheapest shop in town is rarely a long-term option. But change is always hard. And this is where, for me, O'Leary really scored. In acknowledging that his business model would need to change, he also accepted that he himself would become an obstacle. As the airline becomes more sophisticated and more expensive, he said, "You will need a different management team. We won't need my dog-and-pony show."

When Ryanair's prices rise, the company will no longer compete on price. In the future, it will have to do things that it doesn't bother with today -- what O'Leary calls "the carey-sharey stuff," like being nice to customers. And O'Leary's public persona won't fit.

It's a very rare CEO that knows when, instead of holding everything together, they're getting in the way. It happens often enough: usually everyone else can see it, but no one has the courage to do anything about it. Boards are either passive or political, so companies either dwindle or fight. If O'Leary can stay as courageous as his current statements indicate, he might manage what so few CEOs do: an elegant exit.

All leaders have their moment. If their business is successful, it changes -- and as it does so, the needs of the company move on. A true leader changes ahead of the business; the rest always get left behind.

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    Margaret Heffernan has been CEO of five businesses in the United States and United Kingdom. A speaker and writer, her most recent book Willful Blindness was shortlisted for the Financial Times Best Business Book 2011. Visit her on www.MHeffernan.com.