The company has been able to demonstrate entrepreneurial skill in the past with the Star Alliance, but it is in a mature industry that is characterized by a slow pace of change. Lufthansa's business model works well, and aside from 2009 when most airlines lost money Lufthansa has largely been profitable since its troubles in the early 1990s. The company's path to ongoing success is more likely to be incremental improvements to its operations punctuated by the occasional strategy tweak, rather than the introduction of an entrepreneurial culture.
10. Describe what strategic leadership actions should be recommended for reducing complexity at Lufthansa.
Lufthansa is not an especially complex company. However, reducing complexity can have cost advantages, which are important for a firm in a mature industry. The first step is to ensure that the organizational structure has clearly delineated chains of command. Complexity occurs when workers or managers must report to multiple people. Once the organizational structure is clean, it is also important to partition tasks and roles, so that there is role clarity throughout the organization. This is particularly important with respect to the Star Alliance, which is under close control of Lufthansa. The company needs to ensure that the Star Alliance -- even if closely controlled -- it not seen as an arm of Lufthansa. The two are separate entities and should remain so. Subsystem boundaries in other areas of the organization should also be delineated, such that different parts of the organization do not compete. It is evident that Lufthansa already has a clear sense of this simplicity. It has avoided introducing a discount...
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