Khwaja’s Take: Southwest Airlines, FAA Debacle, Disney Activist Proxy Fight, Board Effectiveness

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1. The Southwest Airlines Failure: A Cautionary Tale for Boards

In late December, a fierce winter storm wreaked havoc on the Southwest Airlines , causing more than 15,000 cancelled flights and leaving over one million people stranded. The ripple effect of this chaos was felt far and wide as air travelers scrambled for alternate solutions in an attempt to reach their destinations.

The incident was a classic example of how focusing on short-term value instead of long-term value creation can come back to bite a company. In this case, it was the cost of delaying a tech revamp and modernization that finally caught up with the carrier. This incident is an important reminder to boards everywhere to think more than just cash flow when making major business decisions, and to make sure they drive customer experience and technology strategy into every decision they make.

In an another unprecedented event, the Federal Aviation Administration was forced to do a nationwide reboot of its systems due to technology issues. This rarely seen action had far-reaching consequences for air travel throughout the United States.

Emerging technologies are here to stay - don't get left behind by failing to make them part of your long-term strategy!?-Khwaja Shaik, Board Advisor

The importance of modernizing technology should not be underestimated when it comes to driving value over the long term. Technology debt elimination and architecture simplification are key components of creating effective cost management, while higher utilization of new services can further maximize returns.

Ensure critical tech risks and strategy reviews reach the top with full-board integration. -Khwaja Shaik, Board Advisor

Long-term success starts with modernized tech systems, scalability, high resiliency, and effective processes.?-Khwaja Shaik, Board Advisor

Additionally, metrics around return on capital can be used as tangible evidence of the success or failure of certain tech-infused strategic initiatives in order to inform future decisions.

Too many execs and Boards focus on the now – but improving software systems and modernizing digital infrastructure requires looking into the future and mitigating risks in the present.?-Khwaja Shaik, Board Advisor

At its core, this incident serves as an illustration that customer experience metrics directly drive financial performance as part of an overall profit model. Companies that understand this relationship will be better positioned for long-term success than those who focus solely on short-term gains without considering the bigger picture.

Get ready to lead in a digital era! Realigning your board composition through digital directors provides greater understanding of technology’s influence on risk & earnings.?-Khwaja Shaik, Board Advisor

This is a rallying cry for every Board to ensure they have capable and experienced leaders in charge - not just those who can manage finances, operations, and assets effectively; but also individuals that are able to bring value through customer engagement while driving the organization towards its potential.

If you're going to lead the charge in your industry, you need to know what's happening now – boards should demand frequent, forward-looking reports on technology initiatives! -Khwaja Shaik, Board Advisor

By overseeing talent strategy and customer-centric decision making throughout their organization, companies will be more likely to create lasting value from their initiatives—and avoid costly pitfalls.

Tech Debt elimination is often the most difficult for corporate executives, who lack incentive when the risk/reward won't appear soon. -Khwaja Shaik, Board Advisor

Conclusion:

The Southwest Airlines holiday meltdown is a powerful reminder for boards everywhere that staying focused on short-term profits alone can have expensive consequences if done without considering the bigger picture or without taking into account how customer experience can affect financial performance over time.

In order for Boards to be successful, it is essential that they have experienced and tech-savvy board members leading the way.?-Khwaja Shaik, Board Advisor

By focusing on modernizing technology and driving customer-centric decision making throughout their organization, boards can ensure that they are creating real long-term value through their technology investments rather than kicking the cost down the road until it’s too late.

It's no longer a want but a need—boards must stay ahead of the tech curve and operational excellence! Request regular reporting on tech and business resiliency initiatives. -Khwaja Shaik, Board Advisor

Doing so will help protect against costly failures like what happened to Southwest Airlines in 2022, while setting them up for success over the long haul.

2. The Magic of Disney Under Attack

For years, 华特迪士尼公司 has been synonymous with magic. But now, the company is under attack from an unlikely source: activist investor Nelson Peltz. Peltz plans to mount a proxy fight for a seat on Disney's board, adding to the challenges Robert Iger faces after he recently returned to the role of chief executive at the beleaguered entertainment giant.

Disney revealed the activist's intentions Wednesday afternoon in a statement that said that it is opposed to having Peltz join the board. It also said that current director Mark Parker would become chairman, succeeding Susan Arnold.

Peltz launched the battle last Thursday, according to people familiar with the matter. Late last Wednesday, his firm launched a website for its campaign, called Restore the Magic.

What Is a Proxy Fight?

A proxy fight is when an investor or group of investors tries to replace a company's board of directors in order to effect change within the company. In most cases, proxy fights are initiated because the activists believe that the current board is not doing enough to increase shareholder value.

Why Is Peltz Targeting Disney?

Peltz believes that Disney is not doing enough with capital allocation, corporate governance, and effective corporate strategy to keep up with changing consumer habits. He has been critical of Disney's acquisition strategy, and he believes that the company overpaid for the Fox assets and the succession process is broken. He also believes that Disney should cut costs and streamline its operations.

What Are the Implications of a Proxy Fight?

A proxy fight is a very serious matter. If Peltz is successful in his bid to replace Disney's board, it could have major implications for the future of the company. It could also lead to major changes in how Disney does business. Only time will tell what will happen if Peltz is successful in his quest for control of Disney's board.

Bob Iger and Disney's senior management have a big decision to make. Recent actions by activist investor Nelson Peltz have raised the question of how best to respond in order to ensure that creativity, growth, and stakeholder performance are maximized. It is clear that the Disney Board must vet Nelson’s facts and numbers to determine which are right or wrong. It is essential for the Board to engage with Nelson in order to reach a conclusion.?

Despite his reputation for being an aggressive activist investor, Nelson Peltz has had some success in spurring creative growth and enhancing shareholder value. This can be seen in his involvement with Motorola, where he was able to drive up share prices over time by pushing for cost-cutting measures, improved product design and marketing strategies, as well as greater focus on innovation. He also played a major role in the company's spinoff of its mobile phone business into what became known as Motorola Mobility.?

It is essential for Bob Iger and Disney's senior management team to understand that engaging with activists such as Nelson Peltz can be beneficial, not just for them but also for shareholders who may be looking for positive returns on their investments. Indeed, it is important that all ideas are welcomed, regardless of their source, and vetted towards driving long-term value. If done properly, this engagement could lead to innovative new initiatives that could benefit both shareholders and customers alike.?

However, it should not be assumed that every one of Nelson’s ideas will necessarily prove successful or increase shareholder value—it is important that every idea is assessed objectively before any decisions are made. To do this effectively requires an open dialogue between all parties involved so they can come together to build a plan that meets everyone’s needs while still remaining focused on long-term value creation.?Furthermore, egos must remain at bay throughout the process; everything should ultimately be about reaching the common goal of creating maximum value for all stakeholders involved.??

Nelson Peltz's push to join the Disney board is premature. Bob Iger needs time to correct numerous problems created the past 2 years by Bob Chapek & refocus Disney's strategy on creativity and leveraging Fox acquisition. - Bill George

Conclusion:

Engaging with activist investors such as Nelson Peltz can be a tricky proposition—but when done correctly it can pay dividends both financially and creatively.?We will have to wait and see what happens next in this story. Bob Iger and Disney's senior management team must take a proactive approach to understanding how best to leverage the expertise of someone like Peltz without compromising their own vision or agenda; this requires an open dialogue between all parties involved so they can come together and create a plan that meets everyone’s needs while remaining focused on long-term value creation. Ultimately, if done correctly this engagement could lead to innovative new initiatives that could benefit both shareholders and customers alike while helping drive future growth at Disney Corporation.

3. BOOK RECOMMENDATION: Win When They Say You Won't: Break Through Barriers and Keep Leveling Up Your Success?

Have you ever met the requirements for a promotion, but still felt as if you weren’t qualified enough to take on the new role? Has a male colleague ever repeated what you just said in a meeting and received positive feedback as if he said it first? Has anyone ever implied that you should be less confident and direct, and more “likeable”? These experiences of disempowerment are all too common in the workplace. But don’t let them stop you. Innovation thought leader and former Fortune 50 executive Daphne E. Jones has developed an actionable system for overcoming imposter syndrome, negativity, and building the career of your dreams―and now she shares her winning approach with leaders everywhere. In her book, Win When They Say You Won’t, Jones walks readers through the process of taking control of their careers.?

Win When They Say You Won’t gives readers access to proven strategies for overcoming imposter syndrome and succeeding despite external negativity or self-doubt. From learning how to challenge negative thoughts head-on to finding mentors who will support your aspirations, this book provides an actionable system for taking control of your career path so you can build a professional life on your own terms―the way Daphne E Jones did before you! So don't give up - pick up this book today! It could be just what you need to get out of any rut that's holding you back!

If you enjoyed my book recommendation, here are my book recommendations?LinkedIn?article -Top Must-Read Books for Boards and C-suite -2022

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ABOUT KHWAJA SHAIK

KHWAJA SHAIK?is the award-winning C-level Global IT Executive with 25+ years of technology, industry, and board leadership with?GE,?IBM,?Bank of America?&?PwC. He was recognized globally for turning visionary thinking into breakthrough growth.?As one of?IBM’s CTOs, Khwaja counsels CEOs, Boards, and Startups on corporate strategy, digital transformation, AI, Cybersecurity, ESG, and culture shifts to unlock performance.

Using his innovative mindset, he saved $1.1 billion per year for Bank of America by transforming the Global IT Operating model and future-proofed business by mitigating risk and infusing new?fintech. Khwaja has 20 years of experience in the highly?regulated banking and financial services?industry.?

In addition, as a Big5 thought leader at?PwC, he incubated new businesses, reshaped business and?platform operating models— digitized end-to-end business processes to capture value, and protected firms from?cyberattacks?through AI & the cloud.

Khwaja has a history of leading over $10B digital business transformations by scaling Agile practices for cost optimization, revenue-generation, and societal transformation imperatives. It includes digital business optimization and using digital business models to capture profitable growth, customer lifetime value & competitive advantage to Fortune 500 firms.

Khwaja transformed the Omnichannel customer experience by delivering world's largest next-gen Contact Center platform as part of BAC's M&A (CFC, MBNA, Fleet etc.) by replacing aging telephony system with VoIP. Contact Center platform serves 1 billion calls, 500K interactions annually and 300 million outbound calls annually to support multichannel strategy

In 2016, Khwaja was among the most exceptional IBMers appointed with the rare distinction of IBM Academy of Technology member. In 2020, Khwaja was recognized as IBM’s senior inventor and top 100 technical leaders driving technology ethics and data stewardship, providing the direction of IBM on societal transformation with responsible innovation that matters.

Service to others has been a part of Khwaja’s purpose. Khwaja promotes economic equity, social responsibility, diversity, and inclusion for the prosperity of all -the reinvention of education through innovative programs such as Open P-TECH. Due to his holistic stakeholder engagement in the industry, partner ecosystem, and?community, Khwaja received several service awards from IBM, Bank of America, University of North Florida, Indo US Chamber of Commerce of Northeast Florida, and 2022 ORBIE Awards FloridaCIO Finalist.

Khwaja serves on the boards of directors of the?Museum of Science & History, UNF School of?Computing Advisory Board,?TECt,?MIT?CIO Forum,?Interfaith Center of Northeast Florida,?and McKinsey Executive Panel.

Khwaja regularly writes on?LinkedIn,?Twitter?and regularly?interviewed?for?industry insights?or cited in the?news,?Thought Leadership POVs. He is a frequent international speaker at elite universities, including IIT Hyderabad, CIO IT & Security Forum, MHI Supply Chain Conference, and JAX Chamber IT Council.

Khwaja is a Fellow of?Herndon Directors Institute, sponsored by?Nasdaq?and?Atlanta Life Insurance Company. Khwaja holds an MBA and a bachelor’s degree in Engineering. Khwaja lived on three continents, experienced three different cultures, reads too much, doesn’t do enough gardening, married for over 22 years, and has two boys.

?More details on Khwaja’s career and thought leadership activities could be found via?Linkedin,?Khwajashaik.com?or follow him on Twitter @Khwaja_Shaik

"The postings on this site are my own and don't necessarily represent IBM's positions, strategies, or opinions."