Lufthansa’s Transformation Marathon: Process of Liberating and Focusing Change Energy • 249

LUFTHANSA’S TRANSFORMATION MARATHON:

PROCESS OF LIBERATING AND FOCUSING
CHANGE ENERGY

Heike Bruch and Thomas Sattelberger

Transformations often fail to activate the energy of those whose creativity and action are needed
to realize fundamental change. In 1991 Lufthansa was almost bankrupt. Today it has become
one of the world’s most profitable airline companies and a founding member of the STAR ALLI-
ANCE, aspiring to become the world’s leading aviation group. Lufthansa has undergone a fun-
damental ongoing change—its approach relies on people. Core elements of this strategy involve
providing space for reflection and dialogue despite the crisis pressure, building networks of change
actors and creating durable platforms for emotional mobilization and reflection on action.
© 2001 John Wiley & Sons, Inc.

Introduction bottom into the open. As a result, no matter

The French World War II pilot and writer,
Antoine de Saint-Exupéry, coined a striking
metaphor: “If you want to build a ship, don’t
drum up the men to go to the forest to gather
wood, saw it, and nail the planks together.
Instead, teach them the desire for the sea”.
Failures of change processes are due to
a lack of exactly these mobilizing attitudes
towards change and to overemphasizing the
virtues of pure execution skills. For example,
Duck (1993) points to a lack of awareness
of the validity of emotions and feelings and
also of the importance of symbolic messages
in change processes. She also emphasizes
the relevance of individual and corporate
change history and (often traumatic) expe-
riences with military-style, top-down change
initiatives in corporations which bring the
hidden separation between top, middle, and
how good the new design might be, it doesn’t
produce the planned results (Duck, 1993).
Similarly Beer and Eisenstat (2000) argue
Failures of
that a central, silent killer of many change change processes
processes is top-down or laissez-faire senior are due to a lack
management style. of mobilizing
Trying to control the noncontrollable in attitudes towards
change programs is a formula for disaster. change and to
overemphasizing
Overemphasis on controlling the noncontrol-
the virtues of
lable fails to activate the energy of others pure execution
whose potential for creativity and action is skills.
needed to realize radical change. Instead, such
change programs rely on the force of a top-
down change and the power of a single potent
leader. In strategic transformation processes
in particular, this approach turns out to be
scarcely realistic, perhaps even critical or ir-
responsible. As Kanter, Stein, and Jick (1992,
p. 492) explain: “Leaders engage in two types
of actions ...which can be called ‘bold strokes’

Human Resource Management, Fall 2001, Vol. 40, No. 3, Pp. 249–259
© 2001 John Wiley & Sons, Inc.
250 • HUMAN RESOURCE MANAGEMENT, Fall 2001
and ‘long marches’. These two action streams
are very different in practice. Bold strokes can
be mandated largely by the executive actions
of one or a few people. ... On the other hand,
long marches require the personal support of
many people and cannot be mandated in prac-
tice.” In contrast to superficial, short-term
interventions, successful radical change usu-
ally implies long marches (Kotter, 1995). Thus,
the question of what the potential for action
of many leaders constitutes and how it can be
activated is vital for sustainable change. Ef-
fective change managers recognize their
limited power to mandate corporate renewal
from the top. Instead, they invest in winning
others for the change and give them scope to
discover and find the right paths themselves
(e.g., Kotter, 1995; Tushman and O’Reilly,
1996). They define their own roles as creat-
ing a climate of change, specifying the general
direction of a company’s development with-
Lufthansa had out insisting on specific solutions (Beer,
undergone Eisenstat & Spector, 1990).
massive and This approach to change relies on people;
radical change.
it counts on their trust, active support, and
integrity. Human Resource Management plays
a vital role in liberating their intellectual and
emotional resources and in focusing them on
strategically coordinated change actions.
Lufthansa’s management of its ongoing
change process illustrates ways and means of
catalyzing action potential through a flexible
interplay of strategic acts, leadership at all
hierarchical levels, and proactive Human Re-
source Management.
Lufthansa’s Way—Dimensions of a
Sustainable Reorientation
In 1991, Lufthansa was almost bankrupt
(Bruch & Ghoshal, 2000). Eight years later,
at the company’s Annual General Meeting on
June 16, 1999 Jürgen Weber (CEO) an-
nounced the best results in Lufthansa’s more
than 70-year history. In eight years, the com-
pany had gone from the brink of bankruptcy
to becoming one of the world’s most profit-
able airline companies and a founding member
of the STAR ALLIANCE, which aspired to
become the world’s leading aviation group.
Lufthansa had undergone massive and
radical change. After the first step of the turn-
around (i.e., making operations more effi-
cient), it was apparent that transformation had
only just begun and that a much more funda-
mental change had to follow to assure the
company’s future. The Lufthansa Executive
Board (Vorstand) and the Supervisory Board
(Aufsichtsrat) decided to follow a concept of
sustaining renewal at four levels: operational,
structural, strategic and mental. To date, none
of these processes has been completed. In fact,
maintaining the change momentum is seen
as the key management challenge.
Operational Turnaround: Fight for Survival
1992–1994 and HR’s Contribution
In 1991, Lufthansa reported an after-tax loss
of more than $250 million (US). Although
awareness of a serious crisis began to spread
early in 1992, being a state-owned company,
immortality was taken for granted. The se-
verity of the crisis was shown by the fact
that in mid-1992, with only 14 days of op-
erating cash requirements in hand, Jürgen
Weber went to all the major German banks
asking them for money to pay employee sala-
ries. No commercial bank believed in
Lufthansa’s survival: only a single state-
owned institution—the Kreditanstalt für
Wiederaufbau (Reconstruction Loan Corpo-
ration)—agreed to give Lufthansa the money
it needed to pay its people.
The mental starting point of the turn-
around was a Lufthansa-specific, four-week
change management program which HR
management initiated. It took place at a re-
nowned business school, which at the same
time was also the birthplace of a group called
“Samurai of Change”. The members of this
group discussed the results of their rapid
learning with Jürgen Weber and convinced
him of the urgency of a widespread and large-
scale redevelopment process. This was the
symbolic start of a bottom-up and top-down
change process.
As a result, over a weekend in June 1992
Weber invited about 20 well-selected senior
managers to Lufthansa’s training center at
Seeheim for a meeting that was originally en-
titled “Mental Change”. It was aimed at
building a network of change-minded manag-
ers who would drive the change process within
 Lufthansa’s Transformation Marathon: Process of Liberating and Focusing Change Energy
the company. Shortly before the workshop
Weber got an even deeper insight into the
acuteness of the crisis and changed the title
from “Mental Change” to “Crisis Management
Meeting”. The turnaround began.
The output of the Seeheim meetings was
“Program 93”—a set of 131 projects or key
actions involving drastic cuts in staff numbers
(8,000 jobs), lower nonwage costs, including
downsizing the fleet (about $250 million US),
and increasing revenues (about $400 million
US) in order to reduce the losses of about $800
million US.
The Executive Board appointed teams that
had the task of implementing the 131 projects.
The teams were headed mostly by members
of the “Samurai of Change” who had devel-
oped strong internal cohesion and high
visibility. The most forceful group was the so-
called OPS Team (Operations Team). It
became an important engine of the implemen-
tation. The OPS Team put in enormous effort
and succeeded in driving the Program 93 ini-
tiatives into action by defining concrete
activities and by constantly monitoring, advis-
ing, and supporting the line managers who had
the ultimate responsibility for implementation.
In total, about 70% of the 131 projects-
including short-term cost-cutting such as
reduction of staff and stationing aircraft in the
desert, as well as strategic cost savings,
privatization, and fundamental restructuring-
was successfully implemented during the
turnaround. The remaining 30% covered such
subjects as outsourcing, building of close stra-
tegic partnerships (including joint purchase,
HR policy, and marketing in alliance systems),
as well as development towards an aviation
group. Since these projects addressed long-
term, critical, stakeholders’ interests, they were
launched later; and implementation was still
under way in 2000. Top management inten-
tionally did not insist on rapid implementation
of the remaining 30% in order not to risk con-
sensus with the works councils (unions).
HR management provided intensive
backup for implementation of the staff cuts,
supporting the responsible line management.
For the success of Program 93, it was impor-
tant that line managers were both willing to
implement the unavoidable cuts and to moti-
vate the remaining employees in addition to
• 251
supporting the efforts of HR management. The
latter provided consulting and developed ini-
tiatives of soft rationalization (i.e., no mass
dismissal but instead early retirements, job
sharing, etc.), as well as of mobilization to
support line management.
In November 1993, 18 months after the
crisis staff meeting, the first effects of the ef-
fort were noticeable. Lufthansa was aware,
however, that the superficial recovery could
not guarantee sustainable success and that
more fundamental change had to follow.
Structural Change: Corporate Restructuring
and Privatization 1994–1997
At the beginning of the 1990s, Lufthansa was
functionally organized with six divisions (fi-
nance, personnel, maintenance, sales, market-
ing, and flight operations), each headed by a
member of the Executive Board. This struc-
tural solution turned out to be inefficient,
showing symptoms such as high involvement
of top management in operational problems, In total, about
70% of the 131
slow decision processes, lack of accountabil-
projects-
ity, low transparency, and, finally, insufficient including
nearness to the market. short-term cost-
Lufthansa realized that with its existing cutting such as
functional structure it could not respond ef- reduction of staff
fectively to the emerging competitive and stationing
aircraft in the
challenges. Thus, three business sectors desert, as well as
were formally separated as legally autono- strategic cost
mous and economically independent savings,
subsidiaries: LH Cargo AG (airfreight), LH privatization,
Technik AG (technical maintenance ser- and fundamental
restructuring-
vice), and LH Systems GmbH (IT Services). was successfully
These joined the existing subsidiaries implemented
CityLine (regional flights), Condor (charter during the
flights), and LSG Sky Chefs (catering). turnaround.
At the outset of the turnaround, Lufthansa
also had embarked on negotiations with the
German government to privatize the company.
One important stumbling block for
privatization with which HR management had
to struggle was replacing the pension fund
“VBL” (VBL—Versorgungsanstalt des Bundes
und der Länder) binding Lufthansa to the
German state. It was extremely difficult to
untie these “golden chains”.
There were many discussions about VBL and
it was quite obvious that it was almost im-
252 • HUMAN RESOURCE MANAGEMENT, Fall 2001
possible to get out of these obligations. If
someone had asked, 80% would have said
“You will never achieve this!” But we made
it. (Jochen Hoffmann, then Senior Vice
President Personnel and Labor Relations,
Deutsche Lufthansa AG)
In May 1994, the problem of the pension
fund was resolved. By 1997, Lufthansa had
in a series of steps become fully privatized.
Strategic Change I: Cost Leadership Through
Sustainable Cost Savings 1996–2000
As a private company, Lufthansa came under
full pressure to be competitive and cost-effec-
tive. As a strategic solution, the company con-
tinued its transformation process and started
“Program 15”.1 This is a far-reaching strate-
gic costs management program aimed at an
overall unit cost reduction of 20% within five
years (a 4% annual reduction across the
As a private
Lufthansa Group). It is based on the need to
company, maintain the course of cost reduction strate-
Lufthansa came gically and derived from the conviction that
under full cutting costs by 20% is easier to achieve than
pressure to be cutting costs by 2%. All Lufthansa departments
competitive and
and companies were affected.
cost-effective.
Program 15 is based on integrated re-
sponsibility of line managers which means
that the planned yearly results of the pro-
gram are integrated in their “normal”
management objectives and are part of their
performance evaluations.
The program is based on certain principles
which were applied with vigor, making use of
the experiences of the turnaround:
The game rules for the Program 15 Task
Force
• We do confront contentious issues.
• We prefer facts not prejudices.
• We do what we say.
• We allow ourselves be monitored
whenever required.
• We report continuously and on time.
• We inform managers, employees and
their representatives before telling the
external public.
• We utilize peer groups, informal net-
works for interdepartmental and hi-
erarchy-overlapping problem-solving.
• We try to avoid jargon and overesti-
mating what we can achieve.
To maintain discipline and attention to
strategic costs goals, the Program 15 Task
Force initiated a number of both symbolic and
substantive measures. These included, for ex-
ample, locating its office next to the office of
Jürgen Weber, discussions of costs reduction
measures in Town Meetings, weekly reports
in “Lufthanseat” (the staff journal), and wide-
spread publicity for a few and impressive
success stories.
Strategic Change II: Alliance Building—The
STAR ALLIANCE 1997—Ongoing
While focusing on internal costs and struc-
tural redevelopment, Lufthansa also con-
stantly worked on its external relationships.
Having experienced extreme overcapacities by
following the philosophy of “growth through
own strength”, it decided to choose an alter-
native strategy: “growth through partnerships”.
Lufthansa is one of the originating mem-
bers of the most comprehensive and
probably the most competitive airline net-
work in the world–STAR ALLIANCE. Since
summer 2000, the network has included 15
members operating services to 830 destina-
tions in 130 countries.
At the beginning of the 21st century, the
economic structure of the airline industry
is changing from competition between air-
lines to competition between networks. As
a result, airline networks are striving to in-
tensify integration and common alliance
strategies. In this regard, the biggest chal-
lenge STAR ALLIANCE currently faces is
to sustain its leading position and expand
market leadership through integrated net-
work management and seamless global travel
in a new phase of intensifying competition
among the rival networks.
Beyond traditionally important operational
synergies, STAR ALLIANCE began to ap-
proach the much more demanding challenges
of coordinating and integrating strategic ac-
tivities such as establishing a common global
umbrella brand, developing a shared technol-
ogy platform, providing joint training, and
 Lufthansa’s Transformation Marathon: Process of Liberating and Focusing Change Energy
ensuring HR development. While the operat-
ing synergies were able to be managed by ad
hoc teams and task forces, effective coordi-
nation of these strategic issues required an
integrated management structure for the over-
all alliance, as well as a systematic process for
coordinating the internal strategic activities
of all the partners. HR management is not only
affected by the integration process but has
proactively supported it for several years. Be-
sides preparing Lufthansa members for the
integration, for example, by rotation programs,
training in intercultural management, and the
organization of joint workshops and seminars
with other STAR ALLIANCE members, HR
management also speeds up everyday integra-
tion. An example that illustrates the nature
and extent of this support is the Landlord
Concept introduced within the STAR ALLI-
ANCE in 1997. Aimed at developing a
common ground service (ticketing and check-
in), 27 key hubs were identified worldwide to
start this integration process of sharing air-
port facilities and services under one roof. At
each station, one carrier was appointed “land-
lord” and given the responsibility for airport
services such as check-in and ticketing for all
the other STAR ALLIANCE members. Since
the other airlines did not retain any activity in
these hubs, the program implied a takeover
of the entire staff of all the other partner air-
lines by the “landlord” airline. For example,
in November 1997 all the former Lufthansa
employees at Copenhagen were transferred to
SAS, while Lufthansa integrated all the SAS
employees in Frankfurt. These integration
processes are now facilitated increasingly by
an organizational development activity called
“Star Shaper”.
In December 1998, the STAR ALLIANCE
airlines formed a focused management team
including HR to lead the alliance on a day-to-
day basis, but all this could only be undertaken
by a joint understanding not only in the STAR
management team but by all company members.
Another vital question was how such
close integration within the alliance would
affect the other Lufthansa companies. A com-
mon network strategy and cultural
integration were inevitably connected to criti-
cal issues concerning branding or identity
within the Lufthansa Group.
• 253
Strategic Change III: Development Towards
an Aviation Group
Simultaneously with the STAR ALLIANCE
integration process, Lufthansa aimed to evolve
further from a pure airline company into an
aviation group. The explicit goal was to be-
come the world’s leading provider of air trans-
port services. To realize its intention, in 1994–
1995 Lufthansa chose to build and develop a
federative network based on internal
outsourcing, whereas other airlines pursued a
lean strategy of external outsourcing.
Lufthansa’s way was more or less unique.
No other airline follows an Aviation Group
strategy as consistently as Lufthansa does.
(Jürgen Weber, Chairman and CEO)
Lufthansa identified seven major business
areas in the Group and centrally coordinates
their strategy development process. Each of the
seven main companies is supposed to aim at
achieving profitable, sustainable growth, and a Simultaneously
leading position in its world market segment. with the STAR
ALLIANCE
In terms of their competitive positions, most of
integration
their business areas were already in leadership process,
roles. Nevertheless, their strategies for growth Lufthansa aimed
and globalization vary significantly. Differences to evolve further
can also be seen in their relationships to the from a pure
airline company
brand “Lufthansa”, which again is coupled with
into an aviation
high requirements concerning the ability and group.
readiness to work and learn together.
So Lufthansa went through a cycle from
strategic and mental arrogance to a process of
devolution and simplification and finally to-
wards reintegration.
Mental Change: Liberation and Emotional
Mobilization as Its Core
Concentration on costs, structures, and strat-
egies is only half the story. Lufthansa was and
is aware that sustainable change depends cru-
cially on mobilizing and developing invisible
drivers of processes in organizations which can
mobilize either resistance or liberate construc-
tive energy for the process.
Emotional mobilization and liberation are
the second side of Lufthansa’s success and are
characteristic of the change process.
254 • HUMAN RESOURCE MANAGEMENT, Fall 2001
FIGURE 1. Iceberg of Change—Levels of Liberation and Mobilization.
In the turnaround we have consciously tried
to win the commitment of the people
through workshops, Town Meetings etc.
With everything I do, I try to demonstrate
that at first we have to reach the emotional
mobilization before a rational mobilization
becomes possible at all. Briefly one could
say: Hard success through soft processes.
(Dr. Heiko Lange, until summer 2000 mem-
ber of the Executive Board in charge of HR)
Building Emotional Change Networks. The
starting point of Program 93 was the already-
mentioned “management of change” program.
The program triggered the emotional activa-
tion of a group of managers that later turned
out to be a strong network of leading change
actors and major drivers of the process.
No one had an idea of the gravity and the
brutality of the crisis. After a long phase of
denial or “not wanting to believe”, there was
a next phase of “searching for the guilty
people”, which was followed by a conscious-
ness that there was a massive pressure to act.
After this, everything went very fast. The goals
we committed ourselves to at Seeheim were
very ambitious and nobody believed that we
could ever meet them, but after this process
we committed ourselves to them. The criti-
cal question was how to win over other man-
agers and employees for these “stretching”
goals and activities. (Wolfgang Mayrhuber,
former OPS-Team member, now member of
the Executive Board in charge of Airlines).
One way to involve a larger group of manag-
ers was to repeat the Seeheim workshop three
times with different groups of 50 people each.
This was done in order to let them live through
their own process, let them feel the threat and
the urgency, and not simply inform them of the
facts and the appropriate strategy which they had
to implement. After the meetings the majority of
senior managers within the company was con-
vinced of the necessity for drastic change and
committed to a set of extremely ambitious goals.
As a part of this process, HR management
initiated and accelerated Lufthansa’s idea to
establish teams that were to act as networks
of change agents in the company.
We are aware that active individuals had to
drive the different projects of the change pro-
cess. Therefore we developed them deliber-
ately and linked them with the others. The
net lives through its drivers who—spread in
the whole company—take care of what has
to be done and where the relevant levers are.
(Dr. Heiko Lange, until summer 2000 mem-
ber of the Executive Board in charge of HR)
These networks served as multipliers and
implementers of new ideas and change
projects. By means of deliberate support, many
formal and informal groups emerged which
were actively involved in the change process.
Trust Relationships with Staff Representatives.
During the hard phases of the change, employ-
ees were not treated as passive “victims” of the
 Lufthansa’s Transformation Marathon: Process of Liberating and Focusing Change Energy
process, but as “doers”—actively involved form-
ers of the renewal-although deep staff and wage
cuts were inevitable. Most important about
these reductions was the way they were made,
namely in a socially acceptable manner. Long
and intensive building of a consensus policy
with work councils (unions) played an impor-
tant role in this process. Besides the exemplary
behavior of Jürgen Weber, many different
“small” acts of HR management contributed
to the—at first contraintuitive—building of
partnerships with staff representatives. A cen-
tral element in this trust-building process was
the formation of so-called “structure groups”.
These are a communication platform where
three members of top management and three
staff representatives met every two weeks for
three hours to coordinate all the steps of a spe-
cific change activity and to monitor progress.
The structure groups were a symbol of security
and trust. Initially the work councils mistrusted
the Seeheim plan which included cutting staff
costs by one-third and assumed that the Ex-
ecutive Board would exceed the agreed propor-
tion of staff reductions. The structure groups
contributed to allaying this suspicion by both
ensuring transparency of the implementation
of the change strategy and by symbolic
acknowledgement of the importance of work
representatives in the process. Over time, and
by a continuous input of management effort
the trade unions’ initial reservations turned into
a responsible commitment to a joint challenge.
All this happened in an industry known for its
continual labor disputes and tensions.
One of the results was close collaboration
with the unions, which led, for example, to
wage agreements that were unparalleled for
the German wage policy of those days.
During this time a collective loyalty emerged
which made it possible to achieve signifi-
cant wage concessions in our agreements
with the unions. This was extraordinary for
the German wage policy in those days and,
therefore, a very important contribution to
Lufthansa’s turnaround process. (Dr. Heiko
Lange, until summer 2000 member of the
Executive Board in charge of HR)
The Lufthansa way of negotiating with
trade unions is exemplary for relationships
• 255
based on trust which were developed and
strengthened throughout the change.
Large Scale Direct Communication. Another
essential soft fact was the way of communi-
cating-through large-scale direct and two-way The structure
interaction. The starting point of the broad groups were a
regular communication initiative during the symbol of
turnaround was Town Meetings. Lufthansa security and
deliberately underlined the importance of such trust.
communication methods and processes. Ev-
ery Board member and top manager went, and
still goes, more than a dozen times per year
on-site to seek direct dialogue and clearance
for action. Town Meetings were—and are—
an important forum where employees are
made aware that their ideas are relevant for
change and that they are asked to participate
actively in this change process.
HR management contributed by adding
further strategic communication forums of the
top management such as the Top 50 Confer-
ence and the Top Forum and mass
communication forums such as Open-Space
Events and “Learning Maps” (see Figure 2).
These supported the multiplication of dialogue
in the magnitude of tens of thousands. In
Learning Map sessions, for example, more
than 12,000 Lufthansa employees worked in
teams of 10 to bring up hot issues in a struc-
tured one-day event. The results of the
Learning Maps were presented to top man-
agement and followed up by action.
This is one issue illustrating that due to
the crisis Lufthansa has gained experience and
competence in dealing with change and has
developed a differentiated and yet flexible sys-
tem of activating change energy and
channeling it toward concrete strategy-derived
actions. One challenge now is how to main-
tain these attitudes during good times.
Present and Future Challenges: Maintaining
the Change Momentum
One of the major challenges which Lufthansa
is currently facing is “Maintaining the change
momentum” (Bruch & Ghoshal, 2000). How
can Lufthansa maintain awareness of the cri-
ses and openness for change? How can it re-
tain its learning from the crises? How can it
prevent organizational inertia?
256 • HUMAN RESOURCE MANAGEMENT, Fall 2001
FIGURE 2. Portfolio of Communication Activities.
As during the transformation, an awareness
of the pivotal role of HR has emerged. A key
way of maintaining the change momentum was
to strengthen the Lufthansa School of Busi-
ness, founded in 1998, as the first corporate
university in Germany. Its central ideas are to:
• keep the “sense of urgency” for change
and transformation alive
• form a cultural and knowledge plat-
form for the Lufthansa Group
• drive individual and organizational
learning and experience along the stra-
tegic core processes
Thus, the school’s philosophy and activi-
ties go far beyond traditional approaches of
training and development.
This is illustrated, for example, by ini-
tiatives such as huge transformation and
change networks: the “Explorers 21” net-
work and the Climb 99 initiative.
Characteristic of and notable about these
large-scale programs are their specific com-
position and setting. Individual learning and
network-building processes are linked di-
rectly to strategic development and changes
in business practice.
Maintaining Change Momentum Developing
up to 1,000 Change Agents
“Explorers 21” challenges selected young pro-
fessionals to become change leaders early in
their careers. Each initiative involves 210 Ex-
plorers. The “Climb 99” initiative is an action-
learning and best-practice network of 160 ex-
perienced managers around the world.
The overall goals of these programs in-
clude:
• initiating and fostering mental change
• creating transformation platforms in
critical scale and range
• delivering significant contribution for
putting leadership into action
• producing visible business results
• offering self-assessment and bench-
marks
• forming knowledge and change net-
works within and across Lufthansa
businesses
Both programs start with self-assessment
based on Lufthansa’s leadership tools such as the
Lufthansa Leadership Compass and the
Lufthansa 360° Leadership Feedback. During the
programs, participants visit excellent companies
around the world to explore their areas of excel-
lence and develop business recommendations for
Lufthansa. At various times, all network mem-
bers come together in congresses with Lufthansa’s
top management to discuss findings and recom-
mendations and make concrete goal agreements
and action plans. Benchmarking, dialogues and
problem solving are self-regulated.
Jürgen Weber assesses the value of the
Lufthansa School of Business for the entire
Lufthansa Group in these words:
Our business requires a global mindset and
networking capabilities across borders.
 Lufthansa’s Transformation Marathon: Process of Liberating and Focusing Change Energy
These capabilities can’t be developed with
quick-fix solutions. Our Lufthansa School
of Business supports our business and stra-
tegic objectives. It creates value by build-
ing intellectual capital that is difficult for
others to imitate. (Jürgen Weber, Chairman
and CEO)
Seven Lufthansa Lessons about Change
Lesson 1: Relying on One’s Own Strengths in
Dealing with the Crisis
An important factor of success was relying
on own strengths in dealing with the crisis
instead of becoming dependent on external
consultants.
In Lufthansa’s transformation, consult-
ing proved to be supportive on a few selected
issues such as the initiation of the
turnaround’s outsourcing strategies or coach-
ing of certain top executives. The
management of the overall transformation
process, however, was a joint responsibility
of all Lufthansa management including the
whole HR Organization, not just the Execu-
tive Board. Thus, external consultants were
used for selected expert input only, while with
regard to the core of the change, Lufthansa
relied on its own strengths and assumed re-
sponsibility for the implementation.
Lesson 2: Providing Space for Reflection and
Dialogue Despite the Crisis Pressure
During the turnaround, Lufthansa devel-
oped a distinct style of involving people in
strategic business processes. Furthermore,
Town Meetings became a prototype of the
Lufthansa dialogue culture. Often, organi-
zations go in for hectic activity when crisis
is visible and palpable. Careful and
thoughtful discussion and reflection are
considered a waste of time. What counts is
“doing something fast”; not so at Lufthansa.
Jürgen Weber gave his management team
“time out”. The Seeheim top management
workshops permitted thinking, reflection,
and discussion that led to thoughtful ac-
tion rather than panicky action for action’s
sake. This pattern of “time out” was and is
repeated again and again in critical phases
• 257
of corporate development, such as in Pro-
gram 15 or today in evolving from an air-
line into an aviation group.
Lesson 3: Fostering Intensive Personal
Learning by Top Management
Intensive personal learning by top manage-
ment itself usually starts with the realization
that it is part of the problem. In the early … Lufthansa
years of transformation, Lufthansa’s Execu- consciously
tive Board engaged some outside counseling places emphasis
on the emotional
to mirror and confront top decision-makers mobilization and
(including themselves) with different reali- bonding of the
ties from outside the boardroom. If top man- change actors.
agement sees itself only as a “doctor” and not
also as a “patient”, the staircase is not cleaned
top-down.
Lesson 4: Building Networks of Change
Actors
Lufthansa’s change processes were driven and
managed decisively by strong networks of
change actors. As a result, the building of
change networks is a fixed element of a sys-
tematic, institutionalized renewal. In order to
maintain change momentum, Lufthansa con-
sciously places emphasis on the emotional
mobilization and bonding of the change ac-
tors. The feature of these action-learning net-
works is an emphasis on leadership, not on
being a follower.
Lesson 5: Creating Slack for Growth Despite
Crisis
Continuous investment in strategically im-
portant resources such as business growth,
skills, and leadership development played a
central role in Lufthansa’s turnaround. This
was not only because of its long-term return,
but even more importantly because of its im-
mediate symbolic effect as a “light at the end
of the tunnel”.
Thus, even in times of drastic cuts and
serious threats some redundancy or organi-
zational slack was maintained and some
innovations were made, such as Lufthansa’s
acquisition strategy in the catering business,
service initiatives for customer satisfaction,
and Frequent Flier innovations.
258 • HUMAN RESOURCE MANAGEMENT, Fall 2001

Lesson 6: Managing Intra- and played an important role in Lufthansa’s en-

Interorganizational Relationships and
Consensus
Creating sustainable relationships with various
internal and external stakeholder groups is an-
other important lesson drawn from Lufthansa’s
change. Intraorganizational relationship man-
agement was as decisive for the successful
change as was the interorganizational partner-
ships within the STAR ALLIANCE.
In particular, reconciliation with staff and
their representation is an oft-forgotten issue
in the competitive battle for success. Strong
relationships and mechanisms of consensus-
building were not merely a “nice-to-have”
policy but were essential for survival—through
a constructive consensus-oriented change.
Comparable mechanisms constitute the
strengths and competence for change of the
STAR ALLIANCE.
Lesson 7: Creating Durable Platforms for
Emotional Mobilization and Reflection on
Action
Mobilization of emotions and reflection
ergetic and yet coordinated change process.
In order to support these change-nurturing
mechanisms, clearly defined platforms are
needed to give these mental processes spe-
cific space. Besides the Lufthansa School
of Business, the second platform is the
Lufthansa Leadership Compass (a defined
set of company-specific competencies),
which guides career assessment and devel-
opment. The third platform is Lufthansa
High Performance Management, resulting
in “stretching” goals in the annual goal
agreement dialog and competitive, perfor-
mance-based compensation.
Summary
Implementation competencies not only in
the short term but also for a stable and sus-
tainable change need to be developed con-
tinuously and re-energized regularly. This
is a challenge which Lufthansa currently
faces-armed with initial experiences and
ideas on how to approach it but still with
some experiments and learning processes
to come.

HEIKE BRUCH became a Senior Research Fellow, Department of Strategic and Interna-
tional Management of the London Business School, United Kingdom in March 2001.
She is Lecturer in Leadership at the University of St. Gallen, Switzerland. During 1999
and 2000 she was a visiting scholar at the London Business School. Prior to that she
was Assistant Professor, Institute for Leadership and Human Resource Management,
University of St. Gallen. She received her Ph.D. in Social Sciences from the University
of Hanover.

THOMAS SATTELBERGER was appointed to the Board of Lufthansa German Airlines effec-
tive July 1, 1999. His responsibilities as Executive Vice President encompass product
management, ground services, customer service procedures, and cabin crews. Prior to
this position Thomas Sattelberger was Senior Vice President Human Resources, re-
sponsible for furthering the process of mental change within the Lufthansa Group as
well as recruitment, training and development, compensation, and the implementation
of strategic human resources policies. He also founded the Lufthansa School of Busi-
ness. Thomas Sattelberger joined Deutsche Lufthansa AG in 1994 after 20 years mana-
gerial experience in human resources and marketing in several divisions within the
Daimler-Chrysler Group (automotive engine manufacturing, aerospace).
 Lufthansa’s Transformation Marathon: Process of Liberating and Focusing Change Energy
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ENDNOTES
1. The number 15 stands for 15 pfennig per SKO
(the cost target for transporting one aircraft seat
one kilometer). Program 15 implies reducing its
costs from 17.7 pfennig in 1996 to 15 pfennig in
2001.