Lessons from a management legend
Credit to Author: BEN KRITZ, TMT| Date: Mon, 07 Jan 2019 16:25:22 +0000
WHEN Southwest Airlines’ iconic co-founder Herb Kelleher died at the age of 87 last week, he left behind a legacy nothing short of revolutionary. Kelleher transformed the airline business so profoundly he actually created an entirely new industry, and he did it by standing most conventional management science on its head.
In a complex, highly competitive, and highly regulated industry where success is more likely than failure, Southwest’s performance record is astonishing. Launched in 1971 in Dallas, Texas, Southwest is the world’s largest low-cost carrier, the fourth-largest airline of any type by fleet size, and the largest domestic airline by passengers carried in the United States. In 47 years of operations, the airline has never had a strike or been forced to furlough or lay off any workers, and has been profitable for 45 years in a row.
And despite its fleet size and high frequency of flights, Southwest is also one of the world’s safest airlines. In all its years of operation, it has only suffered eight accidents, only two of which resulted in an aircraft being written off, and only three passenger deaths.
By doing everything the conventional airline business model considered wrong, Kelleher created the “low-cost carrier,” a model that has been imitated all over the world. Familiar examples such as
America’s JetBlue, Europe’s Ryanair, Australia’s JetStar, and, closer to home, AirAsia and Cebu Pacific all owe their existence to the success of Southwest Airlines.
Southwest Airlines in turn owes its success to two complementary factors. Volumes have been written about the company’s unique organizational culture, especially in the wake of Kelleher’s death, since Southwest’s personality as a company is substantially Kelleher’s own larger-than-life personality writ even larger. To describe it as simply as possible, Southwest takes an employee-centric approach. Kelleher explained the perspective frequently: Focusing on keeping the workforce happy means they become emotionally invested in the company and their jobs, which leads to better customer service and happier customers, which leads to financial success and happy shareholders.
The proof of the approach is in Southwest’s performance, not only in strong financial results, but in consistently having one of the best customer satisfaction ratings in the industry. That is all the more remarkable considering what the customer experience actually is; traveling on Southwest is not much different than taking the bus, except that the vehicle flies.
Southwest’s operational model is the second key to its success, and one that does not get nearly as much attention as the human side of the equation. Everything about Southwest’s operations is
designed for maximum efficiency at the lowest cost. It is the largest airline in the world to operate a single aircraft type – the Boeing 737, of which the airline has more than 750. The planes have a single class of seating. This greatly simplifies maintenance and handling, and keeps crew requirements to a minimum; each flight is staffed by just five crew, two pilots and three flight attendants.
Because of the uniformity of the fleet and the minimal servicing requirements for each flight, Southwest ground crews can turn around flights faster than any other airline; each Southwest plane in operation makes an average of six flights per day.
Costs are also kept low by eliminating almost all frills from customer service. The entire reservation and ticketing system is online. Along with having a single class, Southwest also utilizes open seating; although a system is used to keep some order at the gate and board passengers in batches, seating is essentially on a first-come, first-served basis. To make sure it works, the airline adheres to a policy of not overbooking flights. Only light snacks – peanuts or biscuits – and drinks are served on board, and extra services are almost nonexistent, although Southwest has started equipping its planes with Wi-Fi in recent years.
In terms of its network, Southwest uses a point-to-point rather than the hub-and-spoke model that was long thought to be more cost-effective. Although it does serve major airports, the majority of its destinations (about 100 total at the end of last year) are secondary airports and second-tier cities, where landing and gate fees are less. So for example, flights to San Francisco use Oakland International Airport; flights to Chicago land at the older Midway Airport rather than O’Hare. In addition, virtually no Southwest aircraft operates a route with fewer than three stops, and many have four or five.
Southwest’s success, and in a sense, the global success of the low-cost carrier model, can all be credited to Herb Kelleher. Men and women who go on to build successful businesses are born every day. Ones that transform an entire industry and reshape transportation for the entire world are rare, and the lessons they leave behind are worth studying.
Email:ben.kritz@manilatimes.net
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