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The Success of Southwest by Robert Morris

Business Nugget #2

Rollin King and Herb Kelleher co-founded Air Southwest Company in 1967 as an interstate airline, linking Dallas, Houston, and San Antonio. By all standards of measurement, its origin was humble and its prospects were dim (if not grim). It was a classic start-up. In recent years, however, Southwest has been consistently ranked among the "most highly respected" as well as the most profitable of companies. Today there are (on average) 2,500 applicants for each available position in the company. Why has Southwest enjoyed such great success?

In The Journal of Lending & Credit Risk Management (May/June 1998), there is an article based on Herb Kelleher's presentation at the Risk Management Association's annual conference. Here is an excerpt:

"Maintaining excellent customer services involves a process of getting people to understand the importance of it to them in their daily lives as well as in others'. We were a little concerned as we got bigger that maybe some of our early culture might be lost so we set up a culture committee whose only purpose is to keep the Southwest Airlines culture alive. Before people knew how to make fire, there was a fire watcher. Cave dwellers may have found a tree hit by lightning and brought fire back to the cave. Somebody had to make sure it kept going because if it went out, there was was the most important person in the tribe. I said to our culture committee, "You are our fire watchers, who make sure the fire does not go out. I think you are the most important committee at Southwest Airlines.'

I really do believe that to be the case. We have people come in from all over the world who are interested in our culture because they see it in the customer service aspect of it.

"Southwest Airlines had 162 companies at our last corporate day [open house], which we have twice a year. We started them off that day with the Macarena and they were all wondering, 'Hmm....I was looking for E=MC2 and I'm getting the Macarena.' But a fellow from Swiss Air was interviewed when he left and was asked, 'What'ssaid 'For everybody to learn to do the Macarena.' Everybody's looking for a single Big Answer, an easy answer such as 'We'll communicate for six months, then get on with something else that's more important.' I keep telling them that the intangibles are far more important than the tangibles in the competitive world because, obviously, you can replicate the tangibles. You can get the same airplane. You can get the same ticket counters. You can get the same computers. But the hardest thing for a competitor to match is your culture and the spirit of your people and their focus on customer service because that isn't something you can do overnight and it isn't something you can do without a great deal of attention every day in a thousand different ways. That is why I say that our employees are our competitive protection."

Who are the "fire watchers" in your company? (Ideally, everyone.) Which "intangibles" at your company must be protected? How effective are your combined efforts to keep the "fire" alive? Kelleher indeed raises important questions. You are urged to read Nuts!: Southwest Airline's Crazy Recipe for Business and Personal Success, published by Bantam Doubleday Dell and co-authored by Freiberg, Freiberg, and Peters.