Thursday, April 19, 2012

It All Comes From Within

Over the years, Southwest Airlines has been successful in an industry characterized by failures and bankruptcy.  Many may attribute this success to Southwest’s brilliant business plan of identifying the customers you are most capable of serving as well as constantly striving to be the leading low cost option for flying. As previously mentioned, Southwest originally focused its business on providing short point-to-point flights to those who usually drive. However, in-order to persuade these customers from driving, Southwest had to provide a service that was cheap and also reliable. These flights had to be cheap enough that drivers would be willing to spend the extra money; and they needed to be reliable and fast, so commuters could quickly travel without spending the whole day at the airport waiting during long turn-around times. Wanting to have these characteristics is very different than actually having these characteristics. Every airline would want to be cheap, reliable, and fast; however, only Southwest has been able to. So what is it that separates Southwest from the rest? Why is Southwest so successful while everyone else is struggling?

The answer is culture. CULTURE. CULTURE. CULTURE. The greatest competitive advantage any  company can have, is one that can not be copied or stolen. A company may have an elaborate and complex inventory management system that leads to great profitability, but this system can eventually be copied or improved upon and then that company has lost its advantage. Southwest Airlines has a competitive advantage that can not be copied no matter how hard their competitors have tried and will continue to try in the future. As previously mentioned, this success stems from founder Herb Kelleher; and his actions and efforts have ingrained in Southwest a culture that emphasizes the importance of the employee. At Southwest, employees are seen as the airlines “first customers” and passengers as the second. There are many accounts of Herb Kelleher personifying Southwest’s concept of employees come first, such as the time when he learned that mechanics on the graveyard shift could not participate in company picnics. To make up for this, Kelleher organized a 2:00 a.m. barbecue where Kelleher himself and several pilots served as chefs. Another example of Southwest thinking about their employees first, was in response to the attacks of September 11th, 2001. Due to the decreased passenger traffic after the attacks, many airlines laid-off workers; however, Southwest employees were willing to take major pay cuts to avoid lay-offs. Herb Kelleher’s genuine care for his employees leads to the development of a work atmosphere that is known for being fun, friendly, and full of creativity. This happy and stress free atmosphere has led to happy employees who work hard for the company, and these hard-working employees have led to immense customer satisfaction and financial profitability.

Southwest Employees Really Love Their Company:

Southwest is also now more than just a fun and friendly place to work, where there is an emphasis on shared goals, shared knowledge, and mutual respect.  An example of this culture of sharing goals is shown in how Southwest monitors performance. Many companies measure performance by functional area to establish functional accountability. However, Southwest believes that functional accountability leads to department in-fighting where departments blame each other for company failures. Southwest instead utilizes team metrics to monitor performance rather than functional metrics. An example of a team metric at Southwest would be the percentage of on-time departures. Departures involve the efforts of  multiple departments, therefore all departments must work together to to improve the percentage of on-time departures. This emphasis on teams leads to a more cohesive company where everyone succeeds together and struggles together, rather than a company plagued by infighting that will eventually lead to failure. Many companies have tried to implement programs that emphasize company culture; however, these are just programs, and it takes more than just a program to create a strong company culture. Southwest is a prime example of a company whose culture has grown with the company since its inception, and is constantly reinforced in its daily operations. A company’s culture starts at the top, and only if top management fully buys into developing a unique and successful culture, can it truly exist. Herb Kelleher and other leaders at Southwest Airlines have been working and continue to work to develop a unique and fun culture at Southwest that is then expressed to their customers.

Making Flying More Fun:

Current CEO, Gary Kelly is following in Kelleher’s steps by continuing to stress the significance of a company culture that puts the employees first. He has said, “Our people are our single greatest strength and most enduring competitive advantage.” Southwest’s great treatment of its employees has led to employees going above and beyond the call of duty to provide superior service to customers. Happy employees are more willing to go out of their way to help customers and provide services to customers, that are not exactly in their job description. Southwest provides such a great working culture for their employees, so that employees are able to devote all their attention to customers instead of trying to better their own working conditions. Happy workers make good workers, and good workers lead to success. Southwest is quite successful.

Southwest's strong leadership is key to their success. In studies of organizational behavior, strong leadership has been positively correlated with financial success. Kelly and Kelleher are both prime examples of what it takes to be a strong leader; they have and had strong visions and were able to motivate those around them to follow these visions towards success. This strong leadership has led to very high levels of job satisfaction throughout the organization which has also been positively correlated to financial success. This awesome inner culture of Southwest has many characteristics that have been proven to lead to financial success, and has been one of the many factors that have been contributing to the success of Southwest over the years.

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