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Learn to Lead: Herb Kelleher

As the saying goes, there is a distinction between being a manager and being a leader. Also, it has been a long stretch since discussing leaders. During my M.B.A. reflections, I really appreciated learning about different noteworthy figures and what made them so influential. I found it no coincidence that one of the first was Herb Kelleher, the rebellious co-founder and C.E.O. of Southwest Airlines, the most extraordinary success story for airlines today.

Those who even solely approximate aviation know Southwest as the "annoyingly positive" airline where flight crews and ramp personnel are witty and creative, taking themselves lightly yet ensuring the job gets done. The results speak for themselves, as Southwest is the fourth-largest airline in America despite being a low-cost carrier that doesn't allow external bookings. This means making a reservation through a platform like Expedia is impossible - anyone who flies Southwest must go on their website directly to plan a specific trip.

Dating back to before the Airline Deregulation Act of 1978, Southwest had reported a profit every year since 1973 until the COVID-19 Pandemic struck havoc on airlines worldwide. Perhaps most significantly, Southwest operationally is one of the more efficient airlines on record, consistently emerging as a high achiever in on-time performance. Additionally, the carrier has been a mainstay on the FORTUNE® World's Most Admired Companies™ list, achieving this mark annually since 2009.

Southwest is Born

Herb started his career outside the airline industry, attending the New York University School of Law. While studying there, he met his wife Joan, who had family in Texas. At that point, Herb and his future wife became enamored with the lifestyle and opportunities in Texas. Following two years as a law clerk for the New Jersey Supreme Court Justice, the two packed up their things and moved to the Lone Star State.

After several years in Texas, a businessman by the name of Rollin King hired Herb in the position of outside counsel in 1966. A lofty problem at the time was that air travel was only accessible to a privileged portion of the population. Rollin asked Herb, "How can we make it more affordable?" At a club in San Antonio, the two sketched out a simple plan on a cocktail napkin, eventually becoming the initial business model for Southwest Airlines Company.

The idea was built off of Pacific Southwest Airlines (P.S.A.), which was beginning to experiment with point-to-point flying in California. Interstate travel was highly regulated, but intrastate was subject to far more leniency at the time. For a state as large as Texas, this provided a similar opportunity for those willing to take such a risk. Thus, the initial plan for Southwest was to emulate this, connecting three cities first: Dallas, Houston, and San Antonio.

This, however, posed a significant threat to the three existing established carriers in Texas - Braniff, Texas International, and Continental. Before Southwest could even hit the ground, the three combined to fight over 30 filed legal injunctions or lawsuits. Nevertheless, the airline was launched in 1971 and fought hard early to remain alive. An infamous story emerged that would set the tone for what was to come.

At the time, Southwest only had four planes and 70 employees. The airline was running out of money fast, and a solution had to be drawn up. Then, Southwest vowed never to furlough an employee and instead chose to fly a four-plane schedule with only three aircraft. Thus, what we know today as the "quick-turn" was invented, allowing the airline to maximize profits while minimizing the costs between flights. Southwest would go another three decades without furloughing a single employee, another one of its marked accomplishments.

Herb on the Rise

From there, Herb was asked to take on more responsibilities, eventually working up to a role as chairman and C.E.O. The company began to soar, and a legend emerged before our eyes. Rapidly, Southwest became one of the most sought-after places to work. A unique culture was formed thanks mainly to the customs Herb put in place.

This culture would be paramount to establishing a business with success yet to be replicated. Bill Taylor of Harvard Business Review goes on to mention:

"Southwest’s performance since it began as a public company in 1971 is the stuff of business legend. In more than 45 years, in an industry famous for red ink and high-profile bankruptcies, Southwest has never had a money-losing year — ever. Thirty years after Southwest went public, Smart Money magazine concluded that it had been the best-performing stock over those three decades — better than IBM, Merck, or other alluring names. A $10,000 investment in the Southwest IPO was worth $10.2 million thirty years later."

This proves Herb's notion that if you treat your employees right, they will treat customers the same. So many stories exist that only get more interesting each time around. For example, if you speak with a pilot about interviews, most will tell you how it is generally one of the most severe and formal processes you can go through. Interviewers look at every last detail, from answers to nonverbal behavior. For example, a former professor told me that some Delta hiring managers would purposefully have the client sit on a broken chair for years. If the individual did not speak up and ask for a new chair, they were disqualified for the position.

However, that was not the case at Southwest. In one story, a dozen well-qualified pilots showed up to the interview dressed like "Wall Street accountants." Remarking on how serious this specific group of pilots appeared, the hiring team devised a plan. They asked the group to change into colorful shorts they had lying around. About two-thirds enthusiastically obliged, all of whom ended up emerging as successful candidates.

Perhaps most famously, Southwest faced a rather unusual legal request for the rights to use the slogan "Plane Smart." In 1992, Stevens Aviation chairman Kurt Herwald challenged Herb to an arm wrestling match for the rights to use the slogan. In typical Southwest fashion, a crowd of 1,500 spectators (comprised primarily of employees) gathered for the event, where the winner ultimately walked away with rights to the slogan and the proceeds going to a charity of choice. While Kurt walked away the winner, in the end, he agreed that both would be able to use the slogans moving forward.

Southwest has the world's largest fleet of Boeing 737 aircraft, totaling over 800 aircraft.

Herb's Irreverence

What you must understand about the airline industry is that, before deregulation, it was an extremely political climate, often resulting in less-than-desirable fares for travelers. Herb took everything that was known at the time about running an airline and turned it completely on its head, combining low fares with high levels of customer service.

The adversity that Southwest overcame early, combined with the vigor that Herb and his fellow leadership fostered, manufactured a powerhouse that attained unprecedented financial success in one of the world's most volatile industries. Following the terror attacks on 9/11, Southwest was the only airline to remain profitable in the country. Currently, the airline has the largest fleet of Boeing 737 aircraft worldwide, a tall feat for low-cost carriers.

The counter-culture of what constituted an airline at the time was unequivocally the most significant factor in Southwest's dominance over the years. When talking about his airline's prosperity, Herb always attributed it to "the Southwest spirit." It is the secret recipe - the one thing that competitors try to replicate but never can successfully. Certain intangible aspects money can't buy, like devotion and loyalty.

Following Herb's passing in 2019, leaders across all industries went out of their way to praise his achievements during his lifetime. Forbes released a powerful list of "20 Reasons Why Herb Kelleher Was One of the Most Beloved Leaders of Our Time." Usually, I would simply cite the link. However, it perfectly encapsulates the decades-old question - what's his secret?

  • Be interested. Herb loved his employees, and his employees certainly loved him. Herb not only allowed but encouraged employees to express themselves at work, sharing a piece of their personality with Southwest's loyal customers.

  • Be approachable. Herb was well-known for his personality. Well he was also known for remembering names and conversing with employees. Herb felt there was something new to learn no matter who you were, and he made you realize it.

  • Look beyond title and status. Herb recognized that titles are just that - titles. He deplored any hierarchy and vocally supported employees in the trenches, like pilots and ramp workers. In fact, Herb would often be seen throwing bags for himself!

  • Hire for attitude, train for skill. This was a common expression pushed at me in leadership classes. Herb supported the notion that probationary periods for new hires should be highly subjective to ensure a proper fit with Southwest's culture.

  • Put employees first and customers second. Perhaps most often, managers mistakenly sacrifice employees for customer needs - this was not Herb. The belief was that the ripple effect would be high customer satisfaction by treating your employees like customers. If the employees are happy, so will be the customers.

  • Jettison tribalism and office politics. Herb was a proponent of demolishing tribalism and silos, as it cannibalized teamwork and fostered competitive mindsets between departments. Southwest even incorporated a "Walk-a-Mile" program where a pilot would work as a ramp agent for a few days to appreciate the job's difficulty.

  • Be yourself, and allow people to be themselves. The spirit of Southwest is the key to the unprecedented customer satisfaction they have garnered over the years. Without allowing employees to tell jokes and be creative, none of it would have been remotely possible.

  • Be trustworthy. His employees universally trusted Herb, and it showed. The relationship between the unions and management at Southwest was tenable throughout the years, an extraordinary feat considering the industry.

  • Leave your ego at the door. As you can infer, Herb was irreverently against typical office culture. All of this starts by checking your ego before stepping into work. Any narcissistic behavior is always counterintuitive to others and the company and should be demolished.

  • Be irreverent. Challenging the status quo is crucial to being dynamic in today's world. Employees must be able to think critically and independently. Doing so allows employees to act as "change agents," endorsing innovation and supporting the company's evolution with time.

These are only ten reasons - the other ten can be found here. No matter your loyalty program or business industry, something can be learned from Herb's legendary tenure. From maximizing employees' quality of life to building professional and personal relationships, Herb has created a mold for organically assembling an organization where output is greater than the sum of its parts.

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