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Jeff Smisek: CEO's Role in Building Company Culture
12 segments available
Jeff Smisek, president and CEO of United Continental Holdings, oversees one of the most complex of business operations, running the world's largest airline following the merger of United and Continental — with 87,000 highly unionized employees, 5,800 departures daily, and more than 140 million passengers each year. In his View From The Top talk at Stanford GSB, he discusses the role the CEO must play in developing and propagating a customer service culture, aligning stakeholders around a focused plan, and managing crises virtually daily. More about the View From The Top speaker series: http://www.gsb.stanford.edu/vftt All View From The Top videos: http://www.youtube.com/course?list=EC5C14B375A7F2FEA8
Segments Timeline
The Nature of Airline Business
Jeff Smisek introduces the complexities of the airline industry, highlighting its challenges such as low barriers to entry and high barriers to exit. He humorously reflects on the industry's struggle to earn adequate returns since its inception, setting the stage for a deeper discussion on leadership and culture in the airline business.
"[sound] You know, you can tell George is an old friend of mine, when he can sort of pimp me about on time. Look, I, when I heard about this, when George asked me to come, someone had described this as..."
Regulatory Challenges in Aviation
Smisek discusses the heavy regulations that govern the airline industry, emphasizing the paradox of being a heavily regulated yet deregulated business. He points out the impact of outdated air traffic control systems and the financial penalties airlines face due to delays, illustrating the operational hurdles that affect profitability.
"about, leadership as well. Let me start by talking about the airline business. It is an extraordinary business. And I like to say and you're and most of you are, are, are, are, getting your MBAs or yo..."
The Impact of External Events
In this segment, Smisek addresses how external factors like volcanic eruptions and fluctuating fuel prices significantly impact airline operations. He shares insights on how these unpredictable events can disrupt planning and affect the bottom line, underscoring the volatility inherent in the airline business.
"We're also a brutally regulated business, recognizing that the airlines were deregulated in 1978, only nominally. We are the most heavily regulated deregulated business that there is, and some of the ..."
Fuel Costs: A Major Challenge
Smisek elaborates on the critical role of fuel costs in the airline industry, explaining how they surpass other operational expenses. He provides a striking comparison of fuel costs to the price of acquiring new aircraft, highlighting the financial strain that volatile fuel prices place on airlines.
"that are very oppressive. On, on, on the air care someone actually recently said why don't you charge for air tickets because fuel's so important to you. Why don't you sell an air ticket, and then, at..."
Navigating Financial Challenges
In this segment, Smisek discusses the financial strategies United Airlines employs to cope with rising fuel prices, including fare increases and capacity management. He reflects on lessons learned from past fuel crises and the importance of adapting to market conditions to maintain profitability.
"And when we, when, when fuel is such an important input price, it's quite high and quite volatile. To give you a concept of how much, I mean George mentioned $25,000 a minute which is a lot of money. ..."
The Importance of Company Culture
Smisek emphasizes the significance of company culture in the airline industry, particularly during the merger of United and Continental. He discusses the challenges of merging two distinct corporate cultures and the necessity of fostering trust and collaboration among a diverse workforce.
"Technology we have, we're essentially a technology company with wings. It's a very data rich business. A very data rich business and as a result we have a lot of information in which to make a decisio..."
Vision and Planning for Success
In this segment, Smisek outlines the importance of having a clear vision and a simple, understandable plan for employees. He explains how a one-page plan helps align the workforce with the company's goals and ensures that everyone understands their role in achieving success.
"process. And you've got to, you?ve got to earn the people's trust over time. I think the most difficult thing in, in bringing two carriers together the size of Continental and United, it really is cul..."
Hiring and Empowering Talent
Smisek shares his philosophy on hiring talented individuals and empowering them to excel in their roles. He stresses the importance of trusting employees, avoiding micromanagement, and allowing them to take ownership of their work, which fosters a positive and productive work environment.
"Because you can, you can distill everything you want in a business, into a marketing plan, and into a financial plan, and into an operating plan, and into a people plan. And what we do at the combined..."
Engaging with Employees
In this segment, Smisek discusses the value of engaging directly with employees at all levels. He shares his approach to maintaining open communication and building relationships within the organization, which helps him stay informed and connected to the workforce.
"Because if you're constantly, you know, if you're constantly in their underwear, I'll tell you, it makes their lives miserable, and you'll drive good people off. Whereas if you give them lots of respo..."
Building a Culture of Respect
Smisek emphasizes the importance of a respectful workplace culture, where employees treat each other and customers with dignity. He discusses how honesty and transparency in communication contribute to a positive work environment and enhance employee morale.
"But I think the most important thing that you can, that you can bring as leaders in the future to your own enterprises, whether they're for profit or non profit, is, is the culture of the business. I'..."
Trust and Communication in Leadership
In this segment, Smisek highlights the role of trust and open communication in effective leadership. He explains how addressing tough issues directly and respectfully fosters a culture where employees feel valued and engaged, ultimately leading to better service and performance.
"figure it out. And explain what's going on to people. People much prefer that, than, than silence or the runaround. And it also means when I go out and talk to co-workers. I do, I do CEO exchanges, so..."
Follow Your Passion
Smisek concludes by encouraging future leaders to pursue their passions rather than conforming to societal expectations. He reflects on his own career journey and the importance of finding fulfillment in one's work, advocating for authenticity and personal satisfaction in professional choices.
"proud of what they do, and they deliver tremendous service as a result. I'm sure many of you have worked over the years for various enterprises. And if you think of places you've worked where you're r..."