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Herb Kelleher: Managing in Good Times and Bad
34 segments available
Southwest Airlines chairman and former CEO Kelleher said the airline continues to encourage out-of-the-box thinking. View From the Top, April 15, 2006
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Introducing Herb Kelleher
The introduction of Herb Kelleher, the world-famous chairman and former CEO of Southwest Airlines, highlights his likable personality and impressive background. The speaker shares Kelleher's journey from law school to becoming a pivotal figure in the airline industry, setting the stage for his innovative leadership.
"We're just honored to have Herb here and it's a wonderful pleasure for me to introduce him however briefly and the reason I say briefly because he is a world famous fellow as many of you know uh also ..."
The Birth of Southwest Airlines
Herb Kelleher recounts the founding of Southwest Airlines, emphasizing the revolutionary idea of low fares and the challenges faced from established airlines. He discusses the legal battles that ensued and how Southwest's unique approach to flying within Texas disrupted the industry norms of the time.
"I didn't know. [Laughter] He he joined a law firm in San Antonio Texas that specialized in nurturing among other things in nurturing entrepreneurs. And at that law firm, he met a guy named Rand King w..."
Innovations That Changed Aviation
Kelleher outlines the groundbreaking innovations introduced at Southwest Airlines, including the 15-minute turnaround, single-class service, and a focus on low fares. He reflects on how these changes not only transformed Southwest but also gave rise to the low-cost carrier segment in the airline industry.
"American tradition said this must be against the law and challenged it and tried to get Southwest uh put out of business. Herb as a lawyer was the key player in fighting that lawsuit and eventually wo..."
From Entrepreneur to Executive
Herb Kelleher discusses his transition from entrepreneur to managing a large organization with over 30,000 employees. He highlights the importance of maintaining an entrepreneurial spirit within a growing company and his commitment to nurturing future leaders.
"than all the other airlines. Uh, professor, we have two sets of books. Yeah. Yeah. We actually teach that her uh they have they they have 31,000 employees and I might say that while he's come a long w..."
Employees First, Customers Second
Kelleher shares his unconventional philosophy that prioritizes employees over customers and stockholders. He discusses the implications of this approach for corporate governance and the importance of employee ownership without control.
"wonderful interest in entrepreneurship having endured excuse me endowed the entrepreneur center at the University of Texas in in Austin. Herb thank you very much for coming today. We're thank you for ..."
The Role of Innovation in Leadership
In response to a question about innovation, Kelleher reflects on whether it can be taught or is inherent. He emphasizes the need for a spark of creativity and risk-taking in leadership, while also advocating for educational programs that foster entrepreneurial thinking.
"come last. That's not exactly the way I teach it. Uh uh and uh well, I guess I'm going to have to take over that class. Yeah. [Applause] Uh I I I I wondered I wondered given that whether you think it ..."
Encouraging Ideas and Innovation
Kelleher explains how Southwest Airlines fosters a culture of innovation by respecting employee ideas and providing thoughtful feedback. He shares an example of how a mechanic's innovative solution helped the airline adapt to regulatory changes, showcasing the value of employee contributions.
"when you come out of a particular environment uh that tends to be your total focus. uh you tend to be a little tunnel visioned and I don't think it's worked out too well at other airlines uh where the..."
The Importance of Quick Recovery
Kelleher discusses the significance of rapid recovery from mistakes in business. He shares insights on how to handle failures without dwelling on them, emphasizing that quick corrections are essential for maintaining momentum and avoiding institutional worship.
"diagram and said herb I figured out how we can add a seat and still comply with this rule just out of the blue uh when uh the other carriers were coming up with uh Continental Light uh United uh shutt..."
Learning from Mistakes
Reflecting on his own experiences, Kelleher humorously claims that his biggest mistake was hiring himself. He illustrates the value of learning from failures and the necessity of moving forward quickly to avoid stagnation.
"a follow I guess. Let me have a follow-up question on the on the innovation question and then I want to invite a question from the from the audience here. Uh, one of the things that you said right off..."
Building Strong Union Relationships
Kelleher explains how Southwest Airlines maintains positive relationships with labor unions by treating them as partners rather than adversaries. He highlights the importance of collaboration and understanding in fostering a supportive work environment.
"But what I remember what I remember is a story about Thomas Watson, which I know you've heard, uh but I just loved it. Visav the point that you're making. This is what we've always followed at Southwe..."
Trust and Transparency with Unions
Kelleher shares anecdotes about how transparency and humor have helped build trust with union leaders. He emphasizes the importance of recognizing their challenges and maintaining open lines of communication to ensure mutual success.
"their stock. Okay. right there. Yeah, it's you. Okay great. Um, it's kind of well documented that you actually have very good relations with your labor unions. Yes. Compared to your competitors, can y..."
Navigating Conflicts with Humor
Kelleher discusses how humor can diffuse tension during negotiations with unions. He recounts a clever strategy he used to help a union leader manage pressure from their membership, illustrating the value of camaraderie in the workplace.
"uh captains who was the head of SWAP Southwest Airlines Pilots Association uh came in and said, "Uh, Herb, I'm under a lot of fire from the membership." And I said, "Well, we got to distract them." [L..."
Finding Joy in Challenges
Kelleher reflects on his positive outlook towards challenges at work, stating he has never had a 'worst day.' He believes that embracing responsibilities and challenges leads to a fulfilling work experience.
"your philosophy about that which which comes across loud and clear. We have fights but not vendettas. You know we yell, we throw things we get a contract and it's behind us. It's not like the Jukes an..."
Passion for Service and Leadership
Kelleher shares his driving passion for serving others and the importance of excellence in leadership. He emphasizes that true passion comes from helping others, which infuses work with meaning and purpose.
"in trying to get him, you know corrected and get them changed. And we brought in a guy one time. I didn't bring him in, professor. Somebody else did. Talked to our leadership group and he said, you kn..."
Scaling Abilities as the Business Grows
Kelleher discusses how he scaled his abilities alongside Southwest Airlines' growth. He highlights the importance of communication, hands-on experience, and maintaining a focus on core values to ensure effective leadership.
"do is infused with passion. Yes. Right there. I'll catch you in there. A personable individual. Well, how did you scale your own abilities as you grew this business from small regional care to domesti..."
Prioritizing Employee Care
In this segment, Kelleher stresses that taking care of employees must remain the top priority, regardless of the company's size. He shares insights on how consistent communication and honoring employees are crucial for maintaining a positive work environment.
"it. No matter how big you get, taking care of your employees, being interested in your employees, communicating with your employees, honoring your employees is still job one. Well, I spoke to the Inte..."
Opportunities in Domestic Markets
Kelleher reflects on the untapped opportunities for Southwest Airlines in the domestic market, specifically mentioning Newark. He discusses the strategic decisions behind choosing new routes and the advantages of operating within the U.S. compared to international markets.
"Newark yet, for instance. Don't try. But it's it's my old home. Ah I know. Tom Wolf, you can't go home again. Okay. Philadelphia is your home. Well, I told in Philadelphia, I told him, I said, you kno..."
The Importance of Company Culture
Kelleher asserts that losing the unique personality and culture of Southwest Airlines would be detrimental. He emphasizes that maintaining the company's identity is essential for its success and competitive edge.
"top of our priorities like Newark. It'd be all right if you said never Herb but look in the back. Southwest loses all its personality and culture. True or false? Oh, absolutely. No question about that..."
Imitating Southwest's Business Model
In this segment, Kelleher discusses the challenges of imitating Southwest Airlines' business model. He notes that while there have been many attempts, true success requires understanding the complex and unique elements that make up the airline's operations.
"No question about that. I'm glad I could answer that definitively. Yeah. Yeah. Yeah. You my cousin back there in the last row. Do you think others can imitate Southwest's business model? Oh yes. Uh ca..."
The Airline Industry's Financial Paradox
Kelleher addresses the paradox of capital flowing into the airline industry despite its historical financial struggles. He humorously suggests that some investors view starting an airline as a hobby, leading to unsustainable business practices.
"things that we have to really keep our eye on from a competitive standpoint as well as Newark. Uh I I want I want to ask a question to just just plug one in right here. Uh getting back to a little bit..."
Navigating Industry Challenges
Kelleher shares insights on the cyclical and competitive nature of the airline industry. He recounts his experiences with skepticism from the financial community and emphasizes the importance of confidence and resilience in leadership.
"know what,, Professor, Parker,, I, have pondered that question because it is really a horrible business. I mean, you know, it's it's capital intensive, labor intensive, fuel intensive, intensely cycli..."
Finding Balance in Leadership
Kelleher discusses the challenges of achieving work-life balance as a leader. He shares his personal strategies for balancing intense work hours with family commitments, highlighting the importance of prioritizing both professional and personal responsibilities.
"you know, he buys a condo and the younger the younger guy, younger partner is still working. He comes to see him and he says, you know, what do you do for a hobby? You know, do you do you play highlig..."
Overcoming Skepticism in Vision
In this segment, Kelleher reflects on the skepticism he faced while implementing his vision for Southwest Airlines. He emphasizes the need for confidence and the ability to ignore conventional wisdom to achieve success.
"it as a hobby." You want a question? Yeah. Wanted to go a little bit more on the personal side. Can you describe if it's possible to have a work life balance in your I'm sorry I couldn't hear. Workful..."
Leadership During Crisis
Kelleher discusses the leadership strategies he employed during challenging times, such as the aftermath of 9/11. He highlights how Southwest Airlines managed to remain profitable while other airlines struggled, showcasing the importance of strong leadership in crisis management.
"my kids did, four of them, at the same time. never missed any event that they ever had, any Christmas dinner or etc. But I would go back to the office on Christmas and work for 6 or 8 hours till 2 or ..."
Overcoming Skepticism
Herb Kelleher shares his experience of facing skepticism from the financial community after deregulation. He emphasizes the importance of confidence in one's vision and the need to ignore conventional wisdom, which often stifles innovation. Kelleher recounts how he remained steadfast in his approach, ultimately proving the critics wrong as Southwest Airlines thrived.
"different types of planes. Actually start out at 10 10-minute turnaround. I can imagine. Then they remembered the fuel. Yeah. We got tired of that. I can imagine you encountered a lot of skepticism. H..."
The Power of Preparedness
Kelleher discusses how Southwest Airlines managed to remain profitable after the 9/11 attacks, contrasting their success with the struggles of other airlines. He attributes this to a philosophy of preparedness and a proactive approach to management, ensuring that the airline was ready for crises before they occurred.
"he said there's six things that you've got to have in order to survive. And I ran around saying, I guess I'm going to have to communicate with everybody through a swami because we don't have any one o..."
Managing in Good Times for Bad Times
Herb Kelleher explains his management philosophy of preparing for downturns during prosperous times. He highlights the importance of maintaining a strong balance sheet and low operational costs, which allowed Southwest Airlines to weather industry crises effectively. His mantra emphasizes the need for foresight in leadership.
"conventional. Yes. Following 911, uh the airline industry was certainly in uh bad straits and most of them did very very poorly. But it's my memory that Southwest actually was able to continue turning..."
Leadership During Crisis
Kelleher reflects on the leadership roles he had to adopt during challenging times for the airline industry. He emphasizes that effective leadership is not just about style but about having a philosophy that anticipates crises and prepares the organization to respond effectively.
"bad times. Uh, just to give you an illustration of what I'm talking about. Uh, when fuel was real low, jet fuel, I said, I think we're deceiving ourselves with respect to how well we're doing on our c..."
Advice for Young Professionals
In response to a question from the audience, Kelleher offers advice to young professionals about approaching their careers. He encourages openness, curiosity, and continuous learning, stressing that success often comes later in life and that it's important to remain flexible and adaptable.
"practicing law now. But but it's being ready. So there were no furloss. As soon as DOT allowed us to come back up, we brought all the planes up. didn't cancel any flights and what about our business b..."
The Importance of Serving Others
Kelleher shares a personal anecdote about helping a distressed flight attendant whose car was repossessed. He illustrates the culture of care at Southwest Airlines, highlighting the importance of serving employees and the fulfillment that comes from supporting others in their times of need.
"what matters to you most? I guess well first of all I wouldn't be too serious about things. Uh and I think that keeps things in proportion. Uh uh be open, be curious, be inquisitive. And it's amazing ..."
Balancing Work and Personal Interests
Kelleher humorously discusses his personal interests outside of work, including hunting iguanas. This light-hearted moment underscores the importance of maintaining a balance between professional responsibilities and personal passions, reflecting his approachable personality.
"young. Uh Fortune had an article some years ago that said most of the successful business leaders uh of that time uh had really only gotten into what they finally did after they were 40 40 years of ag..."
Navigating Travel Challenges
Kelleher recounts his travel experiences and the challenges posed by regulations in the airline industry. He humorously addresses the complexities of interstate service and the competitive landscape, showcasing his candidness and ability to navigate industry hurdles.
"[Applause] Well, hunting. Hunting what? Iguanas. Okay. There's an island in Florida that's overrun with iguanas. Yeah. Yeah. It's right down here. Yeah. Can you talk talk about your travel arrangement..."
Fighting Bureaucracy for Innovation
Kelleher discusses the challenges of maintaining innovation at scale within a growing organization. He emphasizes the need to combat bureaucracy and hierarchy to keep the business agile and focused on results, using a military analogy to illustrate the importance of readiness over appearances.
"I flew another carrier. [Applause] Wave goodbye to him. Remember those iguados I was talking about? Yes. that a lot of people really admire very nimble and innovative organizations but it seems to be ..."
Rewarding Employee Service
In closing, Kelleher shares a specific example of how Southwest Airlines prioritizes employee welfare. He recounts a touching story of assisting an employee in distress, reinforcing the company's commitment to its people and the rewarding nature of serving others.
"tank. We're gonna have one last question. This has gone quickly, but we have to conclude. One last question. Let me have it right down here in the front row. Yeah. So, you talk about serving your empl..."