A great deal is said about the relaxed, entertaining, laid-back style of the corporate culture of Southwest Airlines, but these comments overlook the key point. For underlying that apparently effortless approach is an unrivaled culture of professionalism and effectiveness. The airline’s former CEO Herb Kelleher (born in 1931) created a corporate culture in which customer value, performance, and responsibility are top priorities. This is the company’s real “secret.”
Many reports about the company and its eccentric CEO focus on Southwest’s unconventional corporate culture. Indeed, it is frequently suggested that this was the mainstay of the company’s success. But that is not the case at all. In the marketplace and where customers are concerned, the company is not successful because of the unconventional aspects of its corporate culture but thanks to its first-class performance.
The reason for this is a commonly encountered and widely accepted fallacy about effective management: the tendency to focus on how things are done instead of what is done. Yet the style of management is relatively unimportant for determining the company’s success, as is evident from the fact that there are many excellent and successful airlines which, though also professional and successful, are managed in a different style. Many such companies are larger than Southwest Airlines and operate on more complex routes all over the world, not only in the United States. This does not diminish the performance of Southwest, but it does direct our attention to factors that merit it.
Dressing casually to go to work at Southwest’s corporate headquarters, celebrating at every conceivable opportunity, employing flight attendants with a sense of humor, and presenting safety briefings in the form of stand-up comedy definitely create a special corporate culture. I am not ruling out the possibility that in the case of Southwest Airlines all this may go some way toward explaining the airline’s success, but it is definitely not the key to its success in general and can most certainly not simply be carried over to other companies.
Airline customers want to arrive safely and punctually, and where Southwest is concerned, for relatively little money. The keys here are professionalism and reliably excellent performance, not the fuss surrounding it. Or would you board an airplane that was flown by a very witty, but incompetent pilot? And how often can your baggage go missing before you switch airlines?
What is impressive about Southwest is not the peculiarities of its corporate culture, but its performance record. Ever since the U.S. Department of Transportation started recording customer satisfaction in the aviation sector back in 1987, Southwest has led the way in the industry, eliciting the fewest complaints per passenger conveyed while at the same time achieving excellent financial results. In this connection, Herb Kelleher said, “We tell our people, “Don’t worry about profit. Think about customer service. Profit is a by-product of customer service. It’s not an end, in and of itself. It’s something that’s produced by your efforts and by the way that you treat each other and the way you treat the outside world.”1
The fruits of this form of management geared toward customer value, performance, and responsibility are clear to see. In 2010, for the fourteenth year in succession, the annual study on companies’ reputations published in Fortune magazine paid tribute to Southwest. Again in 2010, Southwest was the only airline to make the Top 20 in Fortune magazine’s prestigious annual list of the “World’s Most Admired Companies” and was also deemed one of the most admired airlines. In 2008, Forbes magazine listed the company as America’s most reliable airline. One study published at TIME.com listed Southwest as the friendliest airline, and in 2007 and 2010 Southwest made Business Week’s list of “Customer Service Champs.” This is just a small selection of the company’s successes, which were outshone by its achievement of reporting a thirty-eighth successive profitable business year in 2010.
Herb Kelleher and Southwest Airlines can teach us a vast amount about corporate culture, namely about how to create a culture of professionalism, focused on effectiveness, performance, responsibility, and trust. A corporate culture of this kind is nothing more than the result of effective management. Or put the other way around: effective management creates a desirable corporate culture.
Anyone setting out to offer professionalism, effectiveness, and excellent performance will end up cultivating effective management. Viewed in this light, the issue of corporate culture becomes very easy to operationalize. In other words, there are many specific measures that can be taken to build up a corporate culture that will benefit the organization.
This book advocates a division into three domains that need to be taken into account when developing a culture of effectiveness: the management of organizations, the management of innovation, and the management of people. A beneficial corporate culture is not just a combination of several separate things, but rather derives from the professional mastery of the three domains, each comprising numerous modules, and from the interplay between them. Ultimately, a culture of effectiveness is the sum of the quality of its building blocks and how well they work together.
As Helmut Maucher, the long-serving CEO of Nestlé, once said in connection with the tasks of company management and corporate development, “‘Be close to your products, be close to your people’ and be close to your customers.’ If you take this to heart you cannot go wrong all along.”2 However, this advice can be adopted as the core of a corporate culture geared toward effectiveness, performance, professionalism, and responsibility.
In which of the three domains—the management of organizations, the management of innovation, or the management of people—can you make a big step toward a culture of effectiveness if you wish to progress in this area? What specific action will you now take?
Genuine interdepartmental cooperation throughout your organization can help you make a major contribution toward a culture of effectiveness. At one of your next off-site meetings, ask your managers to focus on this single question: “What do we need to do together to establish a corporate culture of effectiveness?” Substantial progress will be made if you focus the ensuing discussion on the three domains listed above.