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Herb Kelleher: Creating Economic Value Based on Human Values

Avatar photo By Kevin Meyer Updated on January 9th, 2019

A legendary CEO, Herb Kelleher of Southwest Airlines, passed away last week.  Many articles have already been written memorializing him, including this one by Bill Taylor in the Harvard Business Review and this one by our friend Mark Graban, but I’d like to reinforce a couple attributes that are important to me.

The key to Kelleher’s success was his focus on people – customers, employees, and suppliers.  He epitomized the “respect for people” (or “human nature“) pillar of lean and demonstrated how effective and powerful humble, authentic, and empathetic leadership can be.  Bill writes,

As I take stock of his life and legacy, what strikes me is how much all of us can learn from what he created and how he led—that you can create vast economic value based on genuine and generous human values, why what you hope to achieve in the marketplace must be reflected in what you build in the workplace, how in an age of disruption and transformation, simplicity and consistency matter most.

Southwest’s mission was to “democratize the skies” by making it easy and affordable for everyone to fly.  Kelleher and Southwest succeeded, and to this day reinforces this mission by eschewing tactics such as charging for carry on baggage.   Kelleher viewed corporate rules as guideposts, but not walls, and encouraged his employees to “serve the customer regardless of what the rules were.”

The focus on people was also internal, with Southwest’s “8 Freedoms” that created an incredible corporate culture, which includes the “freedom to innovate,” the “freedom to achieve financial security,” and the “freedom to learn and grow.”

Kelleher viewed business as an ecosystem where everyone could achieve success if they worked together, and there are many stories about how he actually helped competitors.  Andrew Wagner described this well in a reply to Mark’s article:

There was an MIT Leaders for Manufacturing dissertation written about ten years ago by Ted Piepenbrock that studied “enterprise architectures.” It outlined two different approaches, “modular”, in which the company, shareholders, employees, suppliers, and customers were all interchangeable parts, and “integral” in which the opposite was true: companies, their shareholders, employees, suppliers, and customers were interlinked, committed, and interdependent on each others success.

Two companies most epitomized the “integral” enterprise: Toyota and Southwest Airlines.

I would add “competitors” to that list as, similar to Southwest, Toyota has partnered with competitors such as GM (NUMMI) in an attempt to create mutual value.  Unfortunately that mindset is so unusual that those partnerships aren’t often successful.

Finally, a third characteristic that led to Southwest’s success is a focus on simplicity and consistency – perhaps an anathema to the pressure most organizations feel today to rapidly innovate.   A single type of plane to reduce maintenance costs and increase interchangeability, a simple boarding method rather than the ten or more zones of larger carriers, and a point-to-point network instead of hub-and-spoke.

Take some time to reflect on Herb Kelleher.  How can we learn and improve from his drive to build value via a focus on people?  How can we grow customer value while also being authentic, and empathetic to the needs of our team?  How can we look outside of our organization, even at our competitors, and help them succeed so we all succeed?  And where can we grow by embracing simplicity and consistency?

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Kevin Meyer

Kevin has over 35 years of manufacturing leadership experience in the automotive lighting, telecom electronics, and medical device industries. He has been responsible for lean transformations at Sylvania, Abbott Laboratories, Newport Corporation, and most recently as President of Specialty Silicone Fabricators. He guest lectures on business, manufacturing, and leadership topics at his alma mater Rensselaer as well as CalPoly.

  1. Josh Worthley

    February 1, 2019 - 9:21 am
    Reply

    I teach a 29 credit Metrology program and occasionally I send out these posts as “read, reflect, and respond” assignments to expose the students to the Continuous Improvement side of Quality. Here are some of the responses from my students:

    “We can improve by being more empathetic to our employees. The goals is to make them want to go to work and enjoy doing it, not to consistently dread it or management. We can grow customer value by consistently displaying our care for our employees in front of customers and suppliers. Outsiders seeing the enthusiasm and happily team based employees is a helpful environment, it allows customer service to actually “be there” instead of the “task” being more important. We can help other competitors by sharing methods so that we both can reach mutual values. In the end we both profit and keep each other sharp by healthy competition. We can grow as a company, a household name, etc.” (I enjoy this one because in my CMM programming classes, I talk about having empathy with CMM operators, machinists, or other internal customers A LOT.)

    “When you invest in people, good people, it will show in any company. If a company has a person that feels this way and promotes this mindset at the top it builds a culture and community from the inside out. Happy people, respected people, will do more in the 8 hours of work every day then someone there hating every minute. Being able to lean on management and coworkers is something rare in a world where most people would rather not know anything about each other.”

    “We can grow as individuals by implementing “simplicity and consistency” and taking them literally while putting them to practical use. Most people could be better at improving their lives but even small things in the daily routine can add up to a bigger picture. Getting enough sleep is one thing that most people don’t accomplish but refuse to do anything about it. A consistent sleep schedule will improve every aspect of your day and it most cases is a simple thing to achieve.”

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