Creating Economic Value Based on Human Values

When legendary CEO Herb Kelleher of Southwest Airlines passed away Jan. 3, 2019, many articles memorialized him, including this one by Bill Taylor in the Harvard Business Review and this one by 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.

Taylor 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,” which include the “freedom to innovate,” the “freedom to achieve financial security,” and the “freedom to learn and grow.” Together, these created an incredible corporate culture.

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 Graben’s article: “There was an MIT Leaders for Manufacturing dissertation written about 10 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 other’s 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 in the New United Motor Manufacturing Inc. (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 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 10 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?

First published Jan. 16, 2019, on Kevin Meyer’s website.

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