I hope not. Under former CEO Herb Kelleher, Southwest Airlines shone like a beacon through the gloom of top-down cultures managing to next quarter’s bottom line. Although it often produced the best numbers in the industry, Southwest maintained its focus on people — customers as well as members of its organization. As one imitator after another bit the dust, Kelleher would proclaim that “They can copy the details, like fly just one type of airplane, but they can’t copy the culture!”
Well, the latest quality-related numbers aren’t looking too good. In the Wall St. Journal‘s annual ranking of US airlines, (paywall) Southwest landed at the bottom for mishandled luggage (“On average, at least one passenger ends up missing a bag from every Southwest flight.”), and near the bottom for involuntarily bumped passengers and for on-time arrivals. The once-proud Southwest ranked 5th out of eight overall and scored at the top in only one area, two hour tarmac delays. Ironically, the airline was just fined $1.6 million (WSJ – paywall), the largest such civil penalty ever, for repeated violations of the rule allowing passengers to deplane after a 3-hour delay. Southwest says that it has made substantial investments in the interim to fix the problem.
OK, things happen in business. To me the most worrying symptom is how Southwest is addressing their problems:
To improve on-time and baggage performance, Southwest in August added extra time between flights in its schedule. The airline that once prided itself on 20-minute turnarounds between flights now unloads and reloads flights in an average 39 minutes. On-time reliability improved, but still trails all competitors except United.
A belief that you can solve your problems by throwing time at them is invariably fatal, unless detected and eradicated before it rots your system and culture. You want to improve you on-time arrival rate? No problem. Just figure out your average delay (that is, by how many minutes, on average, you miss your schedule) and just add that amount to next month’s schedule. If that doesn’t solve the problem, add twice that amount.
You might recall that Toyota once described the purpose of its system as “decreasing the amount of time between when a customer orders a car and when we deliver it.” This works because as you pull waste out of a system, cost, quality, and span time all improve. Simultaneously. Thus, span time is good measure of the health of any lean system. Turns out that any implementation of the principles in Boyd’s Discourse on Winning and Losing, such as maneuver warfare, will break similar trade-offs, although you have to define them appropriately for the domain.
At one time, Southwest showed many of the attributes of a lean system, including having both the lowest costs and highest quality as well as their famously fast turnarounds. One does wonder, though, what’s happened since Kelleher retired. Southwest’s problems with baggage, for example, have been building for years (“Southwest Airlines says its baggage belts suffered a lot of breakdowns that left luggage in huge piles.”) What has management been doing? What was their orientation? So that’s why it bothers me so much when Southwest seems to be papering over its problems by lengthening the time it takes to do things. It’s a drug that dims consciousness of the true state of the system. It’s a narcotic for orientation.
Southwest is still the largest US airline by domestic passengers, although newly merged American is largest overall. They also ranked second in passenger complaints behind somewhat funky and much smaller Alaska, so they have a lot going for them, if they just don’t blow it.
The article doesn’t provide any details, other than “technology is the solution.” I’ve flown Southwest and held them up as an example for many years. My assessment is that things aren’t looking too good right now, but I’d LUV to be proved wrong.
The real question is if this is a temporary downturn or if this becomes a long-term trend. If it’s a temporary drop, then it’s not much to be worried about. All companies have their ups and downs, even the good ones. Root causes will need to be analyzed here.
The really scary scenario will be if the management at Southwest decides to abandon the formula that made them so successful. In that case, they will end up like every other airliner.
Southwest is not the only one facing this type of pressure. Costco has frequently been under similar pressures. What is sad here is that Wall Street just doesn’t get it. Profits are the byproducts of a good employee-relationship and with customers.
This just goes to show how important the leadership is. You need that philosopher king at the top or the mandarins will take over.