What
makes for effective leadership style? looks at three very different forms of
successful leadership style. It explains and draws lessons from:
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David Simon of BP – the diplomatic transformer;
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KonosukeMatsushita ofMatsushita Electric – the leader-philosopher; and
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Herb Kelleher of Southwest Airlines – the servant leader.
‘‘People
with different personalities, different approaches, different values succeed
not because one set of values or practices is superior, but because their values
and practices are genuine.’’
Herb Kelleher, CEO Southwest Airlines
DAVID SIMON – THE DIPLOMATIC TRANSFORMER
BP’s
origins date back to 1901, when William Knox D’Arcy, who had made a fortune
from mining in Australia, negotiated a concession with the grand vizier of
Persia to look for oil. Seven years later his company became the first to
strike oil in the Middle East. Keen to secure essential wartime supplies, the
British Navy persuaded the UK government to buy a majority stake in the company
in 1914. This remained the case until 1977, when Labour prime minister Jim
Callaghan began a privatization process by selling a tranche of the
government’s shares.
The
process was completed in October 1987 when Margaret Thatcher’s Conservative
government sold its remaining 31.5% holding. Although it was a cumbersome,
sprawling company, BP was the first to find gas in the UK sector of the North
Sea in 1965, and the first to bring North Sea oil ashore from its Forties field
a few years later. In 1968, after 10 years of exploration, BP had also
discovered oil at Prudhoe Bay in Alaska, part of a vast new oilfield. As a
result the company was able to weather the storms of the oil crises of the
1970s.
BP America
In
order to develop Prudhoe Bay, BP had invested in Standard Oil of Cleveland,
Ohio (Sohio). In 1987 it bought the remaining 45% it didn’t already own and,
merging its other US activities, formed BP America. Robert Horton, who had
worked at BP for 30 years including time as CEO of BP Chemicals and as main
board finance director, was made CEO of the new operation.His reputation as
‘‘Horton the Hatchet’’ for demanding job cuts to stem losses – preceded him.1 In fact Horton, who had taken an MBA at
MIT’s Sloan School of Management in the 1970s, liked Americans and worked hard
to assimilate their culture. Though it was inevitable that jobs would have to
go, he talked straight and persuaded people that he was rebuilding the
business, not destroying it. He took Jack Welch, GE’s blunt and, forthright
CEO, as a role model, cutting out layers, but holding ‘‘town meetings’’ at BP
offices across the US to explain his strategy He joined in the Republican
presidential campaign in 1988, contemplated running for the US Senate himself,
and made a good impression on the Cleveland social circuit.
New ideas, new style
Marked
out as the heir apparent to succeed Sir Peter Walters as BP’s CEO, Horton
planned to bring what he had found great about America back to Britain. The Wall Street Journal,
applauding Horton as ‘‘an unusually brash Briton enamored of the US,’’ wrote in
1989 that he wanted to ‘‘Americanize Britain’s biggest company.’’ Horton
underlined this by expressing the belief that ‘‘BP is, in a funny sense, more
of an American company than a British company.’’2 On his formal appointment as chairman and CEO in September
1989, Horton set about changing BP with vigor. He announced that the company
would have to undergo ‘‘the corporate equivalent of Perestroika and Glasnost.’’3 Widely welcomed in the media and among
financial analysts as someone who could cut through BP’s stifling bureaucracy
and over-centralized systems, Horton launched ‘‘Project 1990’’ to change the
‘‘civil service’’ culture that still reflected the company’s previous
government ownership. He also wanted to flatten the organization, make deep
cuts in head-office functions, and decentralize power to global business streams.
The process changes Horton envisaged were encapsulated in the slogan ‘‘OPEN’’ –
Open thinking, Personal impact, Empowering, and Networking – networked,
empowered teams were to be the change-management tool.
Mismatch
Initially,
all went well, with senior executives such as David Simon, BP’s chief operating
officer, supporting the much-needed changes. However, many people became unhappy
with the way change was being imposed – Horton used words like ‘‘trust’’ and
‘‘empowerment,’’ but showed little sign of it in the way he was pushing the
changes through. His assertive American leadership style began to get in the way
of what he was trying to achieve.
By
1992, as the economic recession continued, BP’s financial situation worsened
dramatically and Horton implemented swingeing cost cuts. Head office staff was
cut from 3000 in 1989 to just 380. Morale plummeted as many saw his change
program increasingly indistinguishable from a large-scale downsizing exercise.
Horton then exacerbated things by adopting an ever more dismissive tone about
his colleagues.
In
an interview with Forbes magazine in the US he said: ‘‘Because I am blessed with my good
brain, I tend to get to the right answer rather quicker and more often than
most people. . . So I have to rein in my impatience.’’4
Widespread
unease turned to real concern about Horton’s judgment and leadership style. In
June, 1992 the company’s non-executive directors acted, informing Horton that
he would have to go. On 25 June, he resigned after little more than two years
in the job. David Simon was asked to take over.
New leader, different style
Simon
had to move fast on several fronts. The business was burdened with debt and was
heading for its first loss in 80 years – so major change would have to
continue. But shattered morale and widespread distrust would have to be
repaired simultaneously.
On
the financial front, Simon developed a three-year plan, called ‘‘1-2-5’’ – to
cut debt by $1bn a year, build profits to $2bn a year, and hold capital
spending to $5bn a year. With a much smaller head office staff, he sold BP’s
headquarters and disposed of $6bn of non-core businesses.
He
speeded reorganization by pushing decision making down the company and changed
the management structure so that managers could co-operate across divisions rather
than referring everything upwards for decisions. As far as continuing change
was concerned, Simon launched a new program called ‘‘PRT’’ – Performance,
Reputation, and Teams – which, despite the name change, was fundamentally a
reshaped version of Horton’s OPEN.
By
setting specific targets and focusing everyone on them, Simon gave BP’s people
clear reasons why they would have to become cost conscious and help the company
back to profitability. By constantly communicating, he regained their trust in
senior management. He made no bones about the scale of change that was needed
and declared early on that he would be continuing Horton’s strategy: ‘‘This is
about the style of running the company at the top.’’ He told the Financial Times: ‘‘It
is not about changes in strategy.’’5 But, where Horton had been blunt and abrasive, Simon was calm
and diplomatic – though anyone who mistook his mild manner for weakness was in
for a surprise. With a firm grip on the numbers he wanted, Simon helped people work
out how to achieve them. He made it clear that he wanted to listen, to think
through problems without jumping to conclusions, and liked to provide space for
other people’s ideas. He thus made clear his own personal commitment to
teamwork. He also made himself approachable – often wandering around talking to
secretaries, tea ladies, and anyone he met. By acting in these ways, Simon not
only won trust and confidence, he also personally engendered a new, freer, more
democratic and empowering way of working. But throughout he never took his eye
off what the business had to achieve.
The achievement
By
late 1994, most of his three-year plan had been achieved – a year early. In
1995, Simon moved up to become chairman and brought in John Browne, previously
head of BP’s exploration division, as his CEO. By the following year, BP’s share
price had doubled compared with 1992 and even though the company’s workforce
had fallen from 117,000 to 56,000, morale and confidence were high.
When
he left BP to take up a political appointment with the new Labour government in
1997, Simon bequeathed Browne a company in such good condition that in 1998 it
could pay $48bn for US oil major Amoco. The following year BP Amoco announced
that it was acquiring Atlantic Richfield for $26.8bn. The turnaround since the
low spot of
1992
had been dramatic.
INSIGHTS INTO LEADERSHIP STYLES – ROBERT HORTON AND DAVID SIMON
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There are few such clear examples of differing leadership styles and their
relative effects. CEOs are usually removed because of strategic error or
failure to achieve expected financial targets. Very few indeed are expelled for
an inappropriate leadership style – especially over such a short period.
»
Few doubted Horton’s intellectual ability, nor the strategy he chose to follow.
But, having assimilated an American style of leadership he showed a blind spot
in applying it in an unadulterated form in the company’s UK operations. What works
in one situation may not work in another.
»
David Simon, who had initially been passed over in favor of Horton because the
latter was seen to have a proven leadership track record, used a style that matched
the situation. He pursued the same strategy and changes, but simply did it
differently. By personifying the behaviors he wanted to embed, rather than telling
people how to behave, he achieved the critical goals.
»
Simon mixed ‘‘hardware’’ with ‘‘software.’’ He blended a focus on what had to
be achieved with sensitivity to the situation, approachability, and good communication
skills. He won trust, respect, and confidence.
BP time-line
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1986:
Robert Horton appointed CEO of Sohio.
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1987:
British government sells remaining shares in BP, completing its privatization.
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1987: BP
completes acquisition of Sohio and Robert Horton appointed CEO of BP America.
»
1989: BP
starts sale of non-core assets and Robert Horton appointed to succeed Sir Peter
Walters as BP’s chairman and CEO.
»
1990:
Project 1990 and OPEN launched.
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1992:
Robert Horton resigns and David Simon takes over. Company announces first loss
in 80 years.
»
1994:
Simon’s three-year plan achieved one year early.
»
1995: Simon
becomes chairman, John Browne appointed CEO.
»
1996: Share
price double that at the 1992 low point.
»
1998: Amoco
offers itself for sale to BP.
»
1999: BP
Amoco acquires Atlantic Richfield.
KONOSUKE MATSUSHITA – THE LEADER PHILOSOPHER
Konosuke
Matsushita was born in a rural Japanese village in 1894, the youngest of eight
children. After his father lost their home and farmland through speculating in
rice, the family moved to the city of Wakayama when Konosuke was only five.
After another business failure, his father moved to Osaka where he told his
youngest son to join him. Aged nine, and without finishing primary school,
Konosuke began working a 16-hour day as an apprentice with a local charcoal
brazier. A year later he was working in a bicycle shop. When he was 16, he
found work with Osaka Electric Light Company, where he was rapidly promoted and
continued to work for eight years. Then, at the age of 22, Matsushita took an
unusual step. He had begun to suffer respiratory problems and lost pay for the
frequent days he had to take off. He also found his work boring. So he decided
to start working for himself, making a Y-shaped adapter he had invented that
allowed both a bulb and an electrical appliance to be plugged into the same
light socket.
Entrepreneur
His
wife, his brother-in-law, and two colleagues from his old company joined him.
Unfortunately, the adaptor did not sell and Matsushita had to pawn his wife’s
kimonos to find working capital. His two former colleagues soon left, but the
little business was saved by an order for insulator plates for electric fans
from a nearby electrical company and, in 1918, the Matsushita Electric Appliance
Factory was established. Within a year it was employing 20 people. Five years
later, Matsushita launched an innovative product, a bullet shaped, battery-powered
bicycle lamp. Unfortunately, it also did not sell well – most people were happy
with the candle or paraffin lamps they were already using. Determined not to be
beaten, Matsushita ensured that every bicycle retailer in Osaka was visited.
Each was left with one of his torches, switched on. As people realized they ran
for 30 or 40 hours, sales picked up rapidly and soon the business was able to begin
developing a national network of sales agents. Within two years, the company had
introduced ‘‘National’’ as its first trademark and, by diversifying into
electric irons, radios, and other allied products, was becoming a significant
business in Japan’s wholesale and retail markets. His business was prospering.
Caring for people
As
in many parts of the world during the 1920s, labor unrest was common in Japan.
Matsushita had always treated his employees as part of a family, but responded
to this intensifying activity by introducing a series of innovations that were
well ahead of their time. In the mid-1920s, he formed a club called Hoichi Kai,
designed to look after employees’ health and foster good relations through
social benefits, sports days, and cultural festivals. Its slogan was ‘‘we all
walk together one step at a time.’’ In another imaginativemove, Matsushita
introduced an in-house magazine to improve communications in 1927. In 1929 he
went a step further. Using the slogan ‘‘harmony between corporate profit and
social justice,’’ he launched a company creed: ‘‘Recognizing our responsibilities
as industrialists, we will devote ourselves to the progress and development of
society and the wellbeing of people, thereby enhancing the quality of life
throughout the world.’’ With this creed came a pledge that he asked all
employees to make: ‘‘we pledge to work together, in the spirit of mutual trust and
through selfless devotion to our jobs, to achieve a continuous improvement of
our corporate and personal performance.’’
The Depression
These
fine words were soon to be severely tested. In the following year the Great
Depression hit Japan and within a short time, Matsushita Electric’s sales had
halved. Across the country, companieswere slashing their workforce and
Matsushita’s colleagues proposed that their own should be halved. But Matsushita
ordered that no employee be laid off. Instead he halved working hours, which
reduced production by 50%, but continued to pay everyone their normal wages.
Matsushita’s workforce responded. By using their spare time and weekends to sell
the company’s products personally, they cleared the company’s backlog of stock
within two months.
Matsushita’s
action stood in stark contrast to other Japanese firms and because it was
successful in both the short and long term – moral, motivation, and
productivity all grew and stayed high – he is seen as the person who pioneered
Japan’s longstanding commitment between employer and employee.
Leadership philosophy
At
around this time, Matsushita visited the head temple of the Tenrikyo religious
sect, where he saw people working hard but happily together without any pay. He
came away with a feeling that if only a business could somehow be made
meaningful – like a religion – people would be both more satisfied and more
productive.6 He
began searching for a philosophy that would encompass his care and respect for
people and the role of a business.
Having
devoted a lot of thought to it, in 1932, to mark the business’ fifteenth
anniversary, he called a meeting of senior managers to announce the company’s
purpose. ‘‘The mission of a manufacturer is to overcome poverty, to relieve
society as a whole from the misery of poverty and bring it wealth. Business and
production are not meant to enrich only the shops or the factories of the
enterprise concerned, but all the rest of society as well. And society needs
the dynamism and vitality of business and industry to generate its wealth. Only
under such conditions will businesses and factories truly prosper, but their prosperity
is secondary. Our primary concern is to eliminate poverty and increase wealth
by producing goods in abundant supply. . . This is a manufacturer’s true mission.’’ Matsushita had found a
vision and higher-level purpose that went well beyond the simple pursuit of
profit.
A
year later, in 1933, he went further still, issuing what were to become his and
his company’s guiding principles right up to the present day:
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service to the public – by providing high-quality goods and services at
reasonable prices, we contribute to the public’s well-being;
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fairness and honesty – we will be fair and honest in all our business dealings
and personal conduct;
»
teamwork for the common cause – we will pool our abilities, based on mutual
trust and respect;
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untiring effort for improvement – we will constantly strive to improve our
corporate and personal performances;
»
courtesy and humility – we will always be cordial and modest and respect the
rights and needs of others;
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accordance with natural laws – we will abide by the laws of nature and adjust
to the ever-changing conditions around us; and
»
gratitude for blessings – we will always be grateful for all the blessings and
kindness we have received.
These
principles were remarkable for their time. To inspire his employees to share
his philosophy and vision he insisted, despite some opposition, that all
employees should repeat them aloud each day before work began – a practice
subsequently followed by many other Japanese companies. These ‘‘Seven Spirits
of Matsushita,’’ as they are known today, were to find constant expression in
Matsushita’s own leadership style. He believed in the potential that every
human being possessed, and saw a successful business as the way to help as many
people as possible to fulfil that potential. To be successful needed hard work
and commitment, but it had to work both ways. He was a competitive and
demanding entrepreneur who believed that personal humility and respect for
other people was the right way of winning that commitment.
Renewed growth
The
Japanese economy began to recover strongly in 1932 and, by the time Matsushita
Electric became an incorporated company in 1935, it had nearly 5000 employees.
Still suffering from ill health, Matsushita decided to delegate more
responsibilities. To do so, he divisionalized the company – thus making it one
of the first companies in the world to adopt this structure. The business
prospered. But Japan was soon to enter World War II, and under orders from the
militarist government Matsushita Electric soon found itself required to work with
large industrial combines – the zaibatsu
– to help make aircraft and ships.
The War’s aftermath
The
defeat of Japan in 1945, and the bombing that preceded it, left the country
completely devastated. Determined to ensure that ‘‘a former enemy would never
again become a threat to world peace,’’ the US occupation force began the
systematic disbandment of Japan’s military structure and its industrial zaibatsu. Because
Matsushita Electric had worked with these combines, Matsushita and his family
were designated as a ‘‘ zaibatsu
family’’ and the company was declared a ‘‘ zaibatsu
company.’’ Despite a petition signed by 15,000 of Matsushita Electric’s
employees, and representations by their trade unions, Matsushita was thus personally
barred from holding an executive position at his company.
However,
with hyper-inflation, severe food shortages, and desperately low morale all
around, Matsushita founded and then devoted his energies to the PHP Institute –
standing for ‘‘Peace and Happiness through Prosperity’’ – in November 1946. The
following year the exclusion order on Matsushita was lifted and both founder
and company were reunited.
Matsushita
reintroduced all the policies and principles that he had developed before the
war and which had subsequently fallen into disuse. As a result, the company quickly
started to thrive again. During the 1950s, the company launched washing
machines, black and- white television sets, and refrigerators. In the 1960s, it
launched tape recorders, color televisions, microwave ovens, and the first
videotape recorders. Significantly, in 1960, just a year before Matsushita relinquished
the role of president and became chairman, Matsushita Electric became the first
Japanese company to introduce a five-day working week.
As
chairman, Matsushita turned to writing – producing 44 books, many directed
toward the future of Japanese society and the world – one of which sold over 4
million copies.7 Between
1963 and 1988 he personally donated billions of Yen to many educational
institutions in Japan and abroad. Throughout, he tirelessly propounded his
personal philosophy, as encapsulated in a short piece of his writing: ‘‘‘The
Untrapped Mind’ The ‘untrapped mind’ is open enough to see many possibilities, humble
enough to learn from anyone and anything, forbearing enough to forgive all,
perceptive enough to see things as they really are, and reasonable enough to
judge their true value.’’
The achievement
Konosuke
Matsushita died of pneumonia on April 27, 1989. He was 94 years old. In his lifetime
he became one of the world’s pre-eminent industrialists, building the business
that bears his name into the world’s largest consumer electronics company, with
familiar brands such as Panasonic, Technics, National, and Quasar. Today, it
has over 40,000 employees in more than 200 companies in 46 countries. Its
turnover in 2000 was just over $70bn.8 Known as the ‘‘god of management’’ in Japan, Matsushita’s
innovations in the 1930s – for instance, teamwork, continuous improvement, customer
first – are still being adopted elsewhere. His genuine concern for people, his
respect for others and his personal humility has made him a powerful role
model.
This
is exemplified by a simple story from the time when Matsushita was at the
height of his renown across Japan. He went for lunch with some colleagues to a
local Osaka restaurant. Upon his arrival, everyone eating there recognized the
great man and stopped to bow and acknowledge his presence. Matsushita honored
the welcome and took his seat. At the end of the meal, with half of his food
unfinished, Matsushita asked the manager if he could go through to the kitchen and
speak to the chef. The manager immediately demurred and instead brought the
quaking chef out into the restaurant. Matsushita explained: ‘‘I felt that if
you saw I had only eaten half of my meal, you would think that I did not like
the food, or did not care for how you prepared it. I want you to know that the
food and your preparation of it was excellent. It is one of the best meals I
have had. I am just old now and cannot eat as much as I used to. I wanted you
to know that and to thank you personally.’’ Thus did Matsushita live the
beliefs he espoused.
Although
Matsushita’s philosophy predated the servant leadership style first promulgated
by Greenleaf in 1970 (see Chapter 6), it is remarkably similar – he saw himself
as an industrialist whose role was to serve others and, by empowering them, to
allow them to achieve their full potential.
INSIGHTS INTO LEADERSHIP STYLES – KONOSUKE MATSUSHITA
»
Coming from an affluent family that had fallen on hard times, Matsushita
understood what hard work and poverty meant.
Once
his own business began to flourish, he did not forget those early lessons but
sought to find ways to improve the lot of his employees, and many others, by
the way he ran the business.
»
He believed there was more to running a business than making profits – though
he never doubted the importance of being profitable. By seeking a wider purpose
and value he established principles based on a vision that won commitment.
»
By establishing those principles and sticking to them, Matsushita established a
style of leadership that was emulated throughout
Japan.
From the 1980s onward, many concepts were widely adopted in the West. The fact that
he is much less well-known outside Japan is a reflection of his humility – he
did not seek publicity unless it was in a good cause.
Matsushita Electric time-line
»
1894:
Konosuke Matsushita born.
»
1917:
Matsushita starts own small business.
»
1918:
Matsushita Electric established.
»
1923:
Bullet-shaped bicycle lamp manufactured and marketed.
»
1929:
Company creed and pledge announced.
»
1930: All
employees retained and kept on full pay during Great Depression.
»
1932:
Company mission and guiding principles announced.
»
1933:
Company divisionalized.
»
1935:
Matsushita Electric Industrial Co Ltd incorporated; 5,000 employees.
»
1941: Japan
enters World War II.
»
1946:
Matsushita and his company designated zaibatsu.
»
1946:
Matsushita starts PHP to promote peacetime industry.
»
1947:
Matsushita declassified as zaibatsu.
»
1950s:
Company expands rapidly.
»
1960s:
Company expands into electronics and goes multinational.
»
1961:
Matsushita resigns as president and becomes chairman.
»
1989:
Matsushita dies, aged 94.
HERB KELLEHER – A SERVANT LEADER
A
lawyer by profession, Herb Kelleher was working at a San Antonio law firm in
1966 when he went out for lunch with one of his clients, a Texas businessman
called Rollin King who had run a small air taxi service. Over a drink King
picked up a napkin and drew a triangle on it, writing Dallas, Houston, and San
Antonio at the three corners. King was suggesting that they start a new
Texas-based airline together. Legend has it that Kelleher briefly shut his
eyes, paused and then said ‘‘Rollin, you are crazy . . . But let’s do it!’’ Kelleher agreed to put up a $10,000 stake and
the business that was to become Southwest Airlines had been born.
At
the time, air travel was still relatively exclusive, with only 20% of US
citizens having ever traveled by commercial airline. Kelleher and King’s
concept was for a no-frills, low fare, short-haul, point-to-point airline that
could capitalize on the booming Texan economy. It was thus a direct challenge
to the established airlines. So, as soon as it applied for a license in 1967,
Southwest immediately became entangled in legal battles with Braniff, Texas
International and Continental, who all contended that the Texas skies were
already too crowded for yet another airline. Kelleher argued the case all the
way up to the US Supreme Court and won. But it took three-and-a-half years and
when they finally got permission to operate, in 1971, the company’s finances
were in a dire state, with $183 in the bank and debts of $80,000.
Take off
Nevertheless,
with the help of Lamar Muse, a man with years of experience at senior level in
the airline industry, who had been appointed president of Southwest in January
1971, the airline began service on June 18, 1971. To mark out its difference,
cabin staff wore extremely short hot pants in bright orange, knee-high white
PVC gogo- girl boots, and wide belts that emphasized shapely bodies. Targeting businessmen,
the airline promised them ‘‘love’’ – using the slogan ‘‘Somebody up there loves
you.’’ Flying from Dallas’ Love Field airport, the drinks on board were called
‘‘love potions’’ and the peanuts the staff served were called ‘‘love bites.’’ Harried
by the big airlines, who used their financial muscle to try to squeeze them out
of business, Southwest lost over $3mn in its first year. But a remarkable
fighting spirit and esprit de corps had developed among the 200 or so employees – for example,
finding ways to cut airport turnaround time from 45 to 15 minutes. By 1973, the
company was in profit. In 1974, it carried its millionth passenger. In 1977,
the company’s stock was listed on the New York Stock Exchange with the three-letter
designation ‘‘LUV.’’
Change at the top
Then,
in 1978, a growing rift between LamarMuse and Rollin King came to a head and
the board asked Herb Kelleher to take over as president, CEO, and chairman. Up
until then Kelleher had been working with his law firm and had not been deeply
involved in running the business, so he only accepted the posts on an interim
basis. But when a new CEO was appointed later in the year, Kelleher stayed on
as chairman and from then on he became more and more caught up in Southwest, finally
taking over as president, chairman, and CEO in 1982.
When
he took over, the airline had just 27 planes, $270mn in revenues, 2100
employees, and flew to 14 cities. For the next 23 years his personality and
leadership would play the dominant part in the company’s growing success. When
he retired in June, 2001, it had over 350 planes, revenues of $5.7bn, more than
30,000 employees, and flew to 57 cities. Its market capitalization, at $14bn,
was bigger than the combined capitalizations of American Airlines, United
Airlines, and Houston-based Continental Airline’s. A chain-smoker, with a
gravelly voice and a well-publicized fondness for Wild Turkey bourbon whiskey,
Kelleher had used the four years from 1978 to 1982 to understand what had made
the company successful, and he now set about embedding it in everything the
business did. In the process he made his own idiosyncratic leadership style an
integral part of the company’s public profile – internally and externally.
People
He
recognized that the high level of customer service that Southwest offered was a
direct result of the attitudes of its employees. So, contrary to conventional
wisdom, he made employees – not customers or shareholders – the number one
priority. ‘‘Your employees come first. There’s no question about that. And if your
employees are satisfied and happy and dedicated and inspired by what they’re
doing, then they make your customers happy and they come back and that makes
your shareholders happy.’’9
Customer
service required going the extra mile and so employing the right people became
the top priority. Fundamental to Southwest’s recruitment philosophy is a motto:
‘‘hire for attitude, train for skill.’’ To provide Southwest’s ‘‘Positively
Outrageous Service’’ requires an ability to be nonconformist. For example, one
recruitment advertisement showed a picture of a dinosaur that had been enthusiastically
colored in by an elementary-school child. Attached is a note from his teacher: ‘‘Brian
– please try to color inside the lines!’’ The advertisement’s headline reads
‘‘Brian Shows an Early Aptitude forWorking at Southwest Airlines.’’10 It is not unknown for 100 people to be
interviewed for a relatively simple job like ramp attendant.
Empowerment
Kelleher
believes people should be themselves atwork, not try to fit into a predefined
mold: ‘‘they can behave the way that their basic natures influence them to
behave. If they want to tell jokes, they can tell jokes. If they want to play
practical jokes, they can play practical jokes, and they can, in effect, be a
liberated spirit within a working environment.’’ ‘‘Do what you think is right’’
is Kelleher’s constant message to staff. This means looking for a lost teddy bear,
parking a customer’s car when they’re running late, using their own credit card
if someone’s lost their purse. ‘‘If you exercise this form of leadership, we’ve
learned that people become healthier, wiser, freer, and more human.’’11
Fun, freedom
Fun
and freedom are part of the Southwest culture. Anniversaries, birthdays,
personal successes, and other celebrations are reasons for a party or picnic
and everyone joins in. Kelleher is often involved and, when it was pointed out
to him that mechanics on the night shift found it difficult to participate in
company picnics, he and some pilots cooked a barbecue for them at two o’clock
in the morning. He arrives unannounced with coffee and doughnuts for the
cleaning crews at three o’clock.
The
informality and fun at Southwest is legendary. As part of safety instructions,
cabin crew have been known to say: ‘‘There may be fifty ways to leave your
lover, but there are only six ways to leave this aircraft.’’ People calling
Southwest’s reservations line are quite likely to hear: ‘‘If you’ve been
waiting more than 10 seconds, press 8. It won’t help, but it might make you
feel better.’’
Being different
Kelleher
has made his drinking and smoking a trademark. If he gives a speech at a
working breakfast, he points out that it’s a unique experience because he
seldom speaks when he’s sober, and the downside is that he’ll remember what
he’s said. He smokes constantly and nobody is surprised that he keeps a
dispenser filled with his favorite Wild Turkey in one of Southwest’s conference
rooms.
He
arrives at company gatherings on a Harley-Davidson motorcycle in jeans and a
T-shirt. He sings rap songs with lyrics that make fun of himself. To celebrate
the company’s 25th anniversary, he was escorted to the podium in a
straitjacket. One of his most publicity-conscious moments was in 1992 when he
agreed to arm-wrestle the chairman of another company, in a downtown Dallas club,
over the right to use the slogan ‘‘Just Plane Smart.’’ For the match, which was
later shown on prime-time television, Kelleher wore a white T-shirt, gray tracksuit
bottoms under shiny red boxing shorts, with a sling on his right arm and smoked
a cigarette. He was accompanied by an assistant wearing a bandoleer filled with
rows of airline-sized bottles of Wild Turkey whiskey. When he lost, Kelleher blamed
his defeat on a hairline wrist fracture, a week-long cold, a stubborn case of
athlete’s foot, and having accidentally over-trained by walking up a flight of
stairs.
Servant leadership
But
these activities hide a deeper sense of leadership. ‘‘I have always believed
that the best leader is the best server,’’ says Kelleher. ‘‘And if you’re a
servant, by definition, you’re not controlling. We try to value each person
individually and to be cognizant of them as human beings – not just people who
work for our company.’’12 ‘‘We
are not looking for blind obedience. We are looking for people who, on their
own initiative, want to be doing what they are doing because they consider it a
worthy objective. I have always believed that the best leader is the best
server.’’ For Herb Kelleher, ‘‘leadership is being a faithful, devoted,
hard-working servant of the people you lead and participating with them in the
agonies as well as the ecstasies of life.’’13
Humility
For
Kelleher, servant leadership is something else as well: ‘‘First of all, it’s an
attitude of humility, one of modesty.’’14 His own office is simple, with an inexpensive desk and a plain
oak bookshelf that houses models of Harley-Davidson motorcycles and a bottle of
Wild Turkey bourbon.
Kelleher
takes little credit for the company’s good fortune and consistently deflects
praise to his employees. His testimony to the US National Civil Aviation Review
Commission is typical: ‘‘My name is Herb Kelleher. I co-founded Southwest
Airlines in 1967. Because I am unable to perform competently any meaningful
function at Southwest, our 25,000 employees let me be CEO. That is one among
many reasons why I love the people of Southwest Airlines.’’
Achievements
Apart
from the financial success of Southwest – it is the only US airline to have
earned a profit every year since 1973 – the company has been voted one of ‘‘The
50 Most Coveted Employers’’ by MBA students, is ranked fourth by Fortune as the
company of choice to work for, and was voted the most admired airline in the
world for four consecutive years, 1997–2000. In May 1988, Southwest was the
first airline to win the US Department of Transportation’s coveted Triple Crown
for Best On-time Record, Best Baggage Handling, and Fewest Customer Complaints.
Since then they’ve won the monthly award more than 30 times. Between 1992 and
1995, the company also won the annual award for four consecutive years. In
1996, Kelleher challenged his employees to make it five in a row. They
responded with a ‘‘Gimme 5’’ campaign that won the title again in 1996.
One
of Kelleher’s biggest achievements is his relationship with his staff. This is
best reflected in an advertisement they placed in USA Today on October 14, 1994
– ‘‘Bosses Day’’ in the US. Costing $60,000, and paid for out of their own
pockets, the copy of the advertisement, addressed to Kelleher, read: ‘‘For
remembering every one of our names. For supporting Ronald McDonald house [Southwest’s
official charity]. For helping load baggage on Thanksgiving. For giving
everyone a kiss (and we mean everyone). For listening. For running the only
profitable airline. For singing at our holiday party. For singing only once a
year. For letting us wear shorts and sneakers to work. For golfing at the LUV Classic
with only one club. For out-talking Sam Donaldson. For riding your
Harley-Davidson into Southwest Headquarters. For being a friend, not just a
boss.’’ It was signed, ‘‘HAPPY BOSSES DAY FROM EACH ONE OF YOUR 16,000
EMPLOYEES.’’
INSIGHTS INTO LEADERSHIP STYLES – HERB KELLEHER
»
Although Kelleher was a founder of Southwest, and sat on its board, he did not
become involved in its day-to-day running until 1978 and didn’t become full
time CEO until 11 years after it began operations. So he adopted a ‘‘builder’’
role (see ‘‘Styles for stages’’ in Chapter 6) – taking the best of the culture
and embedding it.
»
To provide real customer service – the key to differentiation and therefore
profitability – Kelleher recognized that it was employees that mattered most.
Finding people with the right attitude became the top priority. Having found
the right people,
Kelleher
then empowered them to make the service special – he did not rely on scripts,
procedures, or company policy.
»
An intrinsic part of Kelleher’s leadership style is ‘‘being different,’’ but
also being himself. His drinking and smoking are personal habits that he has
made a trademark. His Harley- Davidson, T-shirts, and rap songs are unusual CEO
behavior. But his people know he cares.
»
Despite being highly successful, Kelleher is modest and humble about his own
role He is a selfproclaimed ‘‘servant
leader.’’
Southwest Airlines time-line
»
1966:
Rollin King and Herb Kelleher agree to form intrastate airline.
»
1967: Court
cases to stop airline being licensed begin.
»
1971: First
flight piloted by Lamar Muse.
»
1973: First
profitable year.
»
1974: Millionth
passenger flown.
»
1977:
Five-millionth passenger flown and company listed as LUV on NYSE.
»
1978: Lamar
Muse resigns and Kelleher takes interim charge.
»
1982:
Kelleher becomes president and CEO full-time.
»
1987:
Southwest celebrates the sixth year in a row as recipient of the Best Consumer
Satisfaction record of any continental US carrier.
»
1988:
Southwest becomes first airline to win Triple Crown.
»
1990:
Annual revenues more than $1bn – rated a ‘‘major’’ airline.
»
1992:
Kelleher arm-wrestles for right to ‘‘Just Plane Smart’’ slogan, but loses.
»
1992–96:
Southwest wins Triple Crown five years in a row.
»
2001:
Kelleher retires.
NOTES
1
Manfred Kets de Vries, The New Global Leaders, Jossey-Bass, 1999.
2
J. Lublin, ‘‘Who’s News? Horton Seeks an American Accent for BP,’’ Wall Street Journal,
February 14, 1989.
3
Ian Hargreaves, ‘‘When toughness is not enough: the background to the
resignation of Bob Horton,’’ Financial
Times, June 26, 1992.
4
T. Mack, ‘‘Eager Lions and Reluctant Lions’’, Forbes,
February 17, 1992.
5
David Lascelles, ‘‘Horton is ousted as chairman of British Petroleum: directors
point to personality clashes as reason for shock decision,’’ Financial Times, June
26, 1992.
6
John Kotter, Matsushita Leadership: Lessons from
the 20th Century’s most Remarkable Entrepreneur, Free Press, 1997.
7
KonosukeMatsushita, Michio Hiraku: Developing a Road to
Peace and Happiness through Prosperity, PHP,
1968.
8
$73bn as of March 12, 2001.
9
Chief Executive magazine: http://www.chiefexecutive.net /mag/146/x2article1.htm.
10
Kevin & Jackie Freiberg, Nuts!:
Southwest Airlines’ Crazy Recipe for Business and Personal Success, Bard Press, 1996.
11
Seen Magazine: http://www.seen.com /seenmagazine/july2001/fortune.htm.
12
http://www.greenleaf.org/leadership/read-about-it/articles/The-Essentials-of-Servant-Leadership–principles-in-Practice.htm.
13
Kevin & Jackie Freiberg, Nuts!:
Southwest Airlines’ Crazy Recipe for Business and Personal Success, Bard Press, 1996.
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