R.O.I. + I. – Return on Investment and Integrity. The new Breed of Brands.

Southwest Airlines - Fortune's Most Admired listWhen you think of some of the world’s most admired brands, there have been precious few who have lasted the distance remaining consistently near the top of all the “best” lists for the whole of their corporate life since inception. We have witnessed many burst on to the scene from nowhere only to disappear from view within a decade or so. And quite a few have remained in the public eye as product/service innovators one year; top financial performers another; employers of choice at other times; and maybe even good corporate citizens on other occasions.

But to be recognised as consistently high achievers in the triple bottom line of Financial, Social and Environmental performance takes a special kind of company with a special kind of culture and ‘servant leadership’ who understand the true meaning of ‘stewardship’ and all that it represents. In my opinion there is one company in the USA that has remained the stand-out performer for almost all of its 42 years in an industry littered with failures, and it continues to outperform on its “R.O. Double I” to this day. And no, it is neither a hi-tech nor an IT based company. It plies its trade in a brown fields industry that has been around for decades.

If I told you that this company has managed to maintain a special place in the heart of its millions of customers and the community at large every year with a workforce that numbers over 40,000 then its achievements become even more amazing given that this gives it 40,000 opportunities every hour of every day to ‘get things wrong.’ Invariably it gets it right 99% of the time.

This company continues to gather awards and accolades in all of the triple bottom line measurements that matter most year-in, year-out with a consistency of performance that is unsurpassed. I am talking about one of the World’s Most Admired Companies according to Fortune Magazine’s annual survey of corporate reputations (on the ‘Most Admired’ list every year since 1994 and all but twice in the ‘Most Admired’ Top 10); which is consistently awarded as ‘One of the Best Places to Work;’ ‘One of the Most Respected Corporations in the Community;’ a consistent ‘Green Leader’ on sustainability measures; a Positively Outrageous Service provider (that title is a clue); and a record holder for the longest running profitability streak in its industry with an unprecedented 40 consecutive years of profits and sustained operational excellence. It therefore comes as no surprise to learn that when Forbes completed its exhaustive market research in 2012 of the USA’s most desired brand, according to both men and women, this brand won the coveted #1 position.

Southwest Airlines 25 years of LUV

The amazing brand that I speak of is none other than SWA – Southwest Airlines.

The low-cost (not ‘cheap and nasty’) airline universally recognised and feted for a plethora of “bests” across the whole gamut of Key Performance Indicators:–

  • Best on-time performance
  • Best baggage handling
  • Fewest flight cancellations
  • Fastest gate turn-around
  • Lowest employee turnover rates in its industry
  • Fewest industry customer complaints/highest ratings
  • Over 60% market dominance in every city-city route it enters
  • One of USA’s safest airlines and newest fleets
  • Stock value consistently rising decade after decade
  • Most worker/shareholder millionaires
  • Growth of 20-30% pa in an airline industry littered with failures
  • Standard and Poors rating that is one of the best in its industry
  • Innovations in operational procedures, initial web design and on-line ticketing that turned the industry on its head.

And over those forty years of unabated profits it has all been achieved without the need to resort to lay-offs or pay cuts. That is a remarkable feat unmatched in US aviation history.

So how does Southwest Airlines do it? What makes its business model and its brand recognition and reverence so successful one might ask?

Southwest Airlines NutsThe most obvious answer is often found with the spiritual head of an organisation – the CEO. And Southwest Airlines had both a CEO and a 2-ic who almost reached mythical status during their time at the top over 35 of those 42 years. The co-founder, one time lawyer Herb Kelleher (President) and his 2-ic, one time legal secretary Colleen Barrett (Director of Culture) have created a culture built around fun and love (NYSE moniker – LUV) by never taking themselves seriously, hiring people with a sense of humour, and espousing a theory of delivering Positively Outrageous Service whilst achieving it all at the lowest possible operating costs, in the fledgling years out of necessity and ultimately as an industry game-changer. You can’t do that unless you engage your people and all of their diversity at a level of productivity and service where they are the difference that makes the difference in a ‘no- frills, low-fare, high-frequency’ airline with their good-natured attitude and ‘can do’ work ethic. To top it off, Southwest Airlines has always been a fully unionised workforce, so there are no corners cut through contracted or underpaid labour. I had the undoubted pleasure of witnessing this culture first hand over a period of seven years in the mid 90s when I led my world best practice study tours to the USA and Europe.

Southwest Airlines HO HalloweenThe Southwest operation and its head office at Love Field in Dallas, Texas, was always a favourite destination of mine because walking into their head office and touring their group departments for the day was like walking into a combination of an evangelical revival meeting and a Disney theme park all rolled into one, especially if one visited during Halloween.

The joy, the fun and the sense of camaraderie was palpable every single time. It literally jumped out at you off the walls of the place and was replicated in every personal story, every piece of written material, and every wall covered in photos and plaques and newspaper clippings and wacky stories everywhere you looked. This was not a contrived scene, it was organic. I know because I and my tour guests experienced it consistently year after year and I still have the photos and videos to prove it. What’s more, we never witnessed anything quite like it in any other best practice company elsewhere in the world in all of the fifteen tours I led over that seven year period, and certainly not in a ‘corporate’ environment with over 30,000 staff at that time. And remember – it was consistently profitable and consistently outperforming its competition in all of the industry benchmarks that mattered.

I once mused on one of my many visits back then whether this amazing environment would remain so special once its much loved co-founder Herb Kelleher and his ‘keeper of the culture,’ Colleen Barrett, finally retired and exited the scene. I was assured by anyone at SWA whom I happened to ask that there was ‘never any chance of the culture of love, fun, self sacrifice and passion abating,’ and they were right. Both Herb and Colleen have been gone from the scene for over six years now, and by all available measures the culture and the achievements – financial, social and societal – continue to this day. I believe this is because between Herb and Colleen, and their many thousands of colleagues, they not only led by example from the front, but they crafted a corporate architecture that focused on the highest aspirations of love; fun; service; humility and self deprecating humour that left no room for arrogance or false pride in its make-up. And they selected, hired, and trained accordingly.

Southwest AirlinesFrom my observations, way back in the late 80s and early 90s, Southwest Airlines was the only company which could boast a company director at the highest level of seniority who was responsible as chief custodian of ‘culture.’ Ms Barrett headed up the committee whose sole focus was to ‘spread, keep and enrich the company culture and family spirit.’ I wonder if even today there are that many public corporations as significant as SWA who venerate and resource culture as a specific focus separate to their HR department or things of that ilk? As Colleen Barrett said herself back then, “Basically we hire attitudes. People don’t think of working for this company as a mere job. It’s a cause.” They actively seek out fun loving people who think outside the box in an industry where strict governance and uncompromising rules of safety must apply, and yet this does not detract from their enviable record of efficiency, safety and productivity, it enhances it.

In the words of Gary Kelly, the current Chairman of the Board, CEO and President, “With a Warrior Spirit, a Servant’s Heart, and Fun-LUVing Attitude, our nearly 46,000 employees create the unique Southwest culture that continues to maintain the excellence we have built up over four decades with our brand (in the form of Customer Service, Operational Excellence, Community Engagement and Consecutive Annual Profits)… We are committed to our purpose – to connect people to what’s important in their lives through friendly, reliable and low-cost air travel. It is that purpose that will guide us forward in pursuit of our vision to become The World’s Most Loved, Most Flown, and Most Profitable Airline.”Southwest Airlines Front of Plane

Southwest bonds its employees to one another by shared values that include such traditional virtues as integrity, trust and altruism. For the worker ‘evangelists’ at SWA, it isn’t just a job it’s a crusade. And if the key to a highly successful brand is the level of trust that it engenders in the community then Southwest Airlines has turned trust into an organisational art-form through consistently Aligning the Attitudes; Being the Behaviours and Managing the Message.

What are the three elements that drive that intrinsic brand trust? I believe that it can best be described as:-

•    Trust in one’s Competence (organisationally this may be represented by operating efficiency and safety)
•    Trust in one’s Commitment (organisationally this may be represented by service, pricing, and customer experience)
•    Trust in one’s Character (organisationally this may be represented by community engagement and support)

Southwest Airlines doesn’t just strive to achieve outstanding results in the triple bottom line of Financial, Social and Environmental performance. Nor does it lay claim to winning various awards in these areas while it hides anything less than optimal from its public. It actively and transparently engages in measuring its results in these three areas each financial year in the form of its ‘Southwest Airlines One Report’ which lists all of the good, bad and the ugly KPIs under the triple headings of:– Performance (financial and operational); People (cultural and social); and Planet (environmental and societal). Southwest Airlines plane

R.O. ‘Double’ I

In the work that I have been doing in this area of R.O.I.+I. (Return on Investment and Integrity) or ‘conscious capitalism’ as it has also been termed, I have begun to notice that companies are finally beginning to have quite a unique approach to key areas of business that until this millennium, were almost non-existent. (The old paradigms of R.O.I.; growth for growth sake; command and control; headcount on a balance sheet; and a focus on ‘giving back’ only after the shareholder returns and executive bonuses have been fully accounted for, and where corporate citizenship fell under the banner of public affairs/PR, are still widely in evidence as the main order of the day, but thankfully this is slowly changing.)

In no particular order, these changes in thinking with a differentiated approach fall under the general headings of:- Innovation; Engagement; Environment; Servant Leadership; Culture and Mythology, and are built around a Noble Cause as the new sustainable model of business (Financial and Operational best practices assumed). What I have been discovering is that companies that are changing our world and the way we do business, are coming from a much larger paradigm of heart-centeredness interwoven into the hard edged fabric of sustainable financial results. Such things go hand in hand. They are no longer mutually exclusive. Many (but not all) of these leaders are coming out of the ranks of business entrepreneurs who have only entered the workforce since 2000. They are a new breed of leader and they want to make a difference to all lives, not just their own. What’s more, they have the technological means and the social media street smarts to do so.

Logos, Pathos and Ethos

AristotleIf we go right back to the time of the Greek philosopher Aristotle we will see evidence of this thinking as the source of influence, in the form of Logos (Intellect); Pathos (Emotion) and Ethos (Character). For too many years now we have witnessed only the Logos or rational approach to business sustainability. During the 90s, we began to see evidence of the Pathos or emotional appeal becoming part of the fabric of business in the form of customer service, employee engagement and cultural values as a focus. But now I believe that with the turn of the millennium we are beginning to witness the third critical element come to the fore in the form of Ethos or ethical behaviour in its broadest sense as an integral part of the new business model.

Back in the 90s, Southwest Airlines was one of the pioneering few profit-generating organisations that was doing the unthinkable…bringing ‘fun and love’ into the boardroom.

Some people view this idea of ‘conscious capitalism’ (or R.O.I.+I. as I call it) as idealistic and impractical. In their view the business world is a tough and brutal ‘dog-eat-dog’ world. To them, this is just a pipe dream – wishful thinking for the woolly headed idealists. In fact this way of doing business not only creates wellbeing for all stakeholders but it also creates sustained high performance. Traditional businesses that compete against an authentic socially conscious business soon discover just how strong, resolute and resilient these enterprises can be.  Just ask any executive of some of the now bankrupt or defunct airlines in the USA who marched to the beat of the older drums, what it was like to compete against Southwest Airlines in its own backyard for the last 40 years.

I will end this longer-than-usual article with the words of Herb Kelleher in his ‘Message to the Field’ back in the 90s in one of his famous addresses to his Southwest employees:–

“When you’re sitting around with your grandchildren, I want you to be able to tell them that being connected to Southwest Airlines was one of the finest things that ever happened to you in your entire life.

I want you to be able to say, ‘Southwest Airlines ennobled and enriched my life; it made me better, and bigger and stronger than I ever could have been alone.’

And if, indeed, that happens with your grandchildren, then that will be the greatest contribution that I could have made to Southwest Airlines and to its future.”

What are your thoughts on ‘R.O.I.+I.’ and the amazing SWA story? I’d love to hear them.

Drop me an email to brian@precisionprofiling.com.au if you would like to discuss further how to create the environment that attracts and retains the young leaders of the future for your organisation.

Until then… Let’s seek to understand more and judge less. Have a great week – Brian

Precision ProfilingWhat Makes You Tick? Through ‘Motivational Fingerprinting’ we uncover what you do, how you do it and why you do it, and most importantly, the hidden patterns that lead to your success, and that of your team.

About Brian Clark

Brian Clark is the principal director of Precision Profiling®.

He is a renowned practitioner, writer and speaker on building total customer cultures; values driven leadership and world best practice strategy and implementation.

He has been a guest lecturer on world best practice for the executive management programme at Monash University’s business college (Mt Eliza campus); an adviser to and key note speaker for the Singapore Productivity Association and a consultant to many major Australian and overseas corporations and government departments.

Read more about Brian Clark Here

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