Forum; Kevin Freiberg: A Nutty Airline

from the longhorn radio network the university of texas at austin this is for him with other companies have a little more of what southwest airlines have gotten better place of kevin three mats southwest airlines crazy recipe for business and personal success consulting firm does work with with companies all across the country and i think that people today are somewhat jaded because i believe that the company a corporation or four takes more from them is back and he has a company that has made it a lot of money but in the process i think dignified people and treating them humanely and by that i'm industry an economy in allowing them to express their individuality alive and expressed gibson tells the workplace thinks it's

because this is the day forty years an interview with business management consultant kevin freberg he and his wife jackie have worked with southwest airlines for more than ten years and have written a definitive book describing the airlines quirky business history entitled nuts southwest airlines crazy recipe for business and personal success published by barge books mr freberg spoke rico's southwest precarious early years when they were even off the ground due to the efforts of the competition to delay their inaugural flights low these twenty five years later some of those airlines have ceased to exist mr freberg described the impression southwest airlines leaves and the rest of the industry in one word it's a maverick they always have been a maverick from day one they started as an interested in aligning and in texas self line between san antonio dallas and houston and of course the world thought they were immense at that point in

time because they had a very informal way of doing business are flight attendants war hot pants and global boots in they didn't have a lot of money at the time so they used you know flamboyant ways of operating to draw attention to themselves and that really shaped her personality that i think has existed even today how they're much more informal than other airlines and their operating strategy is radically different from most airlines except for there's a lot to try to copy southwest and they fly point to point barrow high frequency low fare carrier they don't bring you into a hub from you know a smaller cities load up a big airplane and then fly you a long distance they really want to cater to the person that in a once twenty flights a day between austin and dallas are dallas and senate can like the shuttle very much i think you can call them on the shoulder a commuter roland

certainly with the high levels of service though i think in a lot of people's context the show means you you get less for less and i think southwest has done a pretty good job of giving more for less in terms of the value for the dollar well no it's been around twenty five or so years this is their twentieth anniversary can you say that in its early history in its middle years in this recent history as it is growing have they been able to to maintain tear their core provision had been bumpy places what's an insightful question olive because the answer is yes and no on the yes side i think what differentiated them as they've maintained a disciplined to really stay focused on what they'd do well i know which is the short haul point to point market you know a lot of airlines are trying to copy them people express was was certainly one

you need to be a billion dollars and you do one thing for a long period of time and it gets kind of sexy in exotic to try new things and you know by a jumbo jets fly to london that type of thing and i think that's been the demise of a lot of airlines have tried to carve the southwest because they have and maintain the discipline to stay focused on that on the core provision the no part of it is that i think it's really difficult as you get to be twenty three thousand employees strong to maintain that small family lived entrepreneurial informal feel that they got you where you are and that they're working very hard to try to try to keep that spirit alive what did they figure out that nobody really wanted to kneel on their flight well you know they've asked they went out there now you will in nineteen seventy eight when

deregulation hit that was one they had to make some some fairly significant decisions about future operations strategy that operated primarily as an interested airline and now they have the opportunity to do primarily what it wanted to do and i think they realize that they had happened on tuesday very effective and successful strategy being you know the short haul point a point and then the simple operating procedures know meals just peanuts and they ask customers they say would you pay ten dollars more for an airline meal i would you pay ten dollars more for a minute would you pay five dollars more to be to have an assigned seat and what would you think the customer so i now know we'd rather have the loaf there's another bill to fly between austin and dallas for twenty bucks a can drive up for them so they really stayed stayed focused on that simplicity was their competition

always other ones i would think for short distances us travel would be competitive you know you're absolutely right there and certainly there's been fierce competition in the airline industry and southwest of poland facing more fierce competition today than ever before because everybody wants to emulate them but they've always said that we're not just competing against other carriers air carriers were competing against the automobile because when you really think about what their average fare in nineteen seventy one was eighteen dollars their average for todays sixty eight dollars i find that pretty incredible because it's not a huge increase over twenty five years and they are they are competing with their try to draw you out of the automobile and say all of its it's more convenient and cheaper for you to fly that route than it is to drive it but what about the greyhound riot in what sense is that competitive whether they even care well in terms of

actual bus travel will certainly i think if you're the competing with with the bus system is that as well and they are working diligently to keep their costs low so that they can compete with the out with the bus visually believe that they're not an affair or they believe that they're not cost war can offer low fares if you have low costs will where had been the increases in their industry to them they have police gates for instance have the prices of those been increasing significantly you know i can't really tell you the answer to that question i assume that certainly prices and increase their request jet fuel prices fluctuate you know all over the place right now that's certainly increases costs and in most people don't i think most people don't understand that it is the airline industry that basically subsidizes the faa in the infrastructure that we use in this country and as that infrastructure becomes more dilapidated

that brings costs up as well in terms of landing fees and gate charges to to assume new gates in and the like or windy regulation came along and they were able to expand did they have a plan that they say will go this far outside of texas that maybe not that far it may be that for later that they have a map only herb kelleher could truly answer the year that they didn't give a specific answer to that what i can tell you is that they had a strategy which was that we will grow conservatively and we will only go into those markets well we can be profitable they've made no apologies about pursuing profitability and if you follow them and all they are very community oriented their compassion for the communities they go into it's not as writing a check to a charity they get their people involved in you know sweat equity if you will and in the communities

but they firmly believe that the way to do that is to maintain a strong bottom line and to maintain that that sends deep sense of profitability so were some carriers look at market share and say let's you know let's go into the city because it will expand their market share they've said we're only then expand their market share if we can be profitable do it because a lot of carriers will go after twenty five percent of the market additional percent of the market but i'm a customer fifty percent increase in cost and that doesn't make a lot of sense so their strategy has really been grow slowly and going to those cities and those city pairs where we can make money for the other airlines were going to take this lying down has been on a concorde well then corporate southwest incorporated in nineteen sixty eight and it was nineteen seventy one before applying never left the tarmac

and that was primarily because at the time texas international braniff and to a lesser degree can't know pretty much conspired to keep them on the tarmac and out of the out of the air and it took three trips all the way to the united states supreme court before before they get free to fly do you have an entire collection of employees their case tooling their thumbs all the time when it goes on when something like that happens it's a great question because what she read about what we've tried to do in the book is highlighted a balance what what you tend to hear a lot about is the court battles the legal battles which were in our view nothing short of heroic a mean you'd have herb kelleher the single attorney for southwest airlines and then you have you know ten or fifteen attorneys that represented the collective brand of texas international and continental so it was really kind of a david and

goliath story well all that was going on there was a very colorful and flamboyant figure named mr muse who was i think chiefly responsible in the early days for getting the operation off the ground and there were employees that work you're going to go out on the tarmac trying to do more with less they had very little resources to get this airline to get this airline in the air and of course it was a matter of jobs survival for them so they would they would pick in the streets of dallas that come out of the woodwork some unknown and fight the causes that the legal battles representatives well from a pr standpoint you list a lot of the pluses for an organization like this what were some of the mine says what they do wrong went wrong

well i think they've attempted to go into some cities that did not work out very well for them in denver would certainly be the one of them which was great disappointment to make as we used to fly in and out of denver all the time but the problem was that the time stapleton was a very congested airport and weather problems initiated catalyzed a few little doorways in their system and of course of fifteen minute delay in denver may mean an hour or forty five minutes away by the time the plane is through its through which that route for a day so i think they've tried some cities that they wanted to go into that didn't work out very well in those words have to be considered mistakes was the rush plus rush plus was at a program that a guy there people are very entrepreneurial in and they allow them to be that way and even encourage

that and mad buckley well one other people and grown ups had an idea for a basically dated a service that would compete with federal express written off or something above and beyond federal express and they rolled out a very big cooler time and a prologue a very big campaign around roche plus and it didn't work out i don't know if it was ahead of its time i cant quite tell you why it didn't work but i didn't actually try to do well the ideal yeah i ate it certainly wasn't for lack of marketing power and an and having it be well thought out that time i think they would tell you that it may have been a little bit ahead of its time and they are in fact look you're revisiting rush was so will save or extend their second don't they tried to fix it or just make you feel better about not having done what he wanted to do yeah well i think they attempted to i

don't know all the intimate details about what they did to try to fix it i know that when southwest day goes after some time in the initial phases of the rocky they don't give up i mean they they they press on but i think it's a wonderful story about how someone can try something in an organization that doesn't work and in fact cause the organization a lot of money i can't tell you how much in this case other doesn't get killed for anne and i think that the bigger message there is that you know in a day and age when change it so so rapidly and you've got to be creative and you've got to be innovative to stay alive and to stay ahead of the game you can't really do that unless you're people are experimenting and trying new things and coming up with new ideas but people aren't going to do that if every time they come up with a no idea it doesn't work out they get killed for it i think that's one of the things that has separated them from a lot of other companies that we deal with a bailout of people are trying things and they allowed to fail and to

learn from it move on have they've been downsized delayed many corporations have been in this country although they have never had a furlough since nineteen seventy one there's one exception they had three mechanics that i believe were laid off in nineteen seventy one for three weeks and they were hired three weeks later so i mean for all intents and purposes they never had a furlough which which in this industry is pretty incredible herb kelleher would tell you we were we were in an interview not too long ago and someone said oh what is your vision for the future of southwest jones and i found his answer to a pretty unique he said to make southwest airlines jobs secure for our people anonymous ceo's you're here say that but in my experience that's pretty rare we kind of runs counter to the profile the

sword aren't prepared it is people and they're often just a little improvement because think the chances he doesn't take chances oh i think they've taken i think they've taken chances there right now they're engaged in the whole ticket was an effort i think that's certainly a chance they took a chance on but a company called trance star actually going into trance star before that it was news airlines which were more music started and later sold that probably didn't work quite as well as they wanted to oh i think they're very big risk takers as a matter fact the whole approach to the business has been counter culture or outside the traditional ellen paradigm so i think that in and of itself has been a risky and the other thing i would tell you is i think they have innovated by not changing another words by staying focused on the fundamental purpose when i think there's lots to temptations in this

business to try as i said earlier bigger jets different jets flying international versus staying focused to the point to point market well every other airline is doing that kind of thing they've said no we're we do one thing well we're going to stay focused on the air and so i think they've been fairly risky in doing that what's the role of the outrageousness that goes along with this i mean if they're coming along with common sensed no frills small fierce isn't that enough why oh why does a theater command of that well i think it emanates from the top herb kelleher is certainly at a pretty outrageous character he loves life he's got a passion for life he enjoys people immensely and he likes to have a lot of fun and he really believes

that that business for a lot of people is just way too seriously were too much of our lives and invest too much of ourselves in the workplaces that we that that well we are that it really should be fine and you can make a profit have fun at the same time so he charged the people department which is interesting they are called personnel are human resources i called people because they deal with people the people department in nineteen seventy eight when he came on as full time ceo he's a higher fun people and hire and selfish people and hire entrepreneurial people we get that combination and what happens is you draw a kind of an outrageous group and then if you've create an environment for them to express their outrageousness that's it really kind of actually unfolds has he developed over this quarter century

logically as an adventurous entrepreneur does he run against that grain i don't think you eat well i think he has been that way from the very beginning i mean i think herb is a consummate entrepreneur he's a terribly inclusive marketer which was really a risk when you think about where the airline industry was in the early seventies and even the early eighties primarily up until the mid eighties air travel was for the elite air travel was for people who had the box to jump on an airplane and i think his entrepreneurial spirit and is inclusive egalitarian idealism of you have said we will make one affordable for four more people he would much rather philip lane at forty nine dollars a

fair then to charge a hundred and forty nine dollars and have the planned half full and so they really developed i think i am and entrepreneurial spirit that says we're going to go into the markets that we serve and we're going to try our best to lower the fares and expand the market which again is a pretty significant difference from the way the traditional airline industry has been really has what he's done serve to revitalize some things to rules were actually in cities like hobby in houston were made way in chicago there's been a significant part of their strategy is to in addition to the short haul point to point and they go after airports other typically close to downtown locations they started serving the business short haul business travelers so the person that would like to fly from austin the dallas love his fifteen minutes away from downtown or less i'm gettin it a go and have a meeting come out

and get back on the plane and be back for lunch in austin and so they've they've sought to find those low congested and on congested low traffic airports and they're close and one possible and in the case of hobby and love midway in chicago and maybe soon to be lindbergh in san diego i think they've been primarily responsible for keeping those airports alive and thriving has seesawed southwest i can't tell you the number olive but they they probably get a hundred cities amid to say fifty two hundred cities a year that begged them to come and i'm not exaggerating when i say that when you come into a city a new lower fares by a third to a half you can imagine that economically people want you there

politically it's good of the with the politicians can get you to come and they are very restrained in responding to those requests again because they're not that i'm going to a city where they can maintain that their profitability they don't go into a market and say ok what will the market baron how much can we charge they go into a market and say what's the lowest possible for we can charge in this market and still make a profit again because of this inclusive approach tell me about the format of the book i thought those success in a nutshell four entries are interesting actually am in to make copies of each of them just like flip through them for the finances and question about them to get to the copier in time but tell us why you have those rosters through the book out of this work for you well

first of all we wanted nuts to be and you're writing about an unconventional by a lot of people's definition crazy airline so we wanted the book to reflect that i don't think this is a i would like to think this is not a traditional business book it's got a hundred and thirty some color photographs we did it in four color and we tried to make it very readable with lots of stories and anecdotes because they're very colorful al iman in how we tried to write it in such a way that if people remember the store the remember the points behind the story but to sum up each chapter we would put together a little list of what are the things we do at the chapter were the things that were most important to us we've called it a success in a nutshell and really it's it's the takeaway is that we would like the reader to embrace if they were to try to make some change in their own businesses or in their own personal lives ok give us an

example well for example i think one of the operating philosophies of southwest airlines has been manage in the good times for the bad times the fiscally pretty conservative and you know when you're financially strong and the good times come i think it's very easy to say well it's you know it's radically expands buy new equipment whats your goal of breathing room to to spend and their approach has been pretty much the opposite this is a time when we're really profitable let's tighten the belt wolves because you don't know when jet fuel prices are going to go up you don't know when something else can happen in the environment that may cause cost to go and i think that's just a good philosophy in personal life is as well i know that my wife and i have tried to adhere to that there you know in the way we run the finances of our family

let me ask you about something i just opened it won forty seven recites and core values is this something that colorado has worked out or ru devising these bears what holds this all together i'm glad you asked that olive because one of the things the southwest has not done is it has not been well flashy about defining its values and putting them up on nicely framed wall hangings so it's a lot of rhetoric or consulting firm gets into a lot of companies were there's a lot of rhetoric behind the values and the vision but there's not a lot of substance when you look at the difference between walkin the talk of senior management these have never been published as far as i know on the walls are anywhere else in southwest airlines these are the values that we said after observing them for eleven

years and being fairly intimately involved with their operation and what they did what values seem to be driving them and so these were the kevin and jackie freiberg distillation if you will from what yours has been a guest on form as a management consultant kevin freberg he and his wife jackie freberg recordings of nuts southwest airlines crazy recipe for business and personal success published by barb books the views expressed on this program do not necessarily reflect the views of the university of texas at austin or this station technical producer for farm didn't offer its production assistant any second i'm your producer and host olive gray businesses

are available and maybe purchased by writing for and cassettes communication giving the ut austin austin texas seventy seventy one to that's for a cassettes communication at ut austin austin texas seventy seven one to this exchange at the university of texas at austin this is the la morning radio network this week on for business management consultant kevin freberg we thought gosh is a company who needs to be exposed to other companies and corporate america of other companies and corporate america can have a little more of what southwest airlines have one other

place it would be southwest airlines crazy recipe for business and personal success