Robert Scoble is one of many fans of Southwest. He likes the fares but above all he is impressed by the people who work there. That is the essence of the Southwest Trusted Space.
But Southwest is not a network, you might say. It is a single-purpose organization. No. Southwest is a dense network as you and I are as people. It only looks like a conventional machine organization that to those who cannot see systems. Most analysts and most competitors routinely miss this aspect of their competitive edge.
The Southwest Paradox Principle - The lowest price is not derived from superficial costs cutting but from systemic cost saving. The best experience is not rooted, in meals, drinks and legroom. These can all be replicated by the use of money. No the best experience is rooted in the nature of the most human experience as defined by customers interacting consistently with highly motivated and happy staff.
The Southwest experience is embedded in the relationship that the staff have with each other and then with the customer.
This impossible-to-replicate ingredient was the cultural aspect of the plan. Herb saw that the key to outperforming the formula was not merely to find more mechanical efficiency but to find more cultural lubrication between all the parts that had to collaborate. He had to find a way of getting all the parts to work well with each other and not just in their silos.
Southwest has eight unions all of whom interact on the ramp. The ramp is where the turnaround happens and is the key to fleet utilization. A fast turnaround on the ramp drives the point-to-point design and drives part of the trust issue, reliability.
The Competitive Principle – Compete by Using Culture. Herb saw that all his competitors had adversarial cultures where cooperating was exceptionally difficult. All had antagonistic management/unions norms and union-to-union norms. In this context, he saw how he could create a competitive barrier that they could not cross.
So what was his big idea? It was to create an internal container of culture where cooperation was the highest goal of the enterprise. If you go to the ramp for a Southwest flight, you may see flight attendants clean, pilots welcome passengers on board and engineers carry bags. You will see the smallest span of control in any airline team – usually less than 8-1. You will see a different kind of supervisor, the equivalent of a Warrant Officer in the military, whose work is to lead as an expert who shares the work with her team. Want to get fired today at Southwest? Be rude to anyone – especially to another employee.
The Organizational Principle in Cultural Competition - Every major process must be ‘seen’ in a collaborative context and matched with a cultural plan to ensure the maximum collaboration.
The Managerial Focus when Competing by Culture - Trust up and down and across the hierarchy is the fuel that drives the enterprise. Herb won this trust in the third year of operation. That was a bad year for the industry. Southwest hit an earning downdraft. What did his competitors do? They took it out on the staff. What did Herb do? – the executive took the hit and vowed from then on always to carry enough reserves to carry them through the inevitable bumps that would be in the future. They plan for bad days so that thy can reduce the impact.
Trust at Southwest is not about words but about how actions speak and how processes are designed to both create it and to sustain it.
The Time and Money Principle - Internal collaboration is their business plan. It is what drives their costs and their revenues. The result? Southwest pays their staff more than most US airlines. Yet it consistently offers lower fares. Customers get the value of low fares that are generated by the operation of the ‘whole’ where every part adds to the health and to the value.
This all happens because of the container, or trusted space, that Southwest has built for all of their employees. All Southwest staff have lots of room for personal expression and initiative. ‘Have Fun!’ is a mantra. Hence they are happier than most airline staff.
This is a vital part of the customer experience. Instead of interacting with sullen serfs, customers meet vibrant human beings. Who does not value that?
The Motivational Principle – Intrinsic versus Extrinsic. So what Herb has done is to build and operate the optimal container for a network of groups, the unions, and individuals to meet their deepest goal for expression and creativity inside the enterprise.
Many who are millionaires as a result of the profit sharing plan, still work for Southwest. When asked why they still work, they answer that they cannot leave. This is the place that has made them most human and the most happy.
Branding Principles in a Cultural Context - Southwest’s brand is not some marketing wheeze. It is the expression of the experienced reality of its culture and what this culture delivers to its employees first and then as a consequence of what its employees deliver as an experience to the customer. In the new model, the brand is driven by how you are as a person and as an organization.
Being versus Doing Principle - To deliver on the new model, you have to be the new model. This is why it so hard to execute it and why it builds such high walls for competition. If you seek to offer this type of experience to your members, then you as leaders will have to offer this experience to all that work for you as your first priority.