LEAD

Turnaround Strategy: What You Can Learn From Southwest Airlines

Long praised as an exceptionally smart, consumer-friendly company, Southwest Airlines finished dead last in on-time flights for the fourth quarter of 2013. Here's how they're attacking the problem, and what you can learn from it.
Advertisement

Throw a dart at the figurative board of case studies about great business cultures, and chances are that dart will pierce a study in praise of Southwest Airlines. Their employees are highly engaged, their customer service is renowned, their mission and company vision are inspiring, and they know how to party.

But the one thing this vaunted airline isn't doing right is arriving on time.

As Justin Bachman reports in BloombergBusinessweek, Southwest finished dead last in on-time flights for the fourth quarter of 2013, according to the US Department of Transportation. How is Southwest solving the problem? Steve Hozdulick, Southwest's senior director of operational performance, shared a few of the company's methods with Bachman. Here's what you can learn from those methods, if you're facing some delivery problems of your own. 

1. Forget about one-step, magic-bullet solutions. In reality, you'll probably need to take several steps. Sometimes you won't know what move to make next, until you gauge results from the initial moves. For example, in August, Southwest freed up more time for planes to fly between 9 a.m. and 6 p.m. Ostensibly, this step was going to improve on-time performances. Instead, as Bachman writes, the move created "unintended consequences" for Southwest to contend with:

That schedule, and an improving U.S. economy, produced more customers than the company anticipated and more-crowded planes, just as Southwest was learning how to operate a larger model in its network, the 175-seat 737-800. That model typically takes longer to load than the 143-seat 737s Southwest has traditionally flown. Add to this the cascading effects of a late aircraft in the type of nonhub network the airline operates, along with the winter storms that struck in December and January, and you wind up with only about two-thirds of Southwest's flights landing on time. In the fourth quarter of 2013, just 71.8 percent of its flights were on time--dead last in the industry.

The lesson is that one move rarely solves the problem. And sometimes, your first move initially exacerbates the problem--even if it's a good idea.

2. Emphasize what you're doing right. Yes, customers hate being late. But there's a silver lining for any business struggling to meet high customer demand: The high customer demand. From Southwest's perspective, 2013 was still a stellar year, despite the tardy arrivals. Southwest's fifth annual "One Report," which stresses what Southwest calls the "triple bottom line of performance, people, and planet," also came out last week. The positives included record revenues ($17.7 billion in 2013), more than 144,000 volunteer hours by Southwest employees, and an absolute decrease in greenhouse gas emissions.

More specifically, CEO Gary Kelly noted that Southwest achieved all of this while taking "significant steps in our fleet modernization." That's an especially interesting comment, when you consider that one of the upgrades (to the larger-sized planes) was increasing load times (and therefore decreasing on-time performance).

In other words, Southwest is stressing a second silver lining. Yes, the larger planes take longer to load. But the larger planes are part of an upgrade to the fleet, an upgrade which makes Southwest's planes more fuel efficient and environmentally friendly. Isn't that worth a few bumps in the road?

3. Don't hide from the problem. You might think an airline would be hesitant to publicize problems with on-time performance. But Southwest isn't hiding. Hozdulick spoke to the media, and the article appears in plain sight on Southwest's news page

The takeaway here is one you've heard before: transparency matters. What's more, tranparency in marketing is only believable if you share negatives with your customers. As my colleague Laura Montini recently wrote, both Patagonia and Domino's saw their sales increase following transparent marketing campaigns in which they opened themselves up to public criticisms. 

So far, Southwest Airlines seems to be on the right track. Hozdulick tells BloombergBusinessweek that Southwest's on-time arrivals will increase to 83-85 percent next year. Meanwhile, he remains mindful that the problem won't be solved overnight. "It really is a series of levers, and you pull these levers one at a time," he says. "You don't just yank one down really hard."

Last updated: Jun 24, 2014




Register on Inc.com today to get full access to:
All articles  |  Magazine archives | Livestream events | Comments
EMAIL
PASSWORD
EMAIL
FIRST NAME
LAST NAME
EMAIL
PASSWORD

Or sign up using: