Book Excerpt: The Art of Business by Herb Kelleher

What’s sets great CEOs apart from those no one cares to remember? Is it their drive? Their personality? Something else? See what’s different about South West Airline’s Herb Kelleher in this excerpt from The Art of Business.

Book Excerpt:
The Art of Business: In the Footsteps of Giants
by Raymond T. Yeh with Stephanie H. Yeh
Published October 1, 2004
279 pages
ISBN: 0-9754277-1-7 

My first interview with Herb Kelleher actually lasted three and a half hours. During that time, Kelleher laughed, sometimes loudly. The most amazing thing to me was that he was totally focused on me during the whole time. When it was time for me to catch my flight back to Austin, he took me to the airport personally. On our way out, he waved to every person, calling them by first name and hugging many along the way. Then, at the main entrance of the LoveFieldAirport, we sat in the car for a few more minutes while Herb talked about his hobby in astrophysics. As I got to know him, I became mesmerized by his dynamic personality, exceptional intelligence, integrity, and compassion.

Kelleher is considered a legend in the worlds of aviation and business, and was voted by Fortune as one of the ten best CEOs in the U. S. His leadership skills, combined with his flamboyant and dynamic personality, have been envied by many but ably copied by few. Very few people are able to maintain his level of dedication to a higher purpose, his indomitable will to succeed, and his absolute lack of ego.

Early Influence Kelleher’s mother was the most significant and predominant influence during his formative years. As the youngest of the four children, Kelleher saw his family rapidly shrink from six members to two during World War II. He recalls his strong relationship with his mother, the only other member of his family to survive at home:

“She was both mother and father to me simultaneously. She had the strength to do both and she had very high principles. She was very ethical. She had a very democratic view of life and so really I was nurtured at her knees because there was no other knee. She had enormously wide interests in politics and business, so it was very educational in that respect, just talking with her. We’d sit up and talk to two, three and four o’clock in the morning when I was quite young, about how you should behave, the goals that you should have, the ethics that you should follow, how business worked, how politics can join with business, and all those sorts of things. I was going to public school and it was like I was getting a combination of public schooling and home schooling.”

Kelleher attributes his fundamental value of “doing good for others” to his mother, who taught him that a person’s essential worth comes from the contribution that he or she makes. It’s not surprising, then, that throughout his life Kelleher has never been concerned about position or title, and stands out as one of the few great American CEOs truly without ego. He remembers how he saw the pitfalls of outer success at an early age:

“I was about 12, I think, and there was a gentleman in our neighborhood. He was kind of a dandy, the way he dressed himself, and he preened himself like a peacock. I used to see him strutting around that way and lo and behold, within a relatively short time he was indicted for embezzling from this financial institution and sent to jail. And I said to myself, ‘There is a first hand example of what my mother was talking about.’”

In fact, Kelleher was so determined not to become swept up in the chase for acknowledgement, position, or title that he almost got into trouble when he was 18:

“I was a basketball player at my high school, and the point record at that time was 29 points in a game, and this goes back to 1949. I had scored 29 points and everyone was asking me to shoot to break the record, and I refused to do it because that’s not what it’s all about. It’s not about individual records, it’s about teams winning, and it didn’t make any difference to the team whether I broke the record or didn’t break the record. I just refused to shoot until the coach called me over. He called a time out and said, ‘Herb, everybody including me wants you to break this record. Now go ahead and shoot! That’s an order!’ But that’s the way I felt about it.”

Humility When SWA built its corporate headquarters in Dallas, Texas, Kelleher appointed himself a windowless office away from a corner. Though flamboyant and often loud by nature, Kelleher is nevertheless humble at heart. Throughout his professional life, he has held true to the early values he gleaned from his mother, always treating each person as an equal. At SWA, Kelleher does not differentiate people by the positions they hold, choosing instead to honor the sacredness of each person as a human being. Says Kelleher, “It’s very important to value people as individuals.” Adds Barrett, who has worked with Kelleher for over 30 years,

“When he was practicing law, I was his secretary. He had two young lawyersand a law clerk that were assigned to him. Everything that he did, we did. At the time I didn’t even realize that I was being given opportunities. I didn’t know I was being mentored. I just thought that every legal secretary did that. If Herb went to court we went to court. If Herb went to Austin to lobby, we went to Austin to lobby. And he always treated us, really, as equals. He always asked our opinions about things. Remember, I wasn’t even a lawyer.”

Jim Wimberly acknowledges Kelleher’s humility as one of the trademarks of great leadership: “Some people have an open door policy. Well, he has an open door, which is different from an open door policy. There was none of the usual protocol. The hierarchy just never existed here. It’s easy to get to him. He works seven days a week. Access was always there. And you felt comfortable going in.”

At SWA, people can reach their executives, including Kelleher, almost anytime. Executives respond to emergencies immediately, usually within 15 minutes. One SWA pilot said about Kelleher, “If you’ve got a problem, he cares.” Kelleher recalls the early days of SWA, when he fought in court daily to get the fledgling airline off the ground against the more established airlines: “We had these just slashing battles in the courtroom, all day long, really bitter. And then, of course, I was very happy to go out and have a drink with the other lawyers after court. It wasn’t personal.” Wimberly observes, “Herb has made more friends out of enemies than any other person I’ve known. They all love him, whether they are friend or foe because he treats everyone the same.”

When asked about the relationship between leadership and ego, Kelleher, as usual, focuses on doing good for others:

“You have to have the service mentality in the sense that you subjugate your own ego, and you subjugate a large part of your own life to really helping other people, being successful on their behalf.”

Unwavering Resolve to Succeed When Kelleher was diagnosed with prostate cancer in 1999, he never stopped working. He would fly from Dallas to Houston everyday to receive his radiation treatment at the M. D. Anderson Cancer Center, and then return to work as usual. As with everything else in his life, he likes to win. Recalling his fight with cancer, he often jokingly says: “I just kind of kicked its ass.”

During an interview, Barrett revealed that Kelleher never aspired to run an airline. In fact, his dream was to become a pilot. But after almost four years of battling in court against a slew of opposing lawyers for SWA’s right to fly, he couldn’t resist. In fact, the higher the odds, the greater his motivation to fight the good fight. He recalls his reaction to the early legal battles for SWA:

“It fired me up tremendously. As a matter of fact, in retrospect I think that was probably one of the greatest motivations, the most powerful motivation involved. The way I expressed it was, ‘Look, we’re offering to do something better for the people of Texas. I’m not going to let these guys frustrate the system and prevent that from happening.’ It became sort of an idealistic issue. A societal issue with our legal system functioning the way it should.”

In fact, Kelleher became so inspired that he offered to personally finance the airlines’ legal expenses when the SWA Board wanted to close the company.

Passion Kelleher is a man of passion and he inspires others to work passionately in whatever they do. He used the football program at the University of Texas to illustrate the importance of passion at work. He said: “They brought in James Street as the quarterback to succeed Bill Bradley who was touted as a fabulous quarterback. Street didn’t have nearly as many skills as Bradley. For example he couldn’t throw as well. But when Daryl (Daryl Royal was the head coach then) replaced Bradley with Street, guess what? The University of Texas started winning because Street was the guy that could get everybody together to charge. And of course Bill Bradley was fabulous. He was a great defensive back for the Philadelphia Eagles thereafter. But if you had a punch list of who’s bigger? Bill Bradley. Who’s played quarterback longer? Bill Bradley. Who has the best arm? Bill Bradley. Who threw more accurately? Bill Bradley. And yet, there was Street and he took over and made them into a tremendous team, tremendous winner. Street’s got passion!”

Kelleher continues: “When we talk to other people about Southwest Airlines, I always tell them that it’s got to come from theheart not from the head. It has to be spontaneous, it has to be sincere, it has to be emotional. I said, ‘Nobody will believe it if they think it’s just another program that was conjured up for six months time and then you’re going to drop it. The power of it in creating trust is that people have to see that you really radiate, that it’s a passion with you, and you’re not saying these things because you think they are clever or a way to produce more productivity or produce greater profits, but because you really want things to go well for them, individually.’”

Wimberly talks about Kelleher’s love of people this way:

“He has the ability to remember not only names of people he’s met but really significant details of their personal life or their business life, and he can go back and reinitiate a conversation with someone that he met ten years before. He can recall those facts or those personal interest things of people that he met no telling how many years before. So he has just a unique ability to connect with people early, very early. And when he does it, it’s not contrived. It’s not like he’s putting on this persona of trying to be a friendly guy. It’s just the way God made him. I think with the instant connection he has with people, everyone is just mesmerized with him and they just fall in love with the guy, and for good reason because he does have that talent, he does have that God-given ability because he loves people.”

One cornerstone of SWA’s phenomenal success is its focus on loving people rather than following management trends—a clear statement of Kelleher’s influence.

Walk the Talk During several interviews with Kelleher, I discovered that he embodies tremendous consistency and integrity. Jim Wimberly comments:

“He’s totally true to himself and totally consistent between his private life and his public life. He’s totally consistent between his public speeches and his private speeches. You could look at a speech that Herb gave to the annual shareholders meeting of 2002 and compare it to his message to the field in 1992 and compare it to a letter to employees in 1982 and find tremendous consistency in terms of adherence to core values. So the absolute adherence to extraordinarily high professional principles of ethical conduct and fair dealing, is just remarkable over time. So he built up a reservoir of credibility not only among employees but other people.”

Wimberly continues: “The other thing I would say about Herb is what you see is what you get. The public Herb is the private Herb. He doesn’t have one persona for the TV cameras, the public Herb. It’s not a Jekyll and Hyde situation where you have, when he’s up in front of 1,000 employees he’s one personality, but when he’s in a small conference room he’s another. No difference. Absolutely no difference.”

Confidence A person needs tremendous confidence to be a contrarian, which Kelleher has been all his life. For example, SWA was the first in the airline industry to bypass the hub-and-spoke system, long considered the most profitable way to run an airline. SWA counters this deficiency by focusing on short-haul, point-to-point customers, keeping a low cost structure, and maintaining high efficiency. It was also the first airline that put its employees first by offering complete job security. SWA was the first airline to offer profit-sharing the moment it made a profit, and it is the first airline to focus on profitability rather than market share. Of course, it was also the first airline to offer permanently low fares on a widespread basis.

Kelleher possesses the confidence to respond quickly and decisively in almost any situation. For instance, as a result of a tax law change, a segment fee was imposed based on a percentage of the ticket price, putting SWA, which offered many short segments, at a competitive disadvantage. SWA responded immediately by offering longer flights with fewer segments. But people inside of the company then began to argue that the airline needed to start serving meals rather than peanuts, because customers would expect them on longer flights. Kelleher disagreed:

“Nope, we’re not going to start serving meals, we’re not going to start serving meals until our customers tell us that we need to start serving meals. But I don’t think they will, and let me tell you why. Because we are going to fly them non-stop from Nashville to Los Angeles, for example, and we’re going to charge them $1500 less than they are going to pay going through DFW and making a connection on American, or going through Chicago and making a connection on United. So they are going to save about 45 minutes or an hour on their trip, they’re going to save $1500 in money, I don’t think they’re going to worry too much about whether they have a meal or not.”

When the financial community at large jumped in with similar suggestions, such as adding a first class, Kelleher responded the same way:

“Now, let’s move to the coach portion of other airplanes. Have you flown coach recently? We give you more leg room. We give you as good as anybody else gets now, unless you just happen to hit the lunch hour, but when you’re away from the lunch hour, what do you get? ‘Oh, you get peanuts, you get pretzels.’ What’s the difference? That’s 97% of the market. We’ll be happy to appeal to 97% of the market. We just had to tell them, ‘You’re way off base. You don’t understand. If people can save $1500 and 45 minutes to an hour, believe me; they’ll be driving to Nashville from other cities to fly us to Los Angeles,’ which of course they did.”

Focus One of the things that impressed me most during my interviews with Kelleher is that he always put his full attention to me. Wimberly elaborates on this point:

“When you’re with Herb one-on-one, there’s no one else in the world. You could be in the Grand Imperial Ballroom with 10,000 people, and he could be the keynote speaker, but when he’s with you, when he’s talking to you there’s no one else in the world.”

Adds Barrett, “He could have 18 fires burning and he could know they were burning, but when he is focused on a person or a project that is all he is focused on.”

Informal Communication SWA is known for its flamboyant marketing ploys, including events like “Malice in Dallas” in which Kelleher battled for the right to use the advertising slogan “plane smart” against the Chairman of Stevens Aviation in an arm wrestling match. To Kelleher, communication comes in all shapes and sizes. He said:

“Communication is seeing somebody that works in your department and saying, ‘Emily, I sure am glad to see you back. I heard you had a little difficulty with the baby. How’s the baby doing?’”

Demeanor is also a form of communication. Kelleher recalls a situation in which a manager’s demeanor strongly affected his people: “I got a call from a department that has always had superb performance and they said, ‘Herb, we don’t know what we’ve done wrong. Our vice president walks through every morning and doesn’t say hello to any of us, looks at the ground, got his shoulders slumped.’ I said, ‘Really? I need to talk to him.’ So I talk to him and I say, ‘What’s the matter?’ He says, ‘Well, I’m in the middle of a divorce, and I’m really upset, really disheartened by this divorce and it’s really gotten me down, I’m depressed.’ I said, ‘Well, do you realize that you’re communicating that to all the people in your department? They think there’s something wrong with them, that they’re not doing their jobs right.’ His very demeanor was a form of communication. He was a good guy and had just inadvertently made everyone think, ‘Gee, I’m doing a lousy job.’”

Be Quick But Stay Balanced Kelleher is a man of action who is known for making quick decisions. He says:

“If you make quick decisions and they’re wrong, you also have to be ready to change direction instantaneously. Or fix things. Sometimes it’s not going as well as you would like, but that’s because there are little imperfections on it, so you smooth out the imperfections and keep going. I really do believe in ready, fire, aim. In our business, if you keep aiming all the time, you never get to fire.”

Make a Difference While Having Fun Throughout his life, Kelleher has adhered to the basic principle of “doing good for others.” Over time, this principle has evolved into the golden rule in SWA, which is “Do unto others as you would have them do unto you.” Even this rule has evolved into the more encompassing principle of “Making a difference.” During his early years fighting for the airline’s survival in the courtroom and on the field, Kelleher instilled in his people his vision of helping millions of people to fly, of making a difference.

Today, every employee at SWA still believes that they are on a crusade in the business of freedom. They believe that their company exists for a purpose, not merely to make a profit. As such, they almost always focus on serving the legitimate needs of the customers. They believe that their own needs will be met as a result of making a difference to the millions of people who fly SWA.

At SWA, people are encouraged to express their personalities in their work and savor the individuality of each person. While they work hard for a cause, they also don’t take themselves seriously. In fact, making work fun is a trademark of SWA. Kelleher is well known for clowning and bringing fun into the workplace. Nothing is too small or strange to be celebrated at SWA. SWA celebrates milestones, people with big hearts, heroes, and oddities. Celebrations enliven SWA family, reminding them that they are on the winning team, a team that considers love, fun, play, and celebrations to be part of a typical day at work. Says Kelleher, “I want flying to be a helluva lot of fun!” Kelleher attributes his fun loving personality to his Irish origin. He says:

“The fun part really probably comes from being Irish, number one, and being around a lot of Irish people, because they do seem to know how to have fun, I must say. Also, the Irish are very ecumenical in their approach to people. But if you don’t have fun with what you’re doing, then why are you doing it? I mean, it’s just such a drab alternative. I mean, do you want to die and be remembered as the person who had the least fun?”

Adds Colleen Barrett:

“I read somewhere that laughter is really good for your body because it does something to your enzymes or something. I swear, that man, I bet he laughs three hours out of every 24. I’m talking belly laugh. If I go to an event that’s got 2,000 people, I can always find him just because of the laugh. I can find him in the most crowded rooms. He enjoys everything he does.”

LUV, the ticker symbol of SWA, in my opinion, stands for what Kelleher is about, in his own words:

“I would characterize myself as a person who always wants to make a difference while having fun.”

From Raymond Yeh’s “The Art of Business”.

Several leading business experts and authors have joined forces to support the distribution of this amazing masterpiece by Raymond Yeh.

Along with many others, Michael Gerber, Harvey Mackay, Jay Conrad Levinson, Faith Popcorn, Tom Hopkins, and Keith Ferrazzi (plus a few extraordinary authors and experts) are ready to give you their timeless business secrets plus much more when you purchase just one copy of Raymond Yeh’s newest hardcover book “The Art of Business.”

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