The Biggest Threat To Pioneering Firms Are Its Own Leaders

Joost Minnaar
Written by Joost Minnaar January 25, 2023

Last month, I experienced an interesting turn of events. While I was reading a book featuring a story on the awesomeness of Southwest Airlines in terms of employee engagement, customer satisfaction, and high performance through good and bad times, I was simultaneously bombarded by an avalanche of social media posts by angry travelers that experienced canceled flights and terrible customer service by the very same American airline. The book I was reading instantly felt outdated. But it also made me wonder: How was this possible? Why did Southwest Airlines—once one of America's central poster boys of progressive business—fail so miserably?

Over the last few weeks, all kinds of reasons for Southwest Airlines' meltdown were offered. The company blamed the weather, some blamed the outdated software, and others blamed the mismanagement of scheduling and staffing.

They all sound like valid reasons. But perhaps we should listen to Southwest Airlines' own employees for some alternative reasons for their recent string of failures in the middle of the holiday season. Indeed, a particular insight, based on a root cause analysis, is given by a pilot named Larry Lonero.

Why did Southwest Airlines—once one of America's central poster boys of progressive business—fail so miserably?
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An insider's perspective

In a Facebook post titled, "What happened to Southwest Airlines?" the pilot, who has been working for Southwest Airlines for over 35 years, offers a rich insider's perspective:

"I’ve been a pilot for Southwest Airlines for over 35 years. I’ve given my heart and soul to Southwest Airlines during those years. And quite honestly, Southwest Airlines has given its heart and soul to my family and me.

Many of you have asked what caused this epic meltdown. Unfortunately, the frontline employees have been watching this meltdown coming like a slow-motion train wreck for sometime. And we’ve been begging our leadership to make much-needed changes in order to avoid it. What happened yesterday started two decades ago.

Herb Kelleher was the brilliant CEO of SWA until 2004. He was a very operationally oriented-leader. Herb spent lots of time on the front line. He always had his pulse on the day-to-day operation and the people who ran it. That philosophy flowed down through the ranks of leadership to the front-line managers. We were a tight operation from top to bottom. We had tools, leadership, and employee buy-in. Everything that was needed to run a first-class operation. When Herb retired in 2004 Gary Kelly became the new CEO.

Gary was an accountant by education, and his style leading Southwest Airlines became more focused on finances and less on operations. He did not spend much time on the front lines. He didn’t engage front-line employees much. When the CEO doesn’t get out in the trenches, neither do the lower levels of leadership.

Gary named another accountant to be Chief Operating Officer (the person responsible for day-to-day operations). The new COO had little or no operational background. This trickled down through the lower levels of leadership, as well.

“Unfortunately, the frontline employees have been watching this meltdown coming like a slow-motion train wreck for sometime. And we’ve been begging our leadership to make much-needed changes in order to avoid it.”
Larry Lonero

They all disengaged the operation, disengaged the employees, and focused more on Return on Investment, stock buybacks, and Wall Street. This approach worked for Gary’s first 8 years because we were still riding the strong wave that Herb had built.

But as time went on, the operation began to deteriorate. There was little investment in upgrading technology (after all, how do you measure the return on investing in infrastructure?) or the tools we needed to operate efficiently and consistently. As the frontline employees began to see the deterioration in our operation, we began to warn our leadership. We educated them, we informed them, and we made suggestions to them. But to no avail. The focus was on finances—not operations. As we saw more and more deterioration in our operation our asks turned to pleas. Our pleas turned to dire warnings. But they went unheeded. After all, the stock price was up, so what could be wrong?

We were a motivated, willing and proud employee group wanting to serve our customers and uphold the tradition of our beloved airline, the airline we built and the airline that the traveling public grew to cheer for and love. But we were watching in frustration and disbelief as our once amazing airline was becoming a house of cards.

A half dozen small-scale meltdowns occurred during the mid to late 2010’s. With each mini meltdown, Leadership continued to ignore the pleas and warnings of the employees in the trenches. We were still operating with 1990’s technology. We didn’t have the tools we needed on the line to operate the sophisticated and large airline we had become. We could see that the wheels were about ready to fall off the bus. But no one in leadership would heed our pleas.

When COVID happened, SWA scaled back considerably (as did all of the airlines) for about two years. This helped conceal the serious problems in technology, infrastructure and staffing that were occurring and being ignored. But as we ramped back up, the lack of attention to the operation was waiting to show its ugly head.

Gary Kelly retired as CEO in early 2022. Bob Jordan was named CEO. He was a more operationally oriented leader. He replaced our Chief Operating Officer with a very smart man and they announced their priority would be to upgrade our airline’s technology and provide the frontline employees the operational tools we needed to care for our customers and employees. Finally, someone acknowledged the elephant in the room.

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But two decades of neglect takes several years to overcome. And, unfortunately, to our horror, our house of cards came tumbling down this week as a routine winter storm broke our 1990’s operating system.

The frontline employees were ready and on station. We were properly staffed. We were at the airports. Hell, we were ON the airplanes. But our antiquated software systems failed, coupled with a decades-old system of having to manage 20,000 frontline employees by phone calls. No automation had been developed to run this sophisticated machine.

We had a routine winter storm across the Midwest last Thursday. A larger-than-normal number of flights were canceled as a result. But what should have been one minor inconvenient day of travel turned into this nightmare. After all, American, United, Delta, and the other airlines operated with only minor flight disruptions.

The two decades of neglect by SWA leadership caused the airline to lose track of all its crews. ALL of us. We were there. With our customers. At the jet. Ready to go. But there was no way to assign us. To confirm us. To release us to fly the flight. And we watched as our customers got stranded without their luggage missing their Christmas holiday.

I believe that our new CEO Bob Jordan inherited a MESS. This meltdown was not his failure but the failure of those before him. I believe he has the right priorities. But it will take time to right this ship. A few years at a minimum. Old leaders need to be replaced. Operationally oriented managers need to be brought in. I hope and pray Bob can execute his promises to fix our once proud airline. Time will tell.

It’s been a punch in the gut for us frontline employees. We care for the traveling public. We have spent our entire careers serving you. Safely. Efficiently. With love and pride. We are horrified. We are sorry. We are sorry for the chaos, inconvenience, and frustration our airline caused you. We are angry. We are embarrassed. We are sad. Like you, the traveling public, we have been let down by our own leaders.

Herb once said that the biggest threat to Southwest Airlines will come from within. Not from other airlines. What a visionary he was. I miss Herb now more than ever."

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Change in leadership

I agree with the pilot. To me, his arguments seem like a much more plausible explanation for why the once-pioneering firm is failing.

In fact, it reminded me of an article I wrote years ago: When Pioneering Companies Fail. In it, I argue, after observing several pioneering firms failing, that there are three reasons why they seem to do so:

  • A change in leadership.

  • The threat of imminent crisis.

  • A combination of both these factors.

It seems that Southwest Airlines was struck by the first. It was struck by a threat from within.

Now, we can only hope that it is not too late. Let's hope that the newly appointed leadership can clean up the mess made by the accountants.

Written by Joost Minnaar
Joost Minnaar
Co-founder Corporate Rebels. My daily focus is on research, writing, and anything else related to making work more fun.
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