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I Am American Business

Herb Kelleher

Producer Notes

Herb Kelleher arrived at our interview in a chauffeured black car. He was right on schedule. When he got out of the car he gave me a big hug. "Great to see you again!" We had never met before. But who cared! I knew it was just Herb's way of making me feel welcome. That's the way Herb embraces everyone in his presence. And everyone wants to hang out and joke around with him. You can see how he makes it easier for people to have fun at work, just by example. He can't seem to help having a good time. But at the same time, he was calculating the passenger load of every plane that took off during our interview by how long it took to lift off the runway. He is serious about his business. Our crew was welcomed into the entire Southwest operation for a day, invited into an airplane hangar before the sun rose, allowed onto the tarmac to get blasted by hot jet exhaust, and given access to hundreds of employees who all got time off from work to come pose for our camera. It was our biggest cast of employees yet. And it was just like Southwest to want to pose for a big family portrait.

Video Interview

The "I Am" Q&A

What website do you like to visit?
All of them...Well, I start with Google.

What was your worst moment in business?
I guess the worst moment I ever had in business was the fear that Southwest Airlines wouldn't get off the ground.

Favorite drink?
Wild Turkey.

What's your favorite food?
Seafood.

What is your idea of fun?
To drink.

And at work?
Absolutely!

What personal weaknesses do you forgive?
I forgive all personal weaknesses except egomania and pretension.

What about business weaknesses?
I forgive business weaknesses as well, assuming that someone is motivated by good intentions.

What movie star do you like?
I like a whole lot of 'em.

Who's a business hero of yours?
Jack Welch is a business hero of mine. C.R. Smith, founder of American Airlines, "Pat" Patterson, founder of United Airlines. And you know C. R. as well as Pat and Jack spent an enormous amount of time with the employees of their companies.

What personal qualities you admire?
Integrity

And in business?
Integrity

What personal qualities do you admire in business?
Integrity

And in life?
Integrity

Are you doing anything "green", anything for the environment?
Yes we're doing a tremendous amount of "green" things. We have a tremendous recycling program. We have a relatively new fleet. We have cut our consumption of jet fuel by probably 50% per seat over the last 20 years. And we're constantly focused on environmental issues. We want to be green too.

What was your greatest moment in business?
I think my greatest moment in business was when the first Southwest airplane arrived after four years of litigation and I walked up to it and I kissed that baby on the lips and I cried.

And in life?
I'd say marriage, the birth of my children.

What is your dream?
Total job security for the people of Southwest Airlines forever.

Do you have a motto?
Not really.

What is your present state of mind?
My present state of mind is one of thankfulness.

Transcript

CNBC:
When you first started Southwest, it took years of legal fighting. What kept you going?

HERB KELLEHER:
It was a crusade for the American people, to do right by them. The air service at that time in Texas was a very poor quality and the prices were very high. I also wanted to vindicate the system to show that you know, it would come out all right in the end in America. And you couldn't suppress competition that was for the betterment of the people.

CNBC:
Were really thinking that this was a company that you were building for America?

HERB KELLEHER:
Well, I thought that I was doing it for Texas because we were a Texas intrastate airline at that time. That’s before they deregulated the Federal Regulatory Scheme, and so it was really doing it for Texas. That was the focus as an intrastate airline but we wanted to set Texans free because they were captive. There were monopolies in Texas in the air and we were out to destroy them. So the monopolists reacted with great vengeance and anger.

CNBC:
You never got discouraged during that time?

HERB KELLEHER:
Never got discouraged, no. It was like a competition and I was determined that we were going to win and we were going to be vindicated. And it took four years to accomplish that but it panned out all right after that. So persistence is a part of being an entrepreneur.

CNBC:
Once you got the airline going, you took a different approach to marketing. What was your take?

HERB KELLEHER:
Yeah, we did have a different take as a matter of fact and that was the employees came first. Employees first, customers second, shareholders third. If the employees serve the customer well, the customer comes back, and that makes the shareholders happy. It’s simple, it’s not a conflict, it’s a chain. If you treated the employees well, if you cared for them, if you value them as people, if you gave them psychic satisfaction in their jobs uh, that they would really do a great job for the customers and the customers would come back, which would be good for the shareholders. Most companies didn’t operate that way. So we turned the pyramid upside down, in effect, and said the employees come first and they always have. Not just in our minds but in our hearts as well.

CNBC: Has it worked?
HERB KELLEHER: It worked beautifully.

CNBC:
Was that a controversial idea when you decided to do that?

HERB KELLEHER:
Putting your employees first? Yes, it sure was, there was no question about it. Because uh, the business schools as of that time used to think it was a conundrum, which comes first, your employees, your customers, or your shareholders? And I explained it, it wasn’t an enigma at all.

CNBC:
Could you talk a little bit about focusing on your employees?

HERB KELLEHER:
We focused on our employees as people. We want them to know that they’re important to us not just because they’re at work uh, like they were cogs in a machine. So we pay a lot of attention to the personal lives. The grieves, the joys that they experience. We recognize those if they’re seriously ill. We communicate with them, we send them care packages. We want them to know that we value them as individuals, not as part of a workplace.

CNBC:
You also have a particular burden towards leadership…

HERB KELLEHER:
Well, as far as leadership is concerned, I think that everybody needs to be a leader in order to have a successful company. Because everybody, by example, sets a leadership standard. I don't care whether you're checking bags or loading them in the bin or no matter what you're doing. You're setting a standard for other people and we want people to all, all our people to be leaders. We think everybody is a leader no matter what their job is. We want everyone to be a leader. They’re setting an example by their conduct and they should be inspirational.

CNBC:
Let’s talk a little bit about this idea of having fun at work. How is that possible?

HERB KELLEHER:
Well. I think it was Robert Frost that said, “Isn’t it a shame that people’s minds work furiously until they get to work and then they stop?” And the reason their minds stop at work is because they feel that it’s an unnatural experience; that they have to be robotic in their approach to it, that they have to act like an automaton.

CNBC:
How do you think people should be at work?

HERB KELLEHER:
Well, I think people should have fun at work. It should be an enjoyable part of their life. They should gain psychic satisfaction from it. I think most of us enjoy fun, and why not at work as well as at play? And so we’ve always encouraged people to be themselves, not to be robotic, not to be automatons. We don’t expect you to surrender your natural personality when you join Southwest Airlines. We want you to have some fun, we want you to have psychic satisfaction from your job. It’s not just about money, it’s also how you feel about what you're doing. We want people to be recognized, participated, diligent and creative. And you can’t ask people to be someone other than themselves and have that kind of creativity and dedication and participation. So, we liberate people at work.

CNBC:
How do you do that?

HERB KELLEHER:
Well, we just do it by example. Everybody can laugh in the workplace, they can play jokes on each other in the workplace. We’re very informal in the way that we address each other. We recognize people for the things that they do that are amusing to other people like the Clown Award at our annual dinner. And we just say to them, look, have fun, be yourself, and we know you’ll be a far better participant with Southwest Airlines. It’s easy.

CNBC:
You do this in an effort to have everybody feel like this is their company?

HERB KELLEHER:
It is their company. I’ve always said that the general office is at the bottom of the pyramid, not the top. Our job at the general office is to supply the resources that our frontline fighters need in order to be successful. They’re not there to glorify us or make us look good, which would be impossible anyhow, [LAUGHS]. So, the focus is on the people in the field actually doing the job.

CNBC:
What are the values of Southwest?

HERB KELLEHER:
Well, I think the values of Southwest are humanism, number one. I think simplicity, number two. Humor, number three. Service, altruism, number four. I think that pretty well sums it up.

CNBC:
You have never had a layoff at Southwest. Tell us about that.

HERB KELLEHER:
Yeah, Southwest has, in the airline industry, since I’ve been in the industry, I think there have probably been over a million layoffs around the world. Southwest has never had an involuntarily layoff in its thirty-five year history. Many times we have sacrificed profitability during the bad times in order to provide our people with job security because that’s another aspect of how we value them. I think it provides a reciprocal trust in what our focus is. So, we’ve never had an involuntary furlough in the whole history of Southwest Airlines.

CNBC:
You once had to sell something rather valuable to keep from laying off people…

HERB KELLEHER:
Oh yeah, [LAUGHS]. Yeah, as a matter of fact, I think we demonstrated the sincerity and the profundity of our belief in that respect when we sold an airplane in lieu of laying anyone off at Southwest Airlines. So our fleet went from four to three airplanes. We managed to fly the four airplanes scheduled with three airplanes which is basically how the quick turns at the jet way originated. We used to turn airplanes in ten minutes when the standard in the industry was probably fifty.

CNBC:
You have been a big supporter of entrepreneurs…

HERB KELLEHER:
Yes, I have supported entrepreneurship. And I ought to get an A+ for being able to say that. I think it’s important to the help of our country that we continue to maintain a worldwide lead in being inventive, being creative, and that’s the area, frankly, where the jobs are coming from today. You know larger companies are cutting back. They’re reducing employment. It’s the smaller companies, the entrepreneurial companies that are producing the economic boost in the jobs for the United States.

CNBC:
What does it take to be an entrepreneur?

HERB KELLEHER:
I think a willingness to take risks. A willingness to endure chance. Persistence, a determination, a sticktoitiveness, self-confidence. I think if you have all of those things, you have a real good chance. But you have to welcome new ideas and creativity, and you have to entertain a thousand ideas for every good one that you get. But if you start turning them down just to turn them down, because you can’t be bothered and don’t have time, you never get a great one.

CNBC:
What’s your philosophy about listening to people’s ideas?

HERB KELLEHER:
Oh, I think you have to listen to their ideas and you don’t credential them because you can get a great idea from anyone, anywhere, no matter what they do or how much education they’ve had or what their background is. Because people’s minds usually are working furiously. So it’s important to listen to everyone that has an idea. And even if the idea is not perfect, it may be the kernel of a great development in it. So I’d say, when it comes to ideas, keep your ears open.

CNBC:
Do you think Southwest employees know that their ideas are welcomed?

HERB KELLEHER:
Oh, I think they know that full well. We tell them to send your ideas to anyone, it doesn’t matter who it is. Gary Kelly, the CEO, Herb Kelleher, the Executive Chairman, Colleen Barrett, the President. We just want to hear your ideas. In other words, you don’t have to be formal about it. You can write it on the back of a barf bag if you want to. Basically what we say is, if you could have a suggestion box that announces you're not doing your job. Because you should be talking to your employees often enough that you could get their ideas verbally and orally and person to person.

CNBC:
How would you describe the spirit of the company?

HERB KELLEHER:
The spirit of Southwest Airlines is exuberant, it’s caring, it’s dedicated, it’s diligent, it’s fun, it’s rewarding, it’s a joy.

CNBC:
How do you keep that going?

HERB KELLEHER:
The spirit of Southwest Airlines is kept alive, first of all, by who you hire. It’s kind of a religious experience, quasi-religious experience when it comes to hiring. We devote an enormous amount of time to making sure we get people who are other-oriented, who have a servant’s heart, who enjoy working as part of the team. Who can lend themselves to a cause, and then we do an awful lot to imbue those people with the history of Southwest Airlines, the spirit of Southwest Airlines, the accomplishments of Southwest Airlines. And then we try to maintain their interest, their esprit de corps, I guess you might say, by constantly communicating with them and honoring them.

CNBC:
You once said something about people not wearing masks at work…

HERB KELLEHER:
Yeah, we don’t want people to wear masks when they come to work. We want them to be themselves, we don’t want them to have to put on an artificial personality. We enjoy them and value them for who they are, not facades.

CNBC:
When you were starting the airline, you wanted people to have a different attitude when they got off the Southwest flight. What did you want people to feel when they got off a Southwest flight?

HERB KELLEHER:
Well, I always had the desire… that I wanted people to value Southwest because of the experience that they had. In other words, we provided a very good product at a very reasonable price. But in addition to a good product and a reasonable price, impose upon that a spiritual element, a sense of well being when you get off the airplane, a sense of saying ‘hey’, not, ‘whew, we got here”, but ‘boy that was fun, I liked that and I'm coming back.’ The core belief was that if you had fun, if you were relaxed, if you really connected with people, they would love it as customers. I think that’s someone that everyone is looking for in America and they find it on Southwest Airlines because our people are just wonderful. I deeply believe that it would be beneficial to any company that was willing to focus that way and spend the time and resources that it takes to accomplish it. We used to have these corporate days where people would come in from all around the world, and we’d tell them, in essence that it wasn’t just a formula on the blackboard. It was a giant mosaic that you're putting pieces in everyday.

CNBC:
CNBC’s campaign is about American business. About being an American entrepreneur. Can you talk a little bit about that pride – your company on a global playing field and how proud you are?

HERB KELLEHER:
I’ll tell you, I don't know whether this is apropos, but Southwest Airlines has been an exemplar for airlines all over the world. I mean it was really the seedbed for what’s going on in Europe, Asia, Central and South America, India, China. I take great pride in the fact that Southwest Airlines is an American concept, an American creation, and it serves as an exemplar for airlines all across the globe. And I think America should take pride in that as well. It’s been an inspiration and an example for the whole world.

Related Links

http://www.southwest.com