Kelleher on Culture: An Irreplaceable Asset

Southwest has defied the conventional wisdom on everything from its pricing structure to its no-assigned-seats policy. But this remarkable carrier—the only major airline that has never had a money-losing year—has garnered its greatest accolades for its unique corporate culture. Its employees are incredibly loyal, and they have described the atmosphere of Southwest as more akin to that of a small family than of a large company. Kelleher has always hated bureaucracy and the glacial pace of decision making that goes with it. He is convinced that Southwest's culture and people are its greatest assets:

The culture of Southwest is probably its major competitive advantage. The intangibles are more important than the tangibles because you can always imitate the tangibles; you can buy the airplane, you can rent the ticket counter space. But the hardest thing for someone to emulate is the spirit of your people.

Kelleher has firsthand knowledge of how culture drives profits. Kelleher's workforce constantly delivers. One example is its performance in early 2000, when Southwest faced a crisis. Fuel costs had tripled, threatening the company's bottom line. In a heartfelt letter, Kelleher asked every employee to find a way to save the company just $5 a day. If they were successful, the company would save over $50 million a year, the chairman explained. Employees jumped to answer the call. One group of mechanics found a way to heat planes for less money. Another department volunteered to do its own janitorial work. In the first 6 weeks, Kelleher's dedicated employees saved the company more than $2 million. It was a clear demonstration of what is possible when there is real trust between management and workers:

Thinking like a small company isn't just another flavor-of-the-month management philosophy; it's a way of life that has been deeply embedded into the culture from day one.