8 ms·

Herb Kelleher: Manage in Good Times So You'll Do Well in the Bad Times (2006)

96 points by sghill 4y ago

gkanai 4y ago
Notably, Kelleher stepped down from the CEO role at Southwest in 2001. So this crazy debacle of 2022 is largely a result of management that has not followed Kelleher's guidance.
- inferiorhuman 4y ago
  lol, no Herb built up quite a cult, and he was around on the board of directors until 2008. While Gary is a colossal prick what we're seeing is absolutely Herb's legacy. Southwest had already outgrown its reputation as Herb's scrappy little airline by the 2000s. The meltdown is due, in large part, to practices that worked well enough with 90 jets but don't scale to the largest 737 fleet in the world. That lack of automation? That's on Herb, Gary didn't just suddenly decide to walk back a bunch of shit and decree that Southwest employees had to do everything by hand. American and Delta built out SABRE and Deltamatic in the 60s, United built out Apollo in the early 70s. Under Herb, Southwest basically did everything by hand until they started maybe thinking about buying into the full SABRE suite a couple decades ago. They only just integrated ticketing (with Apollo, SABRE, and Amadeus) in like 2017. Their scheduling (which is the biggest pain point right now) is still done the old-fashioned Herb way. As of 2019 Southwest was still doing load planning manually (a.k.a. counting bags by hand and using assumed weights). Notably this got them in hot water with the FAA. While things didn't reach a tipping point until Herb died, he did not leave Southwest on the right course. He created a nifty little airline but utterly failed to scale it. The continued lack of investment is on Gary and Bob, of course.
  - raincom 4y ago
    Love HN for outstanding rebuttals.
  - gedy 4y ago
    > The meltdown is due, in large part, to practices that worked well enough with 90 jets but don't scale to the largest 737 fleet in the world. Sounds a lot like the post IPO companies I've worked with where the leadership is still from the startup days..
  - TedDoesntTalk 4y ago
    > They only just integrated ticketing (with Apollo, SABRE, and Amadeus) in like 2017. Their scheduling (which is the biggest pain point right now) is still done the old-fashioned Herb way Is this why you STILL can’t see Southwest prices and book them on Google Flights, HipMunk, Kayak, etc?
    - listenallyall 4y ago
      This is a conscious decision by Southwest, it is willing to trade off the lack of exposure on the booking engines for not paying any commissions and keeping 100% of its fares as revenue.
    - inferiorhuman 4y ago
      More or less, yes. Proper SABRE integration came last year, and only for businesses. https://skift.com/2021/08/06/southwests-expanded-partnership-brings-bookings-to-the-sabre-standard/ https://skift.com/2021/08/06/southwests-expanded-partnership... Looks like Apollo and Amadeus came in 2020. https://skift.com/2020/05/19/southwest-airlines-expands-corporate-booking-gds-reach-more-business-travelers/ https://skift.com/2020/05/19/southwest-airlines-expands-corp... https://www.businesstravelnews.com/Distribution/Southwest-Goes-Live-in-Apollo-Worldspan https://www.businesstravelnews.com/Distribution/Southwest-Go... So if you use "Kayak for Business" you can book Southwest, otherwise you can click through on the ads that Southwest runs on Kayak. And, yes, it was a deliberate (Herb) choice. So was not being an IATA member and not participating in the IATA clearinghouse. The upside is less overhead the downside is less resiliency. You don't need to care about these things so much when you're flying a regional jet on mostly intra-Texas routes out of an airport that only allows short flights. With a fleet of full-sized airliners, "focus cities" across the country, and an international route network things look a lot different. https://www.iata.org/en/about/members/airline-list/?search=WN&ordering=Alphabetical https://www.iata.org/en/about/members/airline-list/?search=W...
      - theYipster 4y ago
        Um, Southwest participates in the IATA clearing house. You put up the wrong list. Here is the right one: https://www.iata.org/contentassets/82a24c7a736142b6bd18e20f77dcef60/ich-members.pdf https://www.iata.org/contentassets/82a24c7a736142b6bd18e20f7... And now for some industry education. You can participate without being an IATA member. Southwest likely started when they started flying internationally in 2014. You practically can't be an airline with international flights without participating. IATA runs the global clearinghouse. Notably, IATA does not run the clearinghouse for US domestic (and for foreign airline tickets purchased in the US.) That's ARC (Airline Reporting Corporation.) Southwest is also a member there.
  - vba616 4y ago
    I don't understand. If their problem is lack of automation, I wonder why were they reportedly melting down due to the automation failing. Superficially, I'd think that's because they were too dependent on automation. Obviously I don't know how to run Southwest better than Herb Kelleher.
    - inferiorhuman 4y ago
      What automation Southwest had still required a lot of manual intervention on a regular basis. E.g. scheduling still required manual intervention if a flight didn't go as planned. Luggage was almost entirely manual process (weight and balance, hand written tags, etc) up until very recently. Now it's a mostly manual process. So on a day to day basis things can be brute forced, but when something like scheduling goes tits up and leaves you with a giant mess of luggage you're left to clean up the mess in the most tedious way possible. They're the mechanical turk of airlines.
      - jackcviers3 4y ago
        I imagine someone manually changing the flight manifest by clicking a delete button on each passenger and crew member, and waiting on a database save and gui redraw after each action. Complete with major timeouts and concurrency errors due to the massive spike in traffic caused by the storm. It would be awful.
  - el_benhameen 4y ago
    Tech, business, and inside baseball on my preferred airline? Man, I would absolutely devour more of your writing on this, or at least any good sources you have. Any pointers?
    - listenallyall 4y ago
      A subscription to the Wall Street Journal will provide insight into the internal workings and personalities at many major companies.
  - theYipster 4y ago
    lol, but then why didn't SW run into this huge mess years ago, or decades ago? It's because while IT and automation matters, it's not the only thing that matters. The most important thing a CEO can do, especially in this industry, is set culture. That's their greatest role. Culture is far more important than IT. Herb's positive legacy in this industry is well deserved. This is because Herb set the culture at Southwest, and it's well known that Southwest's employee culture has been--under Herb's leadership--its greatest asset. Herb set it in past crises, such as when they had to sell their fourth airplane to keep the airline afloat, and Herb got the employees to band together to create the 10 minute turn, which allowed them to effectively fly a four plane route network with three planes. This "band together" culture has saved Southwest's skin countless times. It's what has let them run a highly complex route network of mid-market point to points (vs. hub and spoke) with inferior technology, and yet with good service and competitive reliability. The problem this time around is that Southwest suffers from the same labor shortage as all other airlines in the industry, and it's this labor shortage that led to their other deficiencies from biting them in the ass. Unfortunately, culture can't solve a crisis when there simply aren't enough people to "band together." Southwest's IT issues are very well known in the industry, and reports are the current CEO and COO understand and aim to address. This week emphasizes the need, and we can expect SW to embark on a modernization plan. Just remember though, IT modernization takes an enormous amount of time. While we wait the better part of a decade for better scheduling and reservation systems (SW's maintenance system modernization is years and years in and is still ongoing,) SW's current CEO can best spend his time in the trenches of the operation preserving and strengthening culture.
    - inferiorhuman 4y ago
      lol, but then why didn't SW run into this huge mess years ago, or decades ago? They have, like clockwork. https://www.cbsnews.com/news/southwest-airlines-computer-outage-causing-massive-delays/ https://www.cbsnews.com/news/southwest-airlines-computer-out... https://www.globaldatavault.com/blog/southwest-airlines-avoided-82m-disaster/page/25/?et_blog https://www.globaldatavault.com/blog/southwest-airlines-avoi... Southwest Airlines flights across the country were held up Wednesday while the airline worked to fix technology problems. … Last October, an outage caused about 800 Southwest flights to be delayed and forced employees to issue tickets and boarding passes by hand. Southwest is blaming a faulty router, which it says prompted a widespread network system failure; a technology crash pegged as the worst in the airline’s history. The reservation system was knocked offline, planes were grounded across the nation, and the outage took four full days to resolve. https://www.usatoday.com/story/travel/flights/2019/02/22/southwest-airlines-computer-outage-temporarily-grounds-flights-causes-delays/2948899002/ https://www.usatoday.com/story/travel/flights/2019/02/22/sou... Southwest Airlines suffered a computer outage early Friday that temporarily grounded flights across the country, adding to a string of recent flight woes at the airline.. https://www.wlrn.org/news/2021-06-15/southwest-airlines-resumes-flights-after-tech-glitch-causes-delays-across-the-country https://www.wlrn.org/news/2021-06-15/southwest-airlines-resu... A nationwide weather data outage disrupted Southwest Airlines flights Monday night, causing long delays for some passengers across the country. The company blamed the problem on issues with Southwest's third-party weather data provider. As for the 2022 meltdown: The problem this time around is that Southwest suffers from the same labor shortage as all other airlines in the industry, and it's this labor shortage that led to their other deficiencies from biting them in the ass. Unfortunately, culture can't solve a crisis when there simply aren't enough people to "band together." Nonsense. Arguably Southwest needs more staff because its operations are so archaic, however Southwest had plenty of ramp rats and crew. The problem was Southwest had no idea where its crew actually were or what they were doing. The CEO can't charm their way out of that nor can they simply throw bodies at the problem. Speaking of culture, the rugged individualism is absolutely a problem but that's still a Herb thing. Up north Sunwing is having massive operational problems but they were willing to charter planes to aid in recovery.
- codefeenix 4y ago
  Whos debacle?
- ktpecot 4y ago
  I don’t think this is necessarily true. Pretty sure there’s a quote from Herb saying that southwest was going to be “high touch, low tech”. Herb was a legend for going up against the big airlines and winning but he was the right person for the right time. A war time ceo if you will. Southwest doesn’t need Jobs they need Cook, someone who can build out and scale now that they’re established. The airline industry as a whole is known to have antiquated tech and hard to clean data. Someone mentioned in one of the threads last week how difficult it is to modernize these systems where every system is using different timestamp formats. Southwest is just more antiquated and probably at least 5 years behind the rest of the industry in modernizing. Especially with crew systems which is what blew everything up last week.
black_13 4y ago
[dead]
bhaney 4y ago
What a difference 16 years can make!
- frozenport 4y ago
  Old enough to drive!
i_have_to_speak 4y ago
Title needs a "(2006)" suffix.
- dang 4y ago
  Added. Thanks!
etempleton 4y ago
Good times are for getting the house in order so things don’t go sideways in the future and creating frameworks for when things inevitably do go sideways. If you have good plans and everyone is one the same page people can fall back to standard operating procedure and not over think things or panic because they don’t know what to do. In the case of Southwest they failed to invest in critical infrastructure and probably contingency planning as well. Hindsight is always 20/20, but I am sure there were/are people who knew this was a ticking time bomb.
- baxtr 4y ago
  What exactly happened at Southwest?
  - TedDoesntTalk 4y ago
    They canceled close to 3000 flights in the last few days, stranding hundreds of thousands of people.
    - nijave 4y ago
      I think they were doing close to 3k per day for a few days
    - late2part 4y ago
      More like 10k: "This week, with cancellations from other major airlines ranging from none to 2%, Southwest has canceled nearly 10,000 flights as of Wednesday and warned of thousands more Thursday and Friday, according to FlightAware. " https://apnews.com/article/business-transportation-us-department-of-0925834b8cfcf1150358f874334d16d7 https://apnews.com/article/business-transportation-us-depart...
  - etempleton 4y ago
    There are some threads online from Southwest employees. Essentially the entire system, which relied on dialing in via phone, failed catastrophically. Those employees could, if not see this coming, at least knew the system was antiquated and brittle. A failure of some magnitude was inevitable. This failure however was so bad that they lost everything. They didn’t know where their own planes were, where their crew was, where baggage was, anything. It was all lost or at least inaccessible for days. The details of how and why the failure happened I am sure will come out, but essentially this was tech debt that the previous CEO saw no value in improving.
evnix 4y ago
for the rest of us, prepare for interviews and keep looking for jobs when you have a stable job.
barbariangrunge 4y ago
Yet, what we do in good times is cut margins until they are so thin that the good times get better, and then everything explodes during bad times so everyone asks for bailouts Eg, unsustainable agriculture, manufacturing, banking…

96 points by sghill 4y ago

Notably, Kelleher stepped down from the CEO role at Southwest in 2001. So this crazy debacle of 2022 is largely a result of management that has not followed Kelleher's guidance.

inferiorhuman 4y ago
lol, no Herb built up quite a cult, and he was around on the board of directors until 2008. While Gary is a colossal prick what we're seeing is absolutely Herb's legacy. Southwest had already outgrown its reputation as Herb's scrappy little airline by the 2000s. The meltdown is due, in large part, to practices that worked well enough with 90 jets but don't scale to the largest 737 fleet in the world. That lack of automation? That's on Herb, Gary didn't just suddenly decide to walk back a bunch of shit and decree that Southwest employees had to do everything by hand. American and Delta built out SABRE and Deltamatic in the 60s, United built out Apollo in the early 70s. Under Herb, Southwest basically did everything by hand until they started maybe thinking about buying into the full SABRE suite a couple decades ago. They only just integrated ticketing (with Apollo, SABRE, and Amadeus) in like 2017. Their scheduling (which is the biggest pain point right now) is still done the old-fashioned Herb way. As of 2019 Southwest was still doing load planning manually (a.k.a. counting bags by hand and using assumed weights). Notably this got them in hot water with the FAA. While things didn't reach a tipping point until Herb died, he did not leave Southwest on the right course. He created a nifty little airline but utterly failed to scale it. The continued lack of investment is on Gary and Bob, of course.
- raincom 4y ago
  Love HN for outstanding rebuttals.
- gedy 4y ago
  > The meltdown is due, in large part, to practices that worked well enough with 90 jets but don't scale to the largest 737 fleet in the world. Sounds a lot like the post IPO companies I've worked with where the leadership is still from the startup days..
- TedDoesntTalk 4y ago
  > They only just integrated ticketing (with Apollo, SABRE, and Amadeus) in like 2017. Their scheduling (which is the biggest pain point right now) is still done the old-fashioned Herb way Is this why you STILL can’t see Southwest prices and book them on Google Flights, HipMunk, Kayak, etc?
  - listenallyall 4y ago
    This is a conscious decision by Southwest, it is willing to trade off the lack of exposure on the booking engines for not paying any commissions and keeping 100% of its fares as revenue.
  - inferiorhuman 4y ago
    More or less, yes. Proper SABRE integration came last year, and only for businesses. https://skift.com/2021/08/06/southwests-expanded-partnership-brings-bookings-to-the-sabre-standard/ https://skift.com/2021/08/06/southwests-expanded-partnership... Looks like Apollo and Amadeus came in 2020. https://skift.com/2020/05/19/southwest-airlines-expands-corporate-booking-gds-reach-more-business-travelers/ https://skift.com/2020/05/19/southwest-airlines-expands-corp... https://www.businesstravelnews.com/Distribution/Southwest-Goes-Live-in-Apollo-Worldspan https://www.businesstravelnews.com/Distribution/Southwest-Go... So if you use "Kayak for Business" you can book Southwest, otherwise you can click through on the ads that Southwest runs on Kayak. And, yes, it was a deliberate (Herb) choice. So was not being an IATA member and not participating in the IATA clearinghouse. The upside is less overhead the downside is less resiliency. You don't need to care about these things so much when you're flying a regional jet on mostly intra-Texas routes out of an airport that only allows short flights. With a fleet of full-sized airliners, "focus cities" across the country, and an international route network things look a lot different. https://www.iata.org/en/about/members/airline-list/?search=WN&ordering=Alphabetical https://www.iata.org/en/about/members/airline-list/?search=W...
    - theYipster 4y ago
      Um, Southwest participates in the IATA clearing house. You put up the wrong list. Here is the right one: https://www.iata.org/contentassets/82a24c7a736142b6bd18e20f77dcef60/ich-members.pdf https://www.iata.org/contentassets/82a24c7a736142b6bd18e20f7... And now for some industry education. You can participate without being an IATA member. Southwest likely started when they started flying internationally in 2014. You practically can't be an airline with international flights without participating. IATA runs the global clearinghouse. Notably, IATA does not run the clearinghouse for US domestic (and for foreign airline tickets purchased in the US.) That's ARC (Airline Reporting Corporation.) Southwest is also a member there.
- vba616 4y ago
  I don't understand. If their problem is lack of automation, I wonder why were they reportedly melting down due to the automation failing. Superficially, I'd think that's because they were too dependent on automation. Obviously I don't know how to run Southwest better than Herb Kelleher.
  - inferiorhuman 4y ago
    What automation Southwest had still required a lot of manual intervention on a regular basis. E.g. scheduling still required manual intervention if a flight didn't go as planned. Luggage was almost entirely manual process (weight and balance, hand written tags, etc) up until very recently. Now it's a mostly manual process. So on a day to day basis things can be brute forced, but when something like scheduling goes tits up and leaves you with a giant mess of luggage you're left to clean up the mess in the most tedious way possible. They're the mechanical turk of airlines.
    - jackcviers3 4y ago
      I imagine someone manually changing the flight manifest by clicking a delete button on each passenger and crew member, and waiting on a database save and gui redraw after each action. Complete with major timeouts and concurrency errors due to the massive spike in traffic caused by the storm. It would be awful.
- el_benhameen 4y ago
  Tech, business, and inside baseball on my preferred airline? Man, I would absolutely devour more of your writing on this, or at least any good sources you have. Any pointers?
  - listenallyall 4y ago
    A subscription to the Wall Street Journal will provide insight into the internal workings and personalities at many major companies.
- theYipster 4y ago
  lol, but then why didn't SW run into this huge mess years ago, or decades ago? It's because while IT and automation matters, it's not the only thing that matters. The most important thing a CEO can do, especially in this industry, is set culture. That's their greatest role. Culture is far more important than IT. Herb's positive legacy in this industry is well deserved. This is because Herb set the culture at Southwest, and it's well known that Southwest's employee culture has been--under Herb's leadership--its greatest asset. Herb set it in past crises, such as when they had to sell their fourth airplane to keep the airline afloat, and Herb got the employees to band together to create the 10 minute turn, which allowed them to effectively fly a four plane route network with three planes. This "band together" culture has saved Southwest's skin countless times. It's what has let them run a highly complex route network of mid-market point to points (vs. hub and spoke) with inferior technology, and yet with good service and competitive reliability. The problem this time around is that Southwest suffers from the same labor shortage as all other airlines in the industry, and it's this labor shortage that led to their other deficiencies from biting them in the ass. Unfortunately, culture can't solve a crisis when there simply aren't enough people to "band together." Southwest's IT issues are very well known in the industry, and reports are the current CEO and COO understand and aim to address. This week emphasizes the need, and we can expect SW to embark on a modernization plan. Just remember though, IT modernization takes an enormous amount of time. While we wait the better part of a decade for better scheduling and reservation systems (SW's maintenance system modernization is years and years in and is still ongoing,) SW's current CEO can best spend his time in the trenches of the operation preserving and strengthening culture.
  - inferiorhuman 4y ago
    lol, but then why didn't SW run into this huge mess years ago, or decades ago? They have, like clockwork. https://www.cbsnews.com/news/southwest-airlines-computer-outage-causing-massive-delays/ https://www.cbsnews.com/news/southwest-airlines-computer-out... https://www.globaldatavault.com/blog/southwest-airlines-avoided-82m-disaster/page/25/?et_blog https://www.globaldatavault.com/blog/southwest-airlines-avoi... Southwest Airlines flights across the country were held up Wednesday while the airline worked to fix technology problems. … Last October, an outage caused about 800 Southwest flights to be delayed and forced employees to issue tickets and boarding passes by hand. Southwest is blaming a faulty router, which it says prompted a widespread network system failure; a technology crash pegged as the worst in the airline’s history. The reservation system was knocked offline, planes were grounded across the nation, and the outage took four full days to resolve. https://www.usatoday.com/story/travel/flights/2019/02/22/southwest-airlines-computer-outage-temporarily-grounds-flights-causes-delays/2948899002/ https://www.usatoday.com/story/travel/flights/2019/02/22/sou... Southwest Airlines suffered a computer outage early Friday that temporarily grounded flights across the country, adding to a string of recent flight woes at the airline.. https://www.wlrn.org/news/2021-06-15/southwest-airlines-resumes-flights-after-tech-glitch-causes-delays-across-the-country https://www.wlrn.org/news/2021-06-15/southwest-airlines-resu... A nationwide weather data outage disrupted Southwest Airlines flights Monday night, causing long delays for some passengers across the country. The company blamed the problem on issues with Southwest's third-party weather data provider. As for the 2022 meltdown: The problem this time around is that Southwest suffers from the same labor shortage as all other airlines in the industry, and it's this labor shortage that led to their other deficiencies from biting them in the ass. Unfortunately, culture can't solve a crisis when there simply aren't enough people to "band together." Nonsense. Arguably Southwest needs more staff because its operations are so archaic, however Southwest had plenty of ramp rats and crew. The problem was Southwest had no idea where its crew actually were or what they were doing. The CEO can't charm their way out of that nor can they simply throw bodies at the problem. Speaking of culture, the rugged individualism is absolutely a problem but that's still a Herb thing. Up north Sunwing is having massive operational problems but they were willing to charter planes to aid in recovery.
codefeenix 4y ago
Whos debacle?
ktpecot 4y ago
I don’t think this is necessarily true. Pretty sure there’s a quote from Herb saying that southwest was going to be “high touch, low tech”. Herb was a legend for going up against the big airlines and winning but he was the right person for the right time. A war time ceo if you will. Southwest doesn’t need Jobs they need Cook, someone who can build out and scale now that they’re established. The airline industry as a whole is known to have antiquated tech and hard to clean data. Someone mentioned in one of the threads last week how difficult it is to modernize these systems where every system is using different timestamp formats. Southwest is just more antiquated and probably at least 5 years behind the rest of the industry in modernizing. Especially with crew systems which is what blew everything up last week.

black_13 4y ago

[dead]

bhaney 4y ago

What a difference 16 years can make!

frozenport 4y ago
Old enough to drive!

i_have_to_speak 4y ago

Title needs a "(2006)" suffix.

dang 4y ago
Added. Thanks!

etempleton 4y ago

Good times are for getting the house in order so things don’t go sideways in the future and creating frameworks for when things inevitably do go sideways. If you have good plans and everyone is one the same page people can fall back to standard operating procedure and not over think things or panic because they don’t know what to do. In the case of Southwest they failed to invest in critical infrastructure and probably contingency planning as well. Hindsight is always 20/20, but I am sure there were/are people who knew this was a ticking time bomb.

baxtr 4y ago
What exactly happened at Southwest?
- TedDoesntTalk 4y ago
  They canceled close to 3000 flights in the last few days, stranding hundreds of thousands of people.
  - nijave 4y ago
    I think they were doing close to 3k per day for a few days
  - late2part 4y ago
    More like 10k: "This week, with cancellations from other major airlines ranging from none to 2%, Southwest has canceled nearly 10,000 flights as of Wednesday and warned of thousands more Thursday and Friday, according to FlightAware. " https://apnews.com/article/business-transportation-us-department-of-0925834b8cfcf1150358f874334d16d7 https://apnews.com/article/business-transportation-us-depart...
- etempleton 4y ago
  There are some threads online from Southwest employees. Essentially the entire system, which relied on dialing in via phone, failed catastrophically. Those employees could, if not see this coming, at least knew the system was antiquated and brittle. A failure of some magnitude was inevitable. This failure however was so bad that they lost everything. They didn’t know where their own planes were, where their crew was, where baggage was, anything. It was all lost or at least inaccessible for days. The details of how and why the failure happened I am sure will come out, but essentially this was tech debt that the previous CEO saw no value in improving.

evnix 4y ago

for the rest of us, prepare for interviews and keep looking for jobs when you have a stable job.

barbariangrunge 4y ago

Yet, what we do in good times is cut margins until they are so thin that the good times get better, and then everything explodes during bad times so everyone asks for bailouts Eg, unsustainable agriculture, manufacturing, banking…