When it comes to speaking out on values, CEOs like Dick’s Sporting Goods’ Ed Stack and Blackrock’s Larry Fink have found a voice.
[caption id="attachment_67584" align="alignnone" width="1016"] Southwest's Herb Kelleher cultivated a leadership style that often combined chain smoking, Wild Turkey and a good laugh. Credit: Southwest Airlines[/caption] Warren Buffett, who has large ownership stakes in several airlines, used to crack that no one made any money in the airline business since the Wright Brothers. “Indeed, if a farsighted capitalist had been present at Kitty Hawk,” he famously joked in 2007, “he would have done his successors a huge favor by shooting Orville down.” Then there's Herbert Kelleher. Kelleher, who died on Thursday at age 87, may not have seemed like much of a threat to the clubby US airline industry of the early 1970s when he launched Southwest Airlines. But what began as a tiny commuter airline serving three Texas cities with four planes and 198 employees now employs 58,000 people, carries over 120 million passengers a year, has never had a layoff or pay cut, and his been profitable every year since 1974. When they did hit financial potholes in 1973, Southwest chose to sell off one of its planes rather than fire employees. That goodwill paid off. I’ve known over 20 CEOs of major airlines, but sadly only had glancing encounters with Kelleher. I do know that CEOs of American, Delta, United, and others often winced and shook their heads smiling when Kelleher’s name came up. They were often frustrated by Kelleher, who did things the major trunk line carriers could not, punching holes through their regulatory protections, operating styles, and route pricing. They tried to undercut him with ferocious litigation and low cost subsidiaries. They all failed. Kelleher, a lawyer by training, was not one of the “flyboy” pioneers of aviation like pilots Eddie Rickenbacker (Eastern Airlines), Howard Hughes (TWA), Walter Varney (United Airlines, Continental Airlines), Colette Woolman (Delta) or Paul Braniff. Nor did he create the idea of no-frills, low cost air travel (that was the UK’s Freddie Laker, while Kelleher was still practicing law). In fact, when he helped former pilot Roland King create Southwest Airlines in 1971 for cheap air travel between Texas cities, a plan they had famously scratched out over drinks a few years earlier on a cocktail napkin, he served as its legal advisor. The first CEO was actually the flamboyant Lamar Muse, infamous for the hot pants and white boots he required the flight attendants to wear as they flew through their base at Houston’s Love Airport. But when Muse abruptly stepped down in 1978, Kelleher brilliantly piloted the young company as CEO for the next 22 years, exploiting operational efficiencies in serving secondary cities and by maintaining uniform Boeing equipment rather than a diverse fleet of planes. They broke away from the hub-and-spoke system, cut out meals and interline baggage transfers. He was a genius at hedging fuel costs and in championing deregulatory battles. Some of these practices were inspired by new approaches at other start-ups such as Pacific Southwest Airlines. [caption id="attachment_67587" align="alignleft" width="300"] Kelleher once arm-wrestled a rival for an ad slogan.[/caption] Kelleher was even more innovative in cultivating an irreverent leadership style which modeled a egalitarian sense of respect for all constituents, customer-centric marketing, and a spirited sense of mirth. His style was revolutionary to an industry traditionally defined by military-like discipline and rigid bureaucratic regulatory mandates. Despite being a heavily unionized enterprise, he charmed flight crews into pitching in to help clear and service aircraft to get them back in the air with an unheard of 15-minute turnaround at the gates. Kelleher set high standards of customer service and personally checked on how well they were met. He regularly boarded flights to join passengers to see how they were enjoying their in-flight experience and recruited entertaining flight crews who acted as performers calming and reassuring crowds while watching over their safety. “We market ourselves on the personality and spirit of ourselves,” he once said. “This sounds like an easy claim, but in fact, it is a supremely dangerous position to take because if you’re wrong, customers will let you know—with a vengeance. Customers are like a force of nature: You can’t fool them and ignore them at your peril.” Famous for getting little sleep, drinking Wild Turkey, chain-smoking, and clowning around in Elvis jumpsuits and heels with customers, employees, and the media, Kelleher confessed his employees allowed him to serve as CEO since he could not competently handle their own critical jobs. Once in a commercial dispute he publically challenged his adversary to settle the battle through a high profile arm wrestling match. Kelleher’s flair for flamboyant eye-catching, effective marketing, was showcased by its "Liar, Liar: Pants on Fire" advertising campaign against a rival carrier in 1992. Perhaps Kelleher’s greatest legacy is his proven performance that confirmed his motto: “I don’t really believe you have to be boring to be successful.”
Ambassador Andrew Young brought a room full of CEOs to near tears. Drawing on his skills as an oratory skills as a preacher, Young delivered a emotional celebration of the free enterprise system.
Elon Musk's interview on 60 Minutes shows that even though he doesn't want to “adhere to some CEO template," the erratic CEO of Tesla needs to grow up.
John Flannery’s sudden ouster at GE after a mere 13 months on the job by a newly constituted board startled many peer CEOs, as well as analysts, investors and employees. When your company hits a bump in the road, will your board have your back—or back you right out the door?
It's rare for one Jeff to disagree with another, but Sonnenfeld says that Cunningham is wrong: GE’s recent action in firing John Flannery was not a unique, one time succession phenomena. He offers a rebuttal to the notion that these board insurrections are unique.