Monday, October 22, 2012

NUTS - Southwest Airlines Secret For Success

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NUTS! is the story of an idea, a company and roadmap to success. It demonstrates the power of something if what it stands for inspires people to care so much that they in turn take onus upon themselves to see it grow and develop into something great. Herb Kelleher started with a plan on a napkin and translated it into millions of dollars worth of success built on ‘integrity, guts and nuts.’ The main concept of Southwest Airlines is repeated throughout the book, and this to treat your employees with care and concern if that is the way you want them to treat each other and your customers.

NUTS! Describes in detail the events that shape and mould the ideals of Southwest Airlines. The employees are the ones who make the this operation tick. Every employee is encouraged to have fun, entertain their customers, look for ways to save money and increase productivity, and to genuinely care about the well being of the company name, it’s customers, and the ideals that it promotes.

Chapter 8 Act like an owner

Chapter eight’s motto is, ‘Ask question, think results.’ Owners have a unique perspective, and are required to ask provocative questions. Someone who is thinking like an owner would ask “If this were my company, how would I handle a customer in this situation?” Ownership is about caring, becoming fully engaged in the active pursuit of objectives. The idea at Southwest is to have every employee thinking like an owner. The thought process is that nonowners are more worried about how their actions are being perceived by their superiors instead of thinking “How would I act if I personally owned this business?” Chic Lang, a Southwest captain says, “When you talk to a ramper or a flight attendant, they’ll tell you what the stock price is that day.” When desert storm broke out jet fuel prices skyrocketed. Herb Kelleher sent a memo to pilots asking them how to cut back. In one week costs went down immediately. A consultant suggested to Kelleher a system whereby pilots would be paid more to conserve fuel. Kelleher told the consultant that wasn’t necessary. Thinking like owners, the pilots solved the problem on their own. Kelleher expresses concepts onto his employees such as putting trust in others, which tells people they are trustworthy and will act accordingly. Also encouraged is the golden rule Do what you expect and want others to do.

Chapter 10 Don’t fear failure.

Being creative and coloring outside the lines are the main points of this chapter. Southwest Airlines makes a point to hire people who aren’t afraid to express their individuality and color outside the lines. Employees have been applauded for painting tugs with their favorite professional sports teams color and logos on them. One of Southwest flight attendants spawned an idea that saves the airline 00,000 a year. How? By removing the company logo from trash bags. How many other people can say that they have the opportunity to do something that substantial for their company. Another employee proposed an idea in which a federal express like business would be run. Time, development and substantial amounts of money were put into the idea, which turned out to be a complete failure. Instead of demeaning and firing the Southwest employee for his failed idea, he has since been promoted four times. Herb Kelleher’s had this to say in regards to failed plans such as this was “The costs of getting burned once in a while are insignificant to the benefits that come from people feeling free to take risks and be creative.” A ticket in a minute is another idea that was supposedly conceived in a bar in Denver. The idea was a ticket dispensing ATM, in which customers inserted their credit card, chose their destination and round trip or one-way, and the machine spit out your ticket. The whole process was to take a minute. Billings now total about 6 million annually from 61 ATVM throughout Southwest’s system. Employees at Southwest are encouraged to use their imagination and create new ways of doing things every day.

Chapter 15 Still nuts after all these years.

This chapter discusses the idea and importance of making work fun. Employees at Southwest have become known for different forms of uniforms, such as hot pants to fun wear and beyond. They even featured a recruiting ad that stated, “Work at a place where wearing pants is optional. Not to mention high-heeled shoes, ties, and panty hose.” At one point the company had a formal uniform but customers thought that the attendants didn’t seem as playful or friendly. The idea is what you wear is how you act, and when the Southwest employees dress in a fun style, their work becomes play. And when work becomes fun, it doesn’t really seem like work at all. This is so important for people because so many people seem to have two lives, their lives at work, which is a somber, serious, and up tight atmosphere, where people find themselves eager to get away from. If your life at work becomes fun, then you are more focused and interested in what you are doing at that moment rather that anticipating the moment you can get away from your job and start acting the way you really want to be. Aside from their attire at work, Southwest airlines flight attendants are encouraged to add spice to the routine announcements. And flight attendants actually have a book of games they use to help create a more enjoyable travel experience for customers to help pass the time. The benefits for Southwest Airlines of this fun atmosphere have been; the most productive work force in the industry, employees working certain days without pay, low attrition and absenteeism, and high creativity and innovation among employees.

Southwest Airlines is obviously a successful business for many reasons. Throughout the years they have turned in a profit every year, even years when other airlines suffered miserably. 1Southwest Airlines have become the fourth largest major airline in America. They fly more than 64 million passengers a year to 58 great cities all over the states. This airline has an impeccable record of treating their employees with dignity and respect, encouraging their employees to enjoy their time at work, and most importantly ensuring their customers are served efficiently on a consistent basis. A stock that is up 00% since 10, investment guru Peter Lynch boasts that “For return on capital, Southwest has yet to be undone.” Since deregulation in 178, 10 airlines have gone bankrupt. Meanwhile, Southwest Airlines continued to expand. They have experienced 1 percent traffic growth over the last five years. And lets not forget this is all done with the lowest fares in the business. Southwest is actually the driving force behind the steady decline in ticket prices. Market dominance, productive workforce, low turnover, no furloughs, the highest customer service ratings, highest completion factor, youngest fleet, best safety record are all earmarks of Southwest Airlines. A company that has settled legal disputes by arm wrestling, paints its 0 million dollar assets like killer whales and state flags, avoids formal, documented strategic planning, and spends a lot more time planning parties than writing policies. In the rd quarter of 00 Southwest Airlines showed net income of 1.1 million1. Even in the events of September 11th, Southwest is due for their twenty-ninth straight year of profit. After reviewing these stats, I suggest that there is nothing that is not successful about Southwest Airlines. In my eyes it epitomizes what success is.

The crucial driving factors in Southwest Airlines business success are many. They take pride in their success, but I think the most important thing they have done is stuck to what has made them successful. That is no matter what has happened in the airline industry over the last thirty years, Southwest has faith in the simple concept that treating your employees like your most valuable asset will rub off onto the customers these people serve every day. Southwest Airlines success is exemplified every day on every flight, when the rampers and flight attendants know the stock of the company that day, know the legal battles its company is fighting, liven up their in flight safety precautions, look for ways to make the company more efficient and overall take pride in their job and the Southwest name. It appears as though nothing can break the spirit of this airline, and as long as their ideas and concepts are passed on when the head’s of the company move on, Southwest will continue to provide low priced, fun, efficient flights as long as people still need to travel by means of the air. For Southwest Airlines the sky truly is the limit.

Southwest Airlines has to face the same obstacles as other airlines, that is the economic distress that September 11th terrorist attacks caused. An economy rooted in recession and a raised public fear of flying are both concerns for Southwest. But no one is better suited to deal with these things that Southwest Airlines is. At a time when people are simply not spending a lot of money, they offer the lowest fares in the industry. When people are concerned about safety, they offer a top safety record. Anyone who knows Southwest can take note to the fact that their employees genuinely care about the well-being of their customers, and no one else is better suited to take care of them than people such as Southwest employees who are encouraged to take initiative and help the company improve wherever possible. Specific strategies Southwest will implement are the same ones that have cause them to grow, prosper and succeed for nearly thirty years.

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