6 ms·

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

96 points by sghill 4y ago

bhaney 4y ago
What a difference 16 years can make!
- frozenport 4y ago
  Old enough to drive!
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.
- codefeenix 4y ago
  Whos debacle?
- 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...
- 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]
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

bhaney 4y ago

What a difference 16 years can make!

frozenport 4y ago
Old enough to drive!

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.

codefeenix 4y ago
Whos debacle?
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...
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]

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…