How To Build A Million-Dollar Business

Southwest Airlines

Making People Count

The pitch went something like this: Rollin King sketched out a triangle on the back of a cocktail napkin with the words "Dallas," "San Antonio" and "Houston" at each corner. With these three routes, the pilot suggested, a lean, mean intrastate airline could take flight. Never mind the competition. Never mind the red tape. Just fly people safely, cheaply and conveniently between these three cities, and you'll have a profitable airline. It was brilliant. It was insane. But was it impossible?

"Rollin, you're crazy," attorney and friend Herb Kelleher responded. "Let's do it.'

Do it they did. Nearly three decades later, the airline they founded, Dallas-based Southwest Airlines Co., continues to set new standards for productivity, affordability, profitability and fun in an industry that isn't exactly renowned for its innovation and responsiveness. Despite what should be unwieldy proportions--49.6 million passengers in 1996 and a current staff of more than 25,000--Southwest is a miracle of efficiency, boasting the best on-time performance, the fewest customer complaints and the best baggage handling in each of the past five years, according to U.S. Department of Transportation statistics.

And that ain't all. Since its founding in 1971, Southwest has been a maverick in virtually every area of operations. It offered air fares so low, it gave bus and car travel companies a run for their money. It eliminated airline meals in favor of peanuts--saving money and manpower. It threw out assigned seating on the principle that customers were capable of finding their own seats, which cut valuable minutes off its boarding times and turned its planes around faster. It encouraged flight attendants to crack jokes during the in-flight emergency instructions. It was the first major airline to champion ticketless travel and one of the first to put up a Web site and offer online booking. All this, and Southwest is widely hailed as one of the safest and friendliest airlines in the skies.

Who's responsible for all this genius? Ask outsiders, and they'll point to CEO and chairman Kelleher, now 66, whose leadership has made Southwest one of the most dynamic, responsive--and zaniest--companies in history.

Ask Kelleher, on the other hand, and he'll tell you it's the employees who make Southwest great. "Competitors have tried and failed to copy us because they cannot copy our people," Kelleher says. He believes it's as simple as seeking out exceptional employees, treating them with respect, and giving them the latitude and encouragement necessary to do their jobs better than anyone knew possible.

What isn't simple is the execution. In an industry fraught with competition and rapid-fire change, an intelligent and motivated work force is everything. Southwest's rules and regulations are kept to a minimum so employees can solve problems on the fly. And at the helm is an entrepreneur who knows the value of the personal touch.

"I'm always willing to look at [market research], but I never want to get bogged down in it," says Kelleher. "We get a lot of employee feedback on what they hear as to our customers' likes and dislikes. I'd rather we be out there doing things for the customers and gauging their responses on the front line."

Kelleher's advice to entrepreneurs: "Ask your employees what's important to them. Ask your customers what is important to them. Then do it. It should be that simple.'

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This article was originally published in the September 1997 print edition of Entrepreneur with the headline: How To Build A Million-Dollar Business.

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