Blue Dots Partners

While the four axes of external alignment in our A4 Precision Alignment™ methodology are the keys of the puzzle to optimize the growth rate, in the end, if poorly executed, the company won’t succeed on its journey to grow. Once the external alignment playbook has been crafted, then the organization in charge of executing it, must also be aligned internally.

How to achieve internal alignment? It all starts with the “Why”

Late management guru Peter Drucker in 2006 stated that “Culture eats strategy for breakfast.” He was so right.

How to align all the internal functions within an organization?

It really is driven by two critical factors: a mission and leadership.

It starts with the mission, the cause, the point of view, the belief, the conviction. In other words, the manifesto. It becomes the magnetic north that aligns all compasses for the entire organization. It inspires. It lifts. It gives a sense of purpose. It informs decisions. It drives the right attitude. It invites actions both internally and externally. Without it, forces are not aligned and cancel each other. It tells everyone which direction to pull. It aligns!

The second critical ingredient of internal alignment is leadership. Leadership sets the tone, shows the example, writes the score that the orchestra will play. Many books, ideas, opinions and points of view have been written on the topic of leadership. So, I am not going to attempt to tackle the subject in this blog. In the end, leadership establishes the enduring culture of the company. The Merriam-Webster dictionary defines culture as “the set of shared attitudes, values, goals, and practices that characterizes an institution or organization.” It always starts from the top with the CEO who sets it, demonstrates it and rallies all behind it. This is what leadership is all about.

Southwest Airlines: internal alignment mastered

On March 15, 1967, in Texas, Rollin King and Herb Kelleher founded a small airline called Air Southwest Co. The story goes that King explained the concept to Kelleher over dinner, by drawing a triangle on a napkin representing three cities: Dallas, Houston and San Antonio.

Shortly after, a legal battle to try to shut down the young airline was waged by some airline incumbents, most notably Aloha Airlines, United Airlines and Continental Airlines. In December 1970, Air Southwest prevailed in a ruling by the Texas Supreme Court. It took three years and a great deal of tenacity for Kelleher to win that difficult legal battle. The company began servicing the three cities with its inaugural flight on June 18, 1971.

Air Southwest was the first to adopt an employee profit-sharing plan in the airline industry. It started in 1971 by giving 10% of the company ownership to its employees. This was a defining moment to start the internal alignment process. That year, in March, the company changed its name to what is now Southwest Airlines. The “Love Airline” was born after a difficult and long labor.

Innovation was very much part of the early formative years at Southwest Airlines. The company pioneered the frequent flyer mileage program. One of its key hallmarks has always been its forward-thinking customer service. In 1973, the company generated its very first profit and 1984 was the fourth consecutive year the airline was ranked number one in customer satisfaction. In 1998, it became the fifth largest US carrier flying over 50 million passengers that year. In 1979, Cubic-Western Data self-ticketing machines were introduced in all airports from which Southwest flew. Passengers could buy a ticket from the machine and go directly to the gate. Another hallmark of Southwest Airlines has been its boarding policy to let passengers choose their seat, while keeping a fair pecking order by groups. This boarding process continues to be applied today and is unique in the industry.

Gary Kelly is the current CEO of the airline. On the company’s website, he explains:

“Our people are our single greatest strength and most enduring long term competitive advantage.”

It is not about how many routes the company flies. It is not about how many countries it covers. It is not about how many passengers it safely moves from one city to another. It is all about the women and men who get up every day, do their jobs with a sense of purpose and accomplish their mission to make people safe and happy in a good and positive spirit. Kelly has always been a strong defendant of civility. He believes that employees need to treat each other like family and customers like guests visiting them. These attributes are definitely reflected in the company’s mission:

“Dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit.”

In June 18, 1976, Southwest celebrated its fifth anniversary and offered a banquet to all five-year employees. This was a true celebration of its culture and its spirit.

Southwest has handsomely rewarded its shareholders. As of August 2017, it is the most valuable airline in the world with $34 billion in market cap. The company generated $20.4 billion in sales in 2016 and grew its top-line 3% from the previous year and 7% from 2014 to 2016. It net income in 2016 was $2.2 billion. That year, it transported 152 million passengers.

If one looks at the market value per employee, no wonder that Southwest is by far, the best performing airline in the world (note that I won’t make any comments on Air France’s poor performance):

Source: Forbe’s Global 2000 Leading Companies (May 2017)

Southwest has managed to build its success by staying true to itself and driving its business with focus and passion and above all, a purpose. Its execution machine is well oiled, well trained and the culture is not an afterthought it iswhat Southwest is all about.

One last vignette: the crew truly enjoys welcoming people onboard with a friendly and positive attitude. In March 2009, David Holmes became known as “The Rapping Flight Attendant” on a flight to Oklahoma City by asking passengers to clap in a beat so that he could make the welcome onboard and safety announcement by rapping. He started by saying: “These of you who have flown with us before know that we do things a little bit differently on Southwest” and he ended his rap song by concluding: “Thank you for my beat. I appreciate that. You will not see this on United. I guarantee.”

Boy is he right!