Nov, 2019

Lead with LUV by Ken Blanchard and Colleen Barrett

The Big Idea: Show your employees love and they will show your customers love.

Foreward

  • Most people are looking not only for monetary security but also for satisfaction in their work.
  • Southwest’s People have produced an unprecedented and unparalleled record of job security, Customer satisfaction, and Shareholder return.

What Is Leadership?

  • LUV is our symbol on the New York Stock Exchange.
  • “Southwest Airlines, the Someone Else Up There Who LUVs You.”
  • We had a heart on our first signature.
  • You can’t manage a horse to water.
  • We want all our People to realize they have the potential to be a Leader.
  • We try to hire Leaders.
  • All of us can be Leaders, both at work and in our homes and communities.
  • When I think about who influenced my life the most as a Leader, I think of my Mother.

Celebrating Successes

  • We send out thousands of letters every year to our People, celebrating their successes and praising them for their efforts.
  • The Executive Office keeps track of every Employee’s birthday, company anniversary, the birth of children, and other important events.
  • We send out 100,000 cards annually.
  • We just believe in accentuating the positive and celebrating People’s successes.
  • To sustain our Company Culture, we cheer People on all the time.
  • We celebrate everything!
  • Giving People chocolates when something good has happened can make them feel like you’ve given them a million dollars.
  • You are letting them know that you love them for their efforts and you want everybody to celebrate their success.
  • The key to developing people and creating great organizations is to catch people doing things right and accentuate the positive by praising them.
  • Celebrating successes has been a key part of my own leadership for a long time.
  • Don’t praise your People just for showing up; celebrate specific things they have done.
  • Read The One Minute Manager to learn more.
  • People hate waiting until their annual performance review to get all the good news or bad news.
  • “Tough Love” still matters. I had to let a personal staff member go. If she couldn’t find a way to recapture her once-positive attitude and make it work, she needed to leave.
  • Don’t let poor behavior or performance go unnoticed.
  • I prefer praising and celebrating successes to dealing with problems.

Having Mentors

  • As long as you were respectful of others and treated people the way you would like to be treated, you would get that back in kind.
  • My biggest expectation with our People is that they be egalitarian in nature.
  • Everyone has an equal opportunity to contribute to the overall success and well-being of the Company.
  • Our mission at Southwest is “dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit.”
  • Lead with your heart.
  • Herb is really brilliant and incredibly visionary. He would see the vision but he wouldn’t have any idea how many steps you had to take to get there; he would just want it done. I was pragmatic and systematic and quite organized. So that’s how our team, or partnership, started.
  • The first word that comes to mind is family.

Servant Leadership Is Love in Action

  • Love isn’t a word that’s used too often in corporate America.
  • It’s loving your mission, it’s loving your customers, it’s loving your people, and it’s loving yourself enough to get out of the way so other people can be magnificent.
  • Nine times out of ten, if we say that we work at Southwest, people have a story about us, and it’s a good one.
  • There are two kinds of leadership involved in Servant Leadership: strategic leadership and operational leadership.
  • Strategic leadership has to do with vision / direction. It’s the leadership part of Servant Leadership.
  • Leadership is about going somewhere — if you and your people don’t know where you are going, your leadership doesn’t matter.
  • We’ve always tried to make sure everyone knows where we are heading. Then, of course, we had to make it all happen.
  • Operational leadership is about: implementation — the “how” of the organization.
  • It includes policies, procedures, systems, and leader behaviors.

The Triple Bottom Line

  • Our entire philosophy of Leadership is quite simple: Treat your People right, and good things will happen.
  • When we talk to our People, we proudly draw a pyramid on the chalkboard and tell them: You are at the top of the pyramid. You are the most important Person to us. You are our most important Customer in terms of priority.
  • Therefore, I am going to spend 80 percent of my time treating People with Golden Rule behavior and trying to make sure that they have an enjoyable work environment where they feel good about what they do, about themselves, and about their position within this Company.
  • But if I do that, what I want in exchange is for you to do the same thing by offering our Passengers — who are our second Customer in terms of priority — the same kind of warmth, caring, and fun spirit.
  • If you do that consistently, our Passengers will recognize how significantly different this is from the behavior they witness at other businesses, and they will come back for more.
  • If they come back often enough and become loyal Customers, they will tell stories about us to their friends. Then we’ll make money, which keeps your job secure and pleases our third Customer in terms of priority, which is our Shareholder — thus a win-win for all concerned.
  • Three bottom lines: being the employer of choice, the provider of choice, and the investment of choice.
  • Profit shouldn’t be the object of a company, but rather a result of good work.
  • Just like a person can’t survive for long without food and water, a company can’t survive without profits — but no one would ever reduce the purpose and significance of human life to only eating and drinking.
  • Servant Leaders know that financial success is a byproduct of how their people and their customers are treated.
  • Profit is the applause you get for creating a motivating environment for your people and taking care of your customers.
  • Today’s workers generally want more than pay. They seek opportunities where they feel that their contributions are valued and rewarded — where they are involved and empowered, can develop skills, can see advancement opportunities, and can believe they are making a difference.
  • Combined voluntary and involuntary turnover has hovered around 5 percent for the past 25 years, and our voluntary turnover rate has always been 3 percent or less.
  • The People of Southwest Airlines are the creators of what we have become.
  • We give our thanks — and our love — to the People of Southwest Airlines for creating a marvelous Family and a wondrous airline!
  • We do think it’s very important to always show a healthy sense of humor. We’ve told new hires the same thing for years — we want them to take our business seriously, but we don’t want them to take themselves too seriously.
  • We often say that other airlines can copy our business plan from top to bottom, but Southwest stands apart from the clones because of our People and how we treat them.
  • Our Culture motivates and sustains us. So, for many of us, being part of our Company is not just a vocation — it’s truly a mission.
  • If you don’t take great care of your customers, somebody else will.
  • We want to create Raving Fans®, not simply satisfied customers.
  • The publicity we get from stories our Raving Fan Customers share about how our Employees treat them is more valuable and revenue-generating than advertising.
  • Our Flight Crews are always thinking of creative ways to make flights interesting and fun for our Passengers.
  • Let’s look at costs first, because in today’s competitive environment, the prize goes to those who can do more with less.
  • Downsizing is an energy drain, and it’s by no means the only way to manage costs. We started with a pared-down, efficient organization and have stayed that way, so downsizing has not been a big issue.
  • Treat your People as your business partners when it comes to managing costs.
  • If you keep your people well informed and let them use their brains, you’ll be amazed at how they can help manage costs.
  • One of our Flight Attendants suggested we take our logo off our trash bags, which had been color printed — this saved us about $ 100,000 a year.
  • Our Flight Attendants also noticed how many fresh lemons were going to waste on every flight because very few Passengers asked for them, so we eliminated lemons and have saved a lot of money that way.
  • Listen to suggestions from Employees.
  • Many revenue-generating ideas including our Early Bird fare, our Bags Fly Free program, our PAWS (Pets Are Welcome on Southwest) program, and our “cashless cabin” policy come from Employees.
  • Our union folks participate in everything we do; their Leaders are involved in all major decision making. As business partners, we are on the same side of the table.

Citizen of Choice

  • We are not only concerned about our People, our Customers, and our financial well-being, but also about how we give back to the community.

A Compelling Vision

  • Having some clarity about a compelling vision is crucial.
  • Three key elements of a compelling vision: 1) Significant purpose — What business are you in? 2) Picture of the future — What will the future look like if you are successful? 3) Clear values — What guides your behavior and decisions on a daily basis?
  • A Compelling Vision Tells You Who You Are (Your Purpose), Where You Are Going (Your Picture of the Future), And What Will Guide Your Journey (Your Values).
  • 1) I think a higher purpose is something that takes precedence over any short-term goal like profit.
  • We’re in the Customer Service business — we just happen to provide airline transportation.
  • 2) The second element of a compelling vision is having a picture of the future.
  • Our picture of the future is that every American has the “Freedom to Fly.”
  • To make that happen, we want to keep our costs low (resulting in low fares) while maintaining an efficient, reliable way to fly. We also want people to enjoy flying, so we want to keep our spirits high (warm, friendly, and fun-spirited Employees), which all amounts to Legendary Customer Service.
  • When we were just starting out, we wanted to “democratize the skies.”
  • Bill Gates wanted to democratize the computer industry!
  • It started with Herb and Colleen . . . and Gary Kelly now — they care for their Employees. They genuinely care for us.
  • 3) The third and final element of a compelling vision: having clear, guiding values.
  • People can’t focus on more than three or four values, if those values are to guide their behavior.
  • We have identified three key values: Warrior Spirit, Servant’s Heart, and Fun-LUVing Attitude.
  • You want to be a winner. People don’t want to work for a loser. You want to win at what you set out to do.
  • So it’s a strong competitive spirit, but not in a warlike way.
  • Work hard and play hard.
  • Our second value: a Servant’s Heart. That’s the core of knowing how to lead with love.
  • People need to have a Servant’s Heart — a passion for serving others.
  • Our People enjoy what they do, and they pass that joy onto our Customers.
  • The way you treat Employees and respect them and the way they trust your word and trust you.
  • Our People know that they can expect us to always treat them with respect.
  • Book: A Life of Servant Leadership by Robert K Greenleaf.
  • Don’t ever ask anyone to do something that you wouldn’t be willing to do right along with them.
  • Herb sat right there with me until four o’clock in the morning, on the floor, licking envelopes and putting stamps on envelopes.
  • We’re all in it together.
  • Pilots come back and help us pick up trash.
  • The first is to give underperformers a loving reprimand for not living up to our expectations.
  • The second step kicks in: career planning. We let underperformers pursue their career someplace else.
  • One of the important things I’ve learned over the years is that behavior is controlled by its consequences.
  • We want to enjoy our work life as much as we do our home life.
  • We have fun, we don’t take ourselves too seriously, we maintain perspective, we celebrate successes, we enjoy work, and we are passionate Team players.
  • Having fun is part of our Culture.
  • We actually test for a sense of humor when we hire People.
  • We sent a rude customer a note that said, ‘We will miss you.’
  • Once you become legendary in your service, your Customers and fans often exaggerate or even fabricate stories.
  • On Halloween, we dress up in crazy outfits and have a lot of fun.
  • Fun means we enjoy and celebrate life and each other in a laid-back, down-to-earth environment that is welcoming, warm, and enjoyable.
  • We celebrate everything.
  • We have a gazillion Employee recognition programs.
  • Early in our history we occasionally flew on “the other guys ” and we saw that there were no smiles, no warmth, and no enjoyment. It was all very robotic.
  • We made a decision that we didn’t have to be stodgy or stuffy to be a successful business. We didn’t even want to use the word professional.
  • Do you have a few well-established values for your organization or department that guide everyone’s behavior?
  • What business you are in (your purpose) and where you are going (your picture of the future).
  • Disney in entertainment, Nordstrom in retail, Chick-fil-A in quick-service restaurants, Ritz-Carlton in hospitality, Wegman’s in the grocery business, WD-40 in the “squeak and clean” business, Synovus in financial services and, of course, Southwest Airlines in the airline business.

What Makes Servant Leadership Work?

  • Vision and direction are the leadership part of Servant Leadership.
  • When it comes to vision, values, and direction, you have to say it over and over and over again until people get it right, right, right!
  • Servant Leaders feel their role is to help people achieve their goals.
  • Leaders serve and are responsive to people’s needs, training and developing them.
  • As a customer, you can always identify a self-serving bureaucracy when you have a problem and are confronted by ducks who quack, “It’s our policy! Quack! Quack! Quack!”
  • We empower our People to use common sense and good judgment. Yes, we have written rules and procedures, and you can go look at them, but I say to our folks every day, “The rules are guidelines. I can’t sit in Dallas, Texas, and write a rule for every single scenario you’re going to run into.
  • Our folks are marvelous about handling all kinds of situations with our Customers.
  • Servant Leadership and empowering your People is not soft management. It is management that not only gets great results but generates great human satisfaction for both our Employees and our Customers.

Defining Love

  • He identifies nine components of love: patience, kindness, generosity, courtesy, humility, unselfishness, good temper, guilelessness, and sincerity.
  • I think when you’re vulnerable, People realize that you, too, are human.
  • I loved the book The Power of Positive Thinking.
  • The second trait that Jim Collins identified to describe great leaders, after will, which we mentioned earlier, was humility.
  • People who are humble feel good about themselves. They have a solid self-esteem.

Maintaining a Strong Culture

  • Our reputation as a family-oriented Company is real.

Freakonomics Discusses Trader Joe’s

NEW YORK – MARCH 17: Shoppers line up inside Trader Joe’s for the grand opening on 14th Street on March 17, 2006 in New York City. Trader Joe’s, a specialty retail grocery store, has more than 200 stores in 19 states. (Photo by Michael Nagle/Getty Images)

Freakonomics did a podcast on Trader Joe’s strategy and company culture.

The Big Idea: ignore competitors and focus on your customers; hire for cultural fit.

How is Trader Joe’s different from competitors?

  • They are a privately held company.
  • They turn down all media requests.
  • They carry no brand names — only private labels.
  • They don’t advertise on TV, radio, internet, or print.
  • They don’t engage in social media.
  • They don’t offer coupons.
  • They don’t have a loyalty program or collect customer data.
  • They don’t offer self-checkout.
  • Their stores are small.
  • They carry 10% the total number of SKUs of competitors.
  • Their prices are lower than the competition.

How is Trader Joe’s doing vs competitors?

  • Their prices are lower than the competition, but…
  • They have 3-4x the sales per square foot of competitors, by a wide margin.
  • They are ranked in the Top 100 Companies to Work For.
  • Customers are loyal fans, with many web sites and FB groups dedicated to Trader Joe’s.

What are the key lessons for companies?

  • Ignore what your competitors are doing and think for yourself.
  • Try out different things and see what works.
  • Trader Joe’s competitive moat isn’t one thing. It’s the combination of culture, employees, values, private label strategy, real estate strategy, pricing strategy, and branding — all supporting each other.
  • Private labels means fewer vendors. Fewer vendors means more purchasing power. More purchasing power means lower COGS.
  • Focus new hire training on culture and values, vs process.
  • Good packaging and copywriting matters. Copywriting requires knowing your customer.
  • Low cost structure (few vendors, private labels, no advertising, cheap rent) gives them the opportunity to invest in the long-term. With the extra margin, they are able to 1) improve packaging and copywriting, 2) offer higher pay and better benefits to retain good employees, 3) spend more on training new hires, 4) hire more cashiers for a better experience — all while keeping prices low.
  • Understand human behavior. “Paradox of choice” means it might be better to have fewer choices. “Scarcity” means it might be better to have products available for a limited time. “Variety” means it might be better to continuously replace old products with new products.