Herb Kelleher: An unparalleled innovator...

Learning from the greatest business leaders of the world

Herbert David Kelleher (March 12, 1931-January 3, 2019) was an American billionaire airline executive and lawyer. He was the co-founder, later CEO and Chairman Emeritus of Southwest Airlines until his death in 2019.

Kelleher earned a bachelor’s degree from Wesleyan University, New Jersey, where his major was English and minor Philosophy and a Bachelor of Laws from New York University.

After clerking for a New Jersey Supreme Court justice, Kelleher moved to Texas intending to start a law firm or a business. Kelleher and one of his law clients, Texas businessman Rollin King, created the concept with a banker that later became Southwest Airlines.

They originally devised a very simple plan of connecting the Texas Triangle with low-cost air service, patterned largely on California’s Pacific Southwest Airlines. After incorporating the company initially as ‘Air Southwest Co.’ in 1967, Kelleher and King faced four years of setbacks and legal challenges from competitors that culminated in winning key cases before the Supreme Court of the United States in December 1970 and the Supreme Court of Texas in June 1971. The first flights finally took off on June 18, 1971.

Reflecting back on that time Kelleher said, “I think my greatest moment in business was when the first Southwest airplane arrived after four years of litigation and I walked up to it and I kissed that baby on the lips and I cried.”

Kelleher’s early involvement in the company was helping the company navigate legal concerns and as an advisor to the operation and later as general counsel. Lamar Muse was hired as CEO but after struggles between Muse and King escalated over the next several years, Muse resigned in 1978.

Kelleher was installed as Chairman of the board in March of that year and the board appointed him as temporary CEO until hiring Howard Putnam as the new CEO and President. In 1981, after Putnam left to head Braniff Airways, Kelleher was appointed the full-time CEO and President, positions he held for 20 years.

Under Kelleher’s leadership, Southwest succeeded by a strategy of offering low fares to its passengers, eliminating unnecessary services, using a single aircraft type (Boeing 737) avoiding the hub-and-spoke scheduling system used by other airlines in favour of building point-to-point traffic. The company he founded and built has consistently been named among the most admired companies in America in the Fortune magazine’s annual poll. Fortune has also called him the best CEO in America.

But Kelleher’s zaniness at times obscured his achievement in building the three sturdy pillars Southwest stands on to this day. First, he virtually invented— and then successfully operated, a rare accomplishment for a founder—a revolutionary business

model, the low-cost carrier. Second, he deployed prudent financial management to keep Southwest’s wings level in turbulent times. Third, in an industry plagued by America’s worst labour relations, Kelleher managed to nurture what’s arguably corporate America’s most loyal workforce.

By creating that architecture, Kelleher stands as the most successful leader in the history of commercial aviation. As CEO from 1981 to 2001, Kelleher piloted Southwest from a tiny carrier that operated half-a-dozen planes in its native Texas towards what it is today, the nation’s most popular domestic airline, flying 120 million passengers annually. Along the way, Southwest has made money for 45 straight years and greatly enriched shareholders.

Shortly after Southwest started using the ‘Just Plane Smart’ motto, Stevens Aviation, who had been using ‘Plane Smart’ for their motto, threatened a trademark lawsuit, which was resolved between Kelleher and Stevens Aviation CEO Kurt Herwald in an arm-wrestling match, now known as ‘Malice in Dallas’.

Kelleher lost the match but was allowed to use the slogan in exchange for a charitable donation and conceding Southwest’s legal claim to the slogan.

In March 2001, Kelleher stepped down as CEO and President of Southwest. He passed the CEO role onto James Parker and the President role to Colleen Barrett, although he remained Chairman of the board.

On July 19, 2007, Southwest Airlines announced that Kelleher would step down from the role of Chairman and resign from the board of directors in May 2008. The retirement of Barrett as President was announced at the same time, though the two would remain full-time employees for another five years.

Kelleher ultimately stepped down as Chairman on May 21, 2008. Kelleher was given the title of Chairman Emeritus with an office at the Southwest Airlines headquarters and he remained connected to the company until his death in 2019.

Here are few great lessons you should take from Kelleher’s leadership style and legacy.

Treat people well

Southwest has always been known for treating its employees and its customers well. Kelleher had great relationships with his union and that trust helped him through a lot of tough negotiations. His airline has not had a strike to this day.

Hire for talent

Kelleher said, “We will hire someone with less experience, less education and less expertise, than someone who has more of those things and has a rotten attitude. Because we can train people, we can teach people how to lead. We can teach people how to provide customer service. But we can’t change their DNA.”

Stay focused

Southwest never wavers from its core operating strategies: It only flies one type of plane (Boeing 737), going point-topoint rather than using the traditional hub strategy, without assigning seats. The airline intentionally economises at convenience and onboard amenities to focus on being on time and inexpensive. The result? Southwest has 45 consecutive years of profitability. Trying to be everything to everyone rarely works.

Be more human

Kelleher was a likeable, approachable, generous and unpretentious man. He treated everyone he met as if he’d known them for years. This authenticity transferred to his brand. Why is Southwest Airlines considered to be so friendly, high-energy and fun? Because Kelleher was all of those things.

Be driven by purpose

Kelleher famously said, “Market positioning changes. Business strategies change. But purpose does not change.” He believed that Southwest was not in the airline business – it was in the freedom business. Their purpose was to give millions of people “the freedom to fly”. This purpose still permeates everything his company does. It’s not just a slogan. It’s a mantra, a rallying cry, a cause.

Commit to simplicity

Herb built the most successful airline ever but by keeping things simple. The company flew just one kind of plane, which made it easier to maintain and repair their fleet and easier to train pilots. It operated using point-to-point flight routes, avoiding the constant delays of traditional hub-and-spoke systems. No change fees. No baggage fees. No meals served. No assigned seats. Everything was intended to keep things simple.

Your culture is your greatest asset

Herb didn’t just build a great company; he created a stellar culture. Southwest Airlines is known to be a great place to work. Its employees feel valued and it shows in the service they deliver. It’s famously a casual and loose culture, with many of their flight attendants wearing shorts and polo shirts. Most have a smile on their face and always appear to be having a good time, even the baggage handlers. This is not

common in the industry.