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He's known as outrageous, off-the-wall, even a wild man. Now 63, he continues to impersonate Elvis and dress up as a leprechaun to amuse customers on St. Patrick's Day. He smokes five packs of cigarettes a day, likes to drink and party all night and relishes a bawdy joke. On a moment's notice, he might take of on a hunting trip with employees who never thought he'd accept their last-minute invitation. Some say Herb Kelleher, chairman of Southwest Airlines, is corporate America's best CEO. Certainly, he is one of its more unconventional.
Southwest continues to buck convention. Featuring no-frills flying at a time when established airlines fell all over themselves to pamper passengers, Southwest flies only one kind of aircraft, the Boeing 737. It has refused to link up with computer reservations systems used by travel agents. It operates in short-haul, low-margin markets and has eschewed the hub and spoke system used by other carriers. Yet it is the best performer in the industry: Southwest consistently beats competitors in on-time performance, it has been profitable for 21 straight years, and, since 1988, its stock price has more than quadrupled. It was the only carrier in 1992 to make money and only one of two to do so in 1993. A prime reason is the legendary productivity of its workforce.
Kelleher is often dismissed as a brilliant aberration, and Southwest's culture as an undefinable chemistry from which lessons can't be drawn. It is true that Kelleher and Southwest reject management fads and have no in-house gurus upon whom they rely. But a recent conversation with Kelleher revealed that this ultimate iconoclast has built Southwest on fundamental principles deeply imbedded in our history and culture. This may be the real lesson for other companies--the best way to handle stiff competition and a fast-changing world is to build your organization on these enduring principles.
Kelleher met with Bill Lee, president of William G. Lee and Associates, a Dallas public relations firm. This interview appeared unabridged in the Fall 1994 edition of Organizational Dynamics, an AMA publication.
Q. Do you think business has gotten too complicated?
KELLEHER: Absolutely. There's a lot being said about the importance of communication. But it can't be rigid, it can't be formal. It...