Tag Archives: Southwest Airlines

Fly the Friendly Skies?

92What a difference from last Sunday morning to this Sunday morning.

United Airlines went from the penthouse to the outhouse for customer relations.

It seems like only a month ago that United Airlines CEO Oscar Munoz was being heralded as “PR Week’s Communicator of the Year.” Oh wait, that’s because it WAS only a month ago this had happened. United Airlines even trumpeted this achievement in a press release.

Sh*t Happens

This is not another article about the incident itself or how it was handled. There are enough of those on the internet already. This article is about you and your media property in a social media internet connected world. We’re living on a knife edge. Only a word or thought vocalized away from disaster.

Every week when I post a new article on this very blog, that thought runs through my brain.

Imus

Don Imus was a big follower of Rutgers Women’s Basketball (who knew, right?) when he uttered a characterization of the players that temporarily ended his career.

Rather

Dan Rather reported a story about W’s military service that ended his tenure at CBS and one that many still hold against him all these years later. Ironically, he’s now on more TV channels than before it happened and has taken the social media by storm with his articles.

Williams

Brian Williams lost the anchor chair at Nightly News for embellishing and now is back on the cable channel that he worked while waiting for his chance to take over NBC’s evening newscast.

Greig & Christian

On December 2nd in 2012 Mel Greig and Mike Christian of 2DAY FM in Sydney, Australia called London’s King Henry VII’s hospital impersonating the Queen Mother and Prince Charles to speak with the Duchess of  Cambridge, Kate Middleton.

They spoke with Kate’s nurse, Jacintha Saldanha, who believed who they said they were and put the prank call through to the Duchess. The whole comedy bit for the Southern Cross Austero owned radio station morning show was pre-recorded and even approved by the company’s lawyers before it was broadcast the following day.

When the nurse committed suicide three days later, the radio careers of Greig & Christian would be terminated with 2DAY FM.

NUTS!

Let me show you a picture I took of three flight attendants because of how they treated their passengers on my flight.

89Steve, Carrie and Tom were the flight attendants on my flight from Nashville to Las Vegas in April 2012. The reason this picture didn’t go viral is because they did what Southwest Airlines is famous for. They made the flight FUN.

Actually, that’s an understatement of what these three did. They were a FREE comedy routine that kept the entire cabin in stitches. Totally hilarious. I don’t even remember another thing about that flight but them and how they made me feel.

Before I deplaned in Vegas for the annual BEA/NAB convention, I had to snap a picture of the three of them on my iPhone.

Southwest founder Herb Kelleher wrote his philosophy for starting Southwest Airlines in this must read book “NUTS!” Herb wanted to create a community of people who have a positive, joyful, engaging attitude that can throw caution to the wind and live a life of unabashed passion.

Author Tony Campolo put it this way: “NUTS! is about people who dare to love and who, in their loving, have found an aliveness that makes them more fully human.”

The Tragedy of Our Time

Herb Kelleher says that the tragedy of our time is that we’ve learned to love our techniques (technology) and use people. We’ve got it backwards.

“This is one of the reasons that more and more people feel alienated, empty, and dehumanized at work. When people feel loved, they love in return. Love is the most important emotion there is because it’s the one that allows us to enjoy — even to consider– all aspects of life.”

In case you didn’t know, when it comes to involuntarily bumping passengers, Southwest does it too. Actually, they involuntarily bumped three more passengers than United Airlines did in 2016. CNBC just posted the latest report on airline bumping.

But when it comes to ranking airlines by complaints, Southwest is the country’s major air carrier with the best ranking for least customer complaints. Could it be because they show the love?

Technology v. Being Human

Last week I wrote about what makes a radio station unique and what it can do that other media can’t in the 21st Century. You can read that article here.

Technology has enabled many radio companies to put technology ahead of the love. This is a BIG MISTAKE. Radio is a people business. Take out the people and what do you have left?

Reputations

I’d like to leave you with one final thought. Whether it’s you or your enterprise, guard your reputation.

Al Tompkins of the Poynter Institute just spoke at my university and he said something to us that his father always said to him about guarding your reputation:

“You make a reputation over time, you lose it overnight.”

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What We Have Here, Is a Failure to Embrace Complexity

42The world we live in today is a complex place. The KISS operational style seems like it would be a good idea. (KISS = Keep It Simple Stupid) But maybe not.

Turns out in a complex world, being agile is more importance than being efficient. Being efficient kills innovation. Innovation today is the primary driver of building value and creating value is one of the basic reasons for any organization to exist.

Managing Complexity is a 21st Century Skill

People who can manage complexity will be the leaders of the future. Managing a radio station was complex due to the fact that radio has two customers, which want totally opposite things. One customer is the radio listener. This customer wants information and entertainment. This customer usually isn’t fond of commercials. The other customer is the radio advertiser. Anytime their ad isn’t dominating the airwaves and driving consumers into their store is a moment the radio station isn’t doing its job. To add to this complexity are the talented people needed to service both of these customers. Air personalities that attract listeners and sales folks that service advertisers.

Consolidation & Complexity

As the radio industry began consolidating after the Telcom Act of 1996, the traditional thinking of protecting margins was amplified. This resulted in reducing labor costs. RIFs became commonplace (RIF = Reduction In Force). For those that were left wages became stagnant, little money was invested in training and the number of people left in the workforce was reduced to a bare minimum.

The problem is, when you have low paid, poorly trained and overworked people, your operation lacks new and innovative ideas that can improve the business. When the only ideas that are introduced come from the tippy top, they rarely connect with the challenges seen at the front line.

Zeynep Ton writes in her book The Good Jobs Strategy about a discount retailer that took a different approach to their operation than most companies when the great recession of 2008 struck the world. Rather than cut wages or reduce staff, Ton says they asked their employees to contribute ideas. The result was that this company managed to reduce prices to their customers by ten percent while increasing their market share from 15% to 20% from 2008 to 2012.

Herb Kelleher writes in his book NUTS! about how Southwest Airlines created a culture where employees are treated as the company’s number one asset. Southwest does a number of things to benefit its employees, including such programs as profit-sharing and empowering employees to make decisions. This empowerment during the period when oil prices hit a high of $145 per barrel in 2008 saw the Southwest pilots taking the initiative to plot more efficient flying altitudes and work with ground crews to get in and out of the gates quicker to control the Southwest ticket prices and not lay off any people while maintaining a positive profit margin. These actions did not come from the corporate home office but from employees in the field.

What to Do When You Have Maximized Efficiency

Let’s face it; the ability for any radio operator today to squeeze out any more profit through efficiency is over. Radio consultant George Johns puts it this way: “Radio today is in the no business, it has no money, no time and no people.”

So what’s the answer? Collaboration.

The radio companies of the 21st Century will need to develop the ability to make collaboration a competitive advantage. The game has changed from what you own and control to what you can access. Access happens via platforms. Radio needs to create platforms that bring consumers and producers together, much like the Apple App store does globally, but locally for their service area.

Radio needs to find a way to attract listeners by causing them to be fearful of missing something if they’re not listening while directing them to local places via platforms they control that can fulfill their wants and needs on demand.

In other words, radio needs to “think different.”

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Radio’s Dilemma (or Opportunity?)

38Radio’s a business. Peter Drucker said “The purpose of a business is to create a customer.” A business also needs to make profit or it won’t be in business for very long. On that we can all agree.

Surprisingly, many business people who know this still go out of business, often because they focus on the profit part and not the customer part. Plus those businesses either never had or lost their competitive advantage.

Radio’s dilemma is it lost that competitive advantage. That being having an FCC license to broadcast. Not everyone could obtain a broadcast license – they were limited by the Federal Communications Commission (FCC) – or had the ability to profitably operate a broadcast property. Profitability is when you earn money in excess of your cost of capital.

The radio business made a lot of money. Many enjoyed cash flow margins north of 50%. Its success attracted more people into radio ownership because it “looked easy” and made a bundle of dough. As more radio stations came on the air, it drove up wages, increased competition and increased multiples for valuing radio properties when they were bought and sold.

If this type of growth and expansion was all that was taking place, the “circle of (business) life” would have seen the radio industry slow down as the overcapacity from all of the new radio stations fought over the not-as-fast-growing advertising pie. It’s similar to what happen to the casino industry as expansion took off in America after just Nevada and New Jersey were no longer the only two states to license casino gaming.

Enter the great disruptor; the Internet. Radio, as we all once knew it, would be changed forever. For the Internet would now provide the world with an infinite number of “radio” options, like Pandora, Spotify, iTunes, RadioTunes et al. All trying to be ad supported like OTA radio.

Clay Christensen wrote about what happens when an industry is disrupted in his book The Innovator’s Dilemma.  He tells the reader how incumbent companies often respond to their disruptors with disastrous consequences.

Radio looked at the Internet as a “free broadcast license” and put their OTA signals onto a stream and then tried to squeeze a little extra profit by running separate ads on the stream versus over the air. It created a little extra money for the radio business but created a less enjoyable listener experience.  Sean Ross recently wrote in his newsletter “Ross On Radio” how different and better a radio station he listens to online sounded when he actually traveled to the market and heard the same station over the air. The difference was in the breaks and it was HUGE.

It doesn’t have to be all doom and gloom.

Southwest Airlines has enjoyed four decades of profitability. Like Walmart, Southwest had a root purpose for existing. Sam Walton’s Walmart mastered logistics to keep prices to his customers low and Herb Kelleher’s Southwest focused on constant improvements to make travel by air more affordable to more Americans. Like all successful enterprises, they put the customer first and profits were the result of doing everything else right.

For radio to be successful on the Internet, it needs to create a better user experience that attracts and delights the listener or that creates a new and different user experience that will enrich the end users’ lives. Radio, over the air, FCC licensed radio has the best platform to promote its Internet products. The possibilities are infinite. But each product must have a purpose beyond just making a buck.

Businesses that grow have a purpose beyond profit. Businesses that focus their growth on profits won’t have either growth or profits.

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Are We Killing the Golden Goose?

25Do you remember Aesop’s fable of the goose that laid the gold eggs? Let me refresh your memory of this tale. It’s about a farmer that was poor. One day he makes a startling discovery when he finds a golden egg in the nest of his pet goose. Skeptical at first, he has the egg tested and finds that it is indeed made of pure gold. Even more amazing, each day this farmer awakes to find that his goose has laid another golden egg. In very short order, this poor farmer becomes fabulously wealthy. But then his wealth brings greed and impatience. No longer satisfied with just one golden egg per day, the farmer cuts open his goose to harvest all of its golden eggs at once only to find the goose is empty inside. With a now dead goose, there will be no more golden eggs laid.

In remembering this fable, it sounded so familiar to the world of radio broadcasting. A radio station was like a wonderful “goose” that laid daily “golden eggs” for many an owner. It was an industry joke that having an FCC broadcast license was like having a license to print money. It was “golden.”

But broadcasters not wishing to wait for each day’s golden egg, cut open their goose with the Telcom Act of 1996. Twenty years ago, this act deregulated radio and now owners, like the farmer cutting open his goose to get all the eggs at once, now could own as many radio stations as they basically wished.

And how did that work out? Not much better than what the farmer discovered.

The moral of Aesop’s fable is if you focus only on the golden eggs and neglect the goose that lays them, you will soon be without the very asset that produces the golden eggs.

The radio industry’s quest for short-term returns, or results, took their free FCC licenses and ruined them by not maintaining the balance between the production of desired results and the production capacity of the asset.

Aesop’s fable is the very principle of effectiveness. It’s a natural law. Like gravity, you don’t have to believe in it or understand its principles, but you can never escape its effects.

Radio broadcasters probably saw the moral of the fable being the more geese you own, the more spots you add to the hour, the more effective your R.O.I. (Return On Investment) will be. But ironically, it was the principle of “Less Is More” that in the end rules the day.

To be truly effective, you need to maintain the balance of what is produced (golden eggs/revenue) and the producing asset (your goose/radio station).

Stephen Covey wrote extensively about all of this in his book “The Seven Habits of Highly Effective People.”

When people fail to respect the P/PC Balance in their use of physical assets in organizations, they decrease organizational effectiveness and often leave others with dying geese.”

-Stephen Covey

One could certainly make that case for two of America’s largest radio broadcasters today. They are reaping the results of those who’ve gone before them who’ve in essence liquidated the asset, before they took over and now the accounting system appears to show that they are not performing at the level of their predecessors. But is that really the case? Did they in reality inherit a very sick goose when they took over? The debt problem say many who are more schooled in this area of high finance than I, will probably be addressed with a re-set. And once that happens, it will come back to the people of radio.

Covey says to “always treat your employees exactly the way you want them to treat your best customers.” Herb Kelleher at Southwest Airlines built his company on this very Covey principle.

Covey puts it this way: “You can buy a person’s hand, but you can’t buy his heart. His heart is where his enthusiasm, his loyalty is. You can buy his back, but you can buy his brain. That’s where his creativity is, his ingenuity, his resourcefulness.”

The bottom line is the future of radio will be determined by the vision of the people leading the radio industry. It will also be determined by the hiring decisions they make going forward.

“If you hire people just because they can do a job,

they’ll work for your money.

But if you hire people who believe what you believe,

they’ll work for you with blood and sweat and tears.”

-Simon Sinek

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