Southwest Airlines' Epic Meltdown

Sharing my long and admittedly opinionated thoughts on Southwest Air from a consultant perspective. I work in the tech space consulting in #digitaltransformation and #governance . I am blown away by reports of the lack of technology investment within the airline and the subsequent meltdown resulting in stock prices equal to August 2020's pandemic levels.

(Too darned long to read? The gist: be intentional with culture, enable your operations with tech investment, build good governance, and focus on continuous improvement.)

A New CEO for Southwest

Last February, I was excited and believed that CEO Bob Jordan would immediately focus on technical upgrades and new software solutions when he took over. Why? Because his background as a Comp Sci graduate from Texas A&M University, combined with his programming and analytics experience at HP, shows technical acumen, unlike most CEOs of other regional airlines. I believe technical acumen is necessary to move the industry forward. I was excited thinking,

"Awesome! Southwest will show other regional airlines why a solid tech foundation is necessary for the industry. I hope they reinvent the industry and evolve as leaders in the regional airline space - a rebirth of a great company."

Ummm, Maybe Not. I sadly look at them now and think,

They have failed in their duty to protect their business value and their reputation.

Excuses?

(I have no inside info, just an external vantage point with a bias toward the technology, so I have more questions than answers peppered into my strong opinions.)

• Perhaps the CEO did have this in his strategic plan, but he's only been there for ten months, and highly regulated industries have deep learning curves.
• Maybe their company culture lacks a speak-up and feedback process to identify internal operational, people, process, and technology risks.
• Perhaps governance is focused solely on regulatory compliance, and they have yet to recognize how governance shapes culture. Cultural gaps and holes chip away at improvements and value protection.
• Perhaps their executive attitude toward Information Technology and supported technologies still rests in the 1990s, like so many other companies, failing to recognize the tightly interwoven tech/operations requirements of today's business needs.

If I Could Analyze

Only those on the inside know the actual story. When they bring in a firm to do the analysis, I would impress upon Southwest that they recognize culture, leadership and systemic gaps in operational procedures (the non-compliance/regulatory ones).

I wish I could help. I would certainly want to be part of the team analyzing and assessing how they reached this point (or be a fly on the wall). I want to know more about the behaviours, leadership styles, constraints, organizational structure, reporting flow, technology alignment with strategic plans, and cost-based vs. risk-based decision-making. I am fascinated to understand their governance model, hierarchical status symbolism and privilege, employee well-being and stress levels coming out of the pandemic, and how the employees have dealt with current technology restrictions and staff shortages in the recent past. I would look at their point-to-point direct flight system and the contingency planning for weather-related incidents. I might see if they had tried to reinvent their staffing procedures due to ongoing shortages rather than return to 'business as usual' before the holiday season. I would look at emergency response procedures and see myself recommending a better communication strategy. (not an exhausted list)

These are all unanswered questions for now, but from my unknowledgeable vantage point, their core gap is the need for solid operational technology.

Ultimately, who will take responsibility?

Sure, I only have what the news has dug up, social media posts from various employees, and my external vantage point (with a bias toward technology) to bring to the table here, but I think my opinion stands:

This is an executive leadership failure

A lot happens between the time of being America's darling and a significant incident like this. The core, multi-pronged question I have is:

Where were the many gaps and failures leading up to the organization's lack of continuous improvement, failure to modernize its systems, and lack of preparedness for emergency issues?

These incidents don't happen overnight. Like millions of tiny little cuts, organizations create their problems over time. Likely caused by many seemingly disconnected issues across the organizational system. Few companies suffer the pain quite so publicly, impactfully, and epically as did Southwest this week. I say leadership failure because those tiny cuts and gaps must be better managed from a governance perspective by recognizing how they contribute to the whole system before a major incident occurs.

Pilots and InFlight Services

Who, in the year 2022, would imagine for one minute that Pilots and InFlight staff would have a manual phone-based repositioning system? No app? WHAT?

So point-to-point direct scheduling, coupled with a manual repositioning that failed during a polar weather event, is the byline . BUT!

• Was point-to-point THE problem or a contributor to the core problem?
• Was the weather THE problem, or a contributor to the core problem?
• Or, was the manual process for repositioning the CORE problem sadly crippling them by the extra contributors of point-to-point and weather?

Painful Results

The results of those million tiny cuts over time that led to this issue have caused significantly troubling results for the airline.

• Significant financial losses (with more to come in reimbursements)
• A reputational disaster that cannot be improved by any PR spin
• Obliteration of employee trust and loyalty
• There will be an ongoing narrative by customers and staff as the airline attempts to make good on the DOT requirement of reimbursement and accommodation.

(I'll reserve my thoughts on the reports of poor treatment of employees for a different post.)

Customer Impact is Massive

The impact on customers cannot be easily calculated, as there are many nuances and variables to their travel plans, familial issues, medication needs (type 1 diabetes comes to mind), missed family necessities (think funerals) and holiday gatherings, loss of work, physical inconvenience, and so much more. The emotions manifested into behaviours and anger that the airline could never have anticipated. Depending on the level of personal impact and how customers are dealt with will either deepen or soften that emotion.

Tech Matters for Operational Stability

In today's business environment, technologies are tightly interwoven into operations. Your operation is only as stable as the technical enablers that allow you to serve. Think about other connecting airlines, airport authorities, airport retail businesses, hotels, transportation hubs, and randomly located businesses where employees could not show up.

Perhaps for other companies, the impact might be a much lesser issue. Some failed shipment delays and logistics problems are easily rectified with loyalty activities to regain trust. But an airline that impacts this many people and businesses must avoid believing their PR or other responses will fix this in the short term. They have a BIG job ahead of them, both internally and externally.

Leaders, Please Don't Wait to Improve Legacy or Manual Systems

I have never been one to chase the next, newest, shiny object. But companies need to invest in, improve, and replace legacy systems and manual processes to support complex operations, such as an airline. My opinion: not having continuous improvement and replacement as part of a strategic outcome is negligent. Focusing only on regulatory compliance rather than including organizational culture and governance is a foundational collapse, eventually leading to an open, bleeding wound.

I feel great empathy for the customers, and the hard-working employees at Southwest Air and will be watching carefully to see how the company will take responsibility -- if they'll admit to where the failures are, how governance played a role, and how they address this incident.

The RUB? They are just one of the regional airlines with technology and governance issues. Regional airlines are notorious for thinking there is a clear separation between technology and operations.