No Way-Yes Way to Run an Airline – Tom Ferguson

Friday is for Friends

Today I want to highlight a great friend, Tom Ferguson, the Founder and CEO of Visible Applause, a company that helps executives inspire and lead high performance teams. You will enjoy Tom's insight here and you can read more of his anecdotes at the Visible Applause Blog. I have always wondered why the airline industry, that has lost $34 billion since 1947, doesn't emulate the business practices and culture of a sole profitable exception like Southwest Airlines. Their successes have always been based on giving customers what they need: on-time flights, no-frills, and a culture of fun-loving employees. At one time there was a waiting list to go to work there. Alas, there is another industry maverick contradiction to the industry. The weekend Wall Street Journal (February 4 – 5, 2012 ) reported that Alaska Airlines reversed its own decline following a series of severe business crises: a plane crash in California 12 years ago that killed 88 , 9/11 and the great recession. The article, based on Matthew Kaminski's interview of CEO Bill Ayer pointed out that any business success comes down to a few basics. Here's the top four, including our perspective about the power of fulfilled human desires.  Our belief is that turnarounds occur when there is a high promise of personal gain, beyond a paycheck, on the part of all employees. For example:
  • they focused on profitability following brainstorming sessions with business non-airline experts (Jim Collins, Cosco's Jim Senegal and Starbucks Oren Smith, for example).  This led to Ayer changing their metrics that put profitability ahead of market share.  From our Visible Applause perspective the human desire fulfilled is providing a new winning game plan to foster employee success.
  • they copied best practices of Southwest Airlines like an all–737 fleet for maintenance simplicity and parts inventory.  The human desire fulfilled: competency
  • they put all staff in the bonus pool; each month sales agents and flight attendants get reports on quarterly results that directly affect the bonus pool.  The human desire fulfilled: ownership.
  • Ayer led around both strategy and humanity – he set 2-3 simple cost reduction goals employees could understand, like "cost per available seat mile". He says "hope is not a strategy. We don't spend a lot time counting on things we can't control.”  The human desire fulfilled: recognition.
Oh, by the way, Ayer is a 30 year Alaska airlines employee!  And Herb Kelleher? … 41 years! Hmmm …

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One Response to “No Way-Yes Way to Run an Airline – Tom Ferguson”

  1. Glenn says:

    Thank you so much Tom! These 4 human needs, success, competency, ownership, and recognition, are powerful. Good food for all business owners to think about.