What can we, as operators, learn from the massive operational meltdown at Southeast Airlines over this past holiday season?
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Today we are talking about a current event that happened over this past Christmas break, the Southwest Airlines meltdown. I am going to use this example today to articulate what it is that we do as operators, and why operations is such a pinnacle part of business.
If you are a service provider and have to deal with broken boundaries, this is called scope creep. As a service provider, you will come across this over and over again. I came up with a formula to escape scope creep, and if you are stuck and need a plan to get out of this cycle, join us for the Scope Creep Solution kicking off on January 30th.
Southwest Airlines History
If you paid attention to the news over the holidays, you heard stories of customers who were expressing their disappointment in Southwest airlines because of recurring delays and cancellations. People were stuck at airports, and were so frustrated because they were strung along for several hours and felt like they were held captive.
Southwest Airlines is a company whose leadership has been a highlight and an example throughout its years in business. It was built on the premise of service, and going above and beyond.
Their customer experience was off the charts, and their initial CEO put a huge emphasis on customer support, which solidified their reputation and helped them gain a larger customer base. In their early years, they were built on a simple model, with a smaller fleet that had fewer destinations.
Once they nailed that model, they looked to scale. They slowly extended to longer flights and partnered with larger airports in key cities. Because of their beloved reputation and great service, they had great success with this expansion. Here’s the catch: the same infrastructure that started this company continues to support the company today. Until it didn’t.
Southwest Airlines’ Operational Crisis
In late December, a large winter storm swept across a large part of our nation… which is pretty normal for this time of year, and airline carriers plan for this. But, allegedly this storm caused scheduling issues for Southwest pilots, crew and staff, and soon it turned into way more of a problem than just the winter storm. The problem was the IT and the scheduling systems that they used to integrate the schedule that made sure the pilots and crews knew where to be and where the planes were coming in. These systems weren’t talking and that led to stranded passengers during the largest air travel holiday of the year.
This disruption to operations was the most costly in the history of US airlines. More than 15,000 flights were canceled through this crisis. To make matters worse, passengers were getting messages of delays and cancellations and the Southwest Call Center wasn’t working. The infrastructure for the telephone system actually went down!
“This was such an impactful breakdown of systems, planning, forecasting, and appropriating funds…it was really death by 1000 cuts.”
Now I don’t think the airlines will actually die, and I hope they don’t. Their CEO has been there for just a year, and leadership is going to be the backbone of what happens next.
There has been a lot of speculation, and some answers from employees, but there are two pieces that stick out to me.
Focus on Profitability
The extra funds they were investing into the business were focused on marketing and sales. The first CEO put all of his emphasis into customer service, but there is new leadership.
“That legacy of customer experience has gifted them the ability to scale without getting people to buy in.”
They were able to increase long term value through the loyal customer base they had acquired, but they wanted to grow that customer base. They used their increased profit to market instead of investing into updating their systems
Neglect of Systems
There was a neglect to fix their known antiquated systems. Pilots have come out and discussed the IT systems and the philosophy that matches it … and they are from the 90’s. They are just plain old!
The system failed, but it should not have been supporting an airline that has exploded that much in growth over the years. I’m sure there were several departments within the company who have been warning that this system was going to break.
“From the top down, there has been a choice not to appropriate funds to fix this system.”
Remember, there was an emphasis on marketing rather than to fix a system they knew was broken. These systems had broken in the past, but had never been a complete fracture. But the winter storm was so large and affected so many cities that it caused a ripple effect.
Because there was such a breakdown, they pulled in 1000 volunteer employees to come in and help this crisis. These people were manually trying to match planes to pilots.
An Operators Take
This should tell you that appropriating funds to known issues is critical, and you need to listen to your people and evaluate the risk.
Another thing that is glaringly obvious is that you can never stop putting money, time, and attention into your operations. No matter the marketing you do, without an operational infrastructure you can’t serve your customers. Instead Southwest will be paying 5x per ticket to make the affected passenger whole.
Those manual backup systems will never be able to keep up with a scaled volume. That’s why, when you scale a company, you scale it through people first, and then automations.
“The lack of operational structures will stall your entire business, no matter the size, the industry, or even an impeccable reputation.”
As an operator, there are several observations that I’ve made:
- They needed solid systems. Maybe they thought they had them, but were they testing them?
- As they scaled, were they creating processes? Were they auditing them? It’s not just the one function, but the impact on the entire enterprise.
- How does this technology support them? Why weren’t they building out a new system in tandem while still serving their customers? They needed to prioritize the opportunities.
- They should have established an “issues log” where the leadership looks at all of the issues that pop up and evaluates what needs the most immediate attention.
“You’re always going to have to balance the needs of the business, and I have a hunch that leadership has given more weight to the areas of marketing and sales, and have coasted on their reputation of “delivery and service,” and have fallen through in the operational space.”
I wanted to highlight this event today to give you a chance to see this through an operator’s eyes.
Through this current event, I want you to recognize your operational mind. You may be considering if the Director of Operations certification program is right for you. I have put together a 5-day sprint called the Scope Creep Solution, where I will share our 5-step formula that has helped thousands of women to get out of the cycle of scope creep. Join us on January 30th for the kick off of the Scope Creep Solution.
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