Like hundreds of thousands of people, I was caught up in the recent cancellation crisis at Southwest Airlines.  While I was able to reach my original destination without incident before Christmas, my return flights were cancelled, extending my trip by nearly a week.  For me this had limited impact, as work is normally slow this time of year, so it just meant my parents had to put up with me for a little while longer.  The same cannot be said for all those who were stranded at airports, forced to make impromptu road trips with strangers, or unable to even make their planned Christmas trips, as well as all of their families and friends who were negatively affected.  As an enthusiast of both aviation and leadership/organizational culture, I have been reflecting on the situation and thus found several lessons that both the corporate world and military can take from this situation.  These lessons revolve around the need for adaptability and decentralization in such situations in particular but also in this Information Age in general.  Before we begin, I must caveat that I am no expert or insider.  I have no experience in the airline industry nor insider knowledge of common practices therein.  I am merely drawing on my general knowledge of leadership/organizational culture and aviation as one who casually studies them as well as my experience with military aircraft maintenance and mission planning.  So while my experience and knowledge are limited, I still think I can offer some insights that can be useful to any industry.

Recap of the Situation

To begin, here is a quick recap of the situation as I understand it.  Some initial analysis from others can be found here, here, and here.  The airline industry like many others entered 2022 still recovering from the impact of the pandemic.  Airlines had been forced to downsize both their fleets and aircrews to survive, and were struggling to scale back up to pre-pandemic levels.  Travel throughout the summer was therefore plagued by crew shortages.  Both by necessity and enabled by technology, airlines were operating more efficiently, using fewer aircraft and crews.  Despite this, Southwest like other airlines went into the busy holiday season feeling prepared.  Then a massive storm swept across the nation a few days before Christmas, shutting down airports (including Southwest hubs like Denver and Chicago Midway) and causing havoc across the industry.  While other airlines were relatively quick to recover, Southwest was paralyzed.  Initial speculation pointed to Southwest’s practice of using more direct flights instead of the hub-and-spoke model that is better able to handle disruptions.  I even thought their single-class layout may have been a factor, as more seats per plane means more passengers needing to be rebooked if a flight is cancelled.  Still, this could not account for the lion’s share of the flights being cancelled day after day, especially since other airlines had already recovered.  Then the truth came out: the meltdown happened because the scheduling software became overwhelmed with the scale of the storm-induced cancellations, requiring dispatchers to resort to manual methods for which they were not prepared.  With the system down, they were unable to track the location and status of aircrew and aircraft aside from phone calls, which meant they could only support about a third of their normal flights until the system could be restored.  This resulted in over two thousand cancelled flights per day, stranding both passengers and crew members across the country.  This inundated Southwest’s phone system with calls from stranded passengers and crews as well as crew members trying to report their location and manually coordinate flights.  It also left gate agents and other personnel without the proper tools or reach-back to the home office, thus essentially abandoning them to face throngs of frustrated passengers alone.  I have no doubt that they did everything they could to accommodate the passengers, but their efforts were woefully inadequate because they lacked the proper tools and support.  What resulted was a fiasco that will ultimately cost Southwest Airlines billions in compensation and lost revenue on top of the lost trust from many valued customers (and perhaps many of their own employees).  Just before the ball dropped to kick off 2023, Southwest operations returned to almost normal, and I had an uneventful return trip on New Year’s Day.  Yet it will take time for Southwest to recover from this fiasco, so it should also serve as a warning for everyone in every industry of the dangers of optimizing for efficiency.

The Dangers of Optimization and Centralization

Dangers of optimizing for efficiency?  Yes.  In recent decades, airlines have been both forced by necessity and enabled by technology to optimize their operations such that they are ever increasing in efficiency.  This is fine for normal operations but becomes problematic when disruptions occur.  Anyone who has regularly flown for several years will likely have noticed that there are fewer and fewer open seats on flights.  This is no accident but instead the result of computers enabling airlines to optimize their operations such that nearly every seat is filled on nearly every flight.  All of this is coordinated by complex systems that track the location and status of aircraft and crew members, automatically orchestrating the delicate ballet of moving them around the country.  Their routes, fuel and payload, crew member staging, and crew accommodations at the destination are all centrally managed to optimize that efficiency.  Since any perturbation can cause unanticipated second- and third-order effects, these systems also help to resolve problems caused by disruption in as efficient a manner as possible.  This allows airlines to be profitable despite incredibly high operating costs, but leaves little buffer in the event things go wrong.  When anything goes wrong, these systems depend on immediate and constant access to vast amounts of data, requiring steady communication between the central office and all operating locations.  When that communication is inhibited, these systems become useless, unable to adapt to the situation.  This means that such systems optimized for efficiency become worthless in crises (when they are needed most) thus crippling their users just as Southwest was crippled. 

These centralized systems are the result of Industrial Age thinking, which emphasized centralized management more out of necessity than desire.  Peter Scholtes begins The Leader’s Handbook by explaining how another transportation fiasco—an 1841 train collision—led to the centralized and hierarchical management structure that characterized the Industrial Age.[1]  I talk about this system and its various merits and shortfalls in my leadership paper, but for our purposes here I will simply say that the centralized management method it enabled was essential in order to prevent catastrophes in the operation of large, multi-site organizations.  As the Industrial Age has given way to the Information Age, such strong centralized control is no longer necessary to prevent catastrophes.  The proliferation of technology to all operating locations enables people and machines to coordinate with each other to prevent mishaps.  This is not new to the aviation industry, as the Traffic Alert and Collision Avoidance System does just that, enabling aircraft to coordinate with each other, alerting crews and even directing them how to maneuver to prevent a collision.  And that is only the beginning.  We carry in our pockets a device capable of easily reporting our location and status and facilitating coordination with anyone else anywhere in the world who has a similar device.  But even as these technologies have become common, the Industrial Age mentality of centralized control remains, with most information systems still optimized for it.  This was fine in the Industrial Age, when efficiency of normal operations was a competitive advantage.  But now in the Information Age, technology enables that efficiency much more easily, meaning that the new competitive advantage comes from adaptability to disruption.  Centralized systems can only facilitate that adaptability when they have instant access to all of the data required.  In the absence of that communication, organizations with the ability to decentralize that analysis and decision-making hold the advantage.  Christian Brose extols the importance of this in The Kill Chain in the broad application of national competition with China.[2]  The military has seen this as well, currently attempting to shift from the centralized control/decentralized execution model that has worked so well in the Industrial-Age-minded past to a system of “centralized command, distributed control, and decentralized execution” that will be required in any future fight in which communication will likely be cut off.[3]  This is equally important for the corporate world, as increasingly sophisticated cyber-attacks can quickly render any organization’s communication methods inoperable.  This makes organizations that rely on centralized decision-making and its enabling systems especially vulnerable.  Thus, what used to be a competitive advantage is now a liability.  Instead, those who distribute decision-making ability to the lowest possible level will be much more adaptable and less vulnerable and thus will have the competitive advantage, which leads to the first major lesson of the Southwest situation.

Lesson 1: Data is King, Ignorance is the Enemy

The first lesson is that data needs to be available at all operating locations and shared with all who need it in order to facilitate decentralized decision-making. This type of decision-making requires data to be immediately available.  In the information Age, data is the most important commodity, so its movement is the most important thing to be optimized.  The problem with Southwest was that the data was not available and therefore had to be passed using phone calls, which was inadequate.  The data required simply could not be ingested, processed, and output in anywhere near the volume needed.  Furthermore, the sheer volume of calls from passengers essentially created an inadvertent denial of service attack that further hindered this transfer of data.  Essentially, Southwest was operating in an environment in which communications were contested.  Thus, the centralized system became the single point of failure.  As the military prepares for a high-end fight in which communication jamming is to be expected, we should expect similar performance from similar centralized systems.  Instead, all needed data must be accessible at all locations in real time, allowing decisions to be made.  This certainly needs to be addressed in the Southwest scheduling system, since the situation turned from minor disruption to major fiasco when the system became overwhelmed.  If the Southwest system had been able to ingest and use all of the required data, the debacle would have at least been much less pronounced.  But more importantly, the data the system uses needs to be visible and usable at all operating locations.  If that data had been available to Southwest employees at all of their locations, they likely would have proved adaptable and innovative, ultimately reducing both the timeframe and magnitude of the situation.   Also, if some of that data was available to customers, the vast majority of the frustration would have been eliminated as well.  The most frustrating part of this situation for me (and likely for many others) was the lack of information.  I found out my flights were cancelled by checking flight status long before I was notified by Southwest.  This ignorance meant I ended up trying to call Southwest every five minutes or so, thus inadvertently and unknowingly adding to the problem.  Lack of information for passengers also causes anxiety which in turn leads to angry customers.  Conversely, regular and honest updates have a calming effect, instilling hope that the situation will be resolved and thus fostering cooperation in customers in addition to reducing the strain on Southwest’s phone lines.  So whatever long-term solution Southwest implements, it should include the real-time access of all required data at all of their locations.  This is the Information Age, in which data is the most important commodity and must be shared throughout the organization rather than hoarded at one location. 

Lesson 2: Decentralize Decision-Making

This leads to possibly the most important lesson: decentralize decision-making by equipping people at all locations with the tools that enable them to coordinate with each other and make decisions when communications with the home office are limited.  The Southwest employees “on the front lines” were powerless to resolve the situation, despite having idle aircraft and crews on site who were ready and willing to go above and beyond to do their jobs.  In the military context of peer competition, this holds life-and-death importance.  The military that clings to centralized control will likely be defeated in a high-end fight, as those control centers become centers of gravity and thus very attractive targets.  Joint teams need to be able to form ad hoc and coordinate in the moment, “calling an audible” to take advantage of opportunities when they arise.  The same is true of any industry.  In the Southwest situation, if aircrews and gate agents had possessed such enabling tools, crews could have formed at airports then taken available aircraft along with anyone needing to go in that general direction.  Gate agents could work with passengers to understand their travel plans and then inform the crews so that as many as possible could be accommodated as closely as possible.  When combined with the aforementioned honest and frequent status updates, this would cause passengers to be much more flexible and patient with gate agents, thus becoming part of the broader team to resolve the situation.  The result would have been inefficient, but likely would have resulted in many more people reaching their destinations faster as well as much more cooperative passengers and (more importantly) happy employees.

This is just another application of generally empowering employees.  Whether intentional or not, Industrial Age systems perpetuate the Industrial Age mentality that undervalues the ability of people at all levels to make decisions.[4]  In The Toyota Way, Jeffrey K. Liker even calls failure to properly utilize people a form of waste to be zealously removed.[5]  With the proper knowledge, training, and tools, employees at any level and location can make critical decisions.  Computer systems need to help people make sense of information in order to make decisions.  The processes and systems of the organization need to work for the people in the organization, not vice versa.  Those processes are the responsibility of leadership, so part of taking care of people is giving them the right tools and processes to empower their ability to make decisions that will serve the customers.  Thus, investment in these tools should be properly prioritized, with their long-term benefits in helping employees to serve customers better weighed more heavily than their immediate price tag.  These benefits may be impossible to quantify, which is why the infinite mindset Simon Sinek extols in The Infinite Game is so crucial.[6]  Ultimately, leaders need to serve their people first so that their people can in turn serve their customers. 

Lesson 3: Supporting Employees is the Top Leadership Priority

In my opinion, the failure of Southwest to adequately support their employees on the front lines during this incident is far worse than their inability to serve their customers.  The Southwest pilot’s union shared similar sentiments in a scathing letter that placed the blame on chairman and former CEO Gary Kelly for eroding the company culture and prioritizing shareholder profits over needed system upgrades, ignoring persistent warnings from the union and others that system updates were sorely needed. The letter contrasted Kelly’s leadership to the employee-centric vision of Southwest’s founder Herb Kelleher:

Herb’s legacy and the culture he built from the ground up was centered on his employees and empowering them to make proactive decisions at the lowest level possible. However, the culture that Gary Kelly ushered in with his ascension to the throne was the exact opposite. Gary’s vision was to become the darling of the investment community while building an insulated and vertical hierarchical structure where all decision-making authority was slowly stripped from front line experts with the most situational awareness and moved further up the cubicle chain in Dallas far removed from line operations….All while there were clear and constant signals that there were aspects of our operation that were in desperate need of significant investment and upgrade….Even as recently as early November, [union] President Casey Murray said, “I fear that we are one thunderstorm, one ATC event, one router brownout from a complete meltdown. Whether that’s Thanksgiving, or Christmas, or New Year, that’s the precarious situation we are in.” [emphasis original]

-Captain Tom Nekouei, Southwest Airlines Pilot’s Association 2nd Vice President, “Two Legacies” letter, 31 December 2022

While the tone of the letter may be related to the all-too-common animosity between unions and leadership, the underlying argument is likely sound. The short-term profit focus at the expense of long-term organizational health the letter decries is a telltale sign of the finite mindset that Simon Sinek refutes throughout The Infinite Game. It is also eerily similar to the situation at Boeing that led to the 737 MAX crashes, which started around the same time and with a similar mindset. We can therefore add both to the growing list of crises that can be traced to leaders prioritizing shareholders over employees.

Instead, any leader’s first priority must always be to take care of employees and adequately equip them so that they can serve the customers, which will in turn better serve shareholders.  The union letter actually begins with a quote from Herb Kelleher to that effect. This means that the scene last month was the exact opposite of Kelleher’s vision. Due to the combination of centralized hoarding of information and communication breakdown, Southwest was unable to adequately support their crew members and gate agents.  There is no easy solution to this, but a significant culture change will be required. In this situation, Southwest leaders committed to prioritizing employees could have traveled to the most affected airports, talk directly to both their employees and stranded passengers, and reassure them all that they were doing everything in their power to resolve the situation.  This may have done next to nothing to resolve the immediate technical situation, but it would have been incredibly important to the ultimate solution by being a visible sign of support of Southwest’s leaders for their people.  It would have also been useful in empowering the employees in the sight of the passengers and therefore likely diffusing much of the frustration.  If that wasn’t enough to prevent abuse of their employees by angry customers, those leaders could have used the same visits to enlist the aid of local law enforcement so that their employees could feel safe enough to serve their customers as well as they could.  All of this would benefit the long-term health of the company and maintain both the public’s trust in the company and the employees’ trust in their leaders.  This is so important that even if it would have required these leaders to charter several private jets to accomplish it, that expense would be worthwhile.

Lesson 4: Honesty and Humility Go a Long Way

This leads to another broader lesson for leadership in general: the importance of both honesty and humility.  While Southwest eventually did admit that the issue was due to a failure of their systems, they did initially blame the pre-Christmas storm.  Had they immediately owned up to the real cause of the problem, people’s trust in the company would have been maintained.  Since their system failure left them unaware of where both aircraft and aircrews were, they could have used an immediate and honest status report as an opportunity to enlist the help of others to fill in those gaps.  Crew members could have used social media or other apps to report their location and status, while other airport personnel and even amateur plane spotters could use similar means to report on the location of their aircraft.  This would not have resolved the situation but it could have helped to bring a solution in a quicker and less painful way.  However, this type of honesty involves pain of a different kind, since it is contrary to human nature in general and age-old leadership principles in particular to make such a public admission of weakness that risks tarnishing the reputation of the company and its leaders.  However, this risk is not as great as it would seem, since it is well known and acknowledged by most people that companies are made up of humans who make mistakes, so such an admission merely tells people what they already suspect.  In fact, honesty in these situations is often refreshing to people and helps to build their trust, whereas persistent refusal to acknowledge weakness when it is obvious to everyone actually erodes that trust.  So why do leaders try to conceal the obvious in ways that erode people’s trust in their organizations?  Pride and self-centeredness prevent us from being honest and vulnerable, deceiving us into thinking that others think as highly of us as we think of ourselves and that we must preserve that perception at any cost.  To combat this, leaders must maintain humility: not thinking less of themselves but thinking of themselves less.  In reality, not only do people think less highly of us than we do ourselves, but they think less about us period.  Thus, a humble attitude brings us more in line with how others perceive us anyway, freeing us to be honest and even vulnerable.  This type of humility and its resulting honesty defined the “level 5 leaders” in Jim Collins’ book Good to Great, which is really just another way of saying “servant leaders” as James C. Hunter noted in The Servant.[7]  Therefore, this lesson is really nothing new, just a restatement of the need for servant leadership.

Conclusion

In the end, the Southwest situation is yet another example of the importance of shifting from an Industrial Age mindset of centralized control optimized for efficiency to an Information Age mentality of technology-enabled decentralized control to achieve the adaptability and flexibility that are required to be competitive in the modern era.  This incident should serve as a reminder to all organizations everywhere of the importance of decentralizing their decision-making, providing the right tools and data to all of their people, giving them adequate support, and approaching both employees and customers with honesty and humility.  It is also yet another example of the shortcomings of the Industrial Age mindset and the need for the infinite mindset and servant leadership. As counterintuitive as it sounds, the best way to lead really is to serve.

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[1] Peter R. Scholtes, The Leader’s Handbook: Making Things Happen, Getting Things Done, New York: McGraw-Hill: 1998: 2-3.

[2] Christian Brose, The Kill Chain: Defending America in the Future of High-Tech Warfare, New York, NY: Hachette Books: 2020: 176-177.

[3] Sandeep Mulgund, “Evolving the Command and Control of Airpower”, Wild Blue Yonder, United States Air Force: Air University: 21 April 2021, https://www.airuniversity.af.edu/Wild-Blue-Yonder/Article-Display/Article/2575321/evolving-the-command-and-control-of-airpower/

[4] Myron Tribus, “The Germ Theory of Management”, Swiss Deming Institute, 31 March 2002, 8.

[5] Jeffrey K. Liker, The Toyota Way, New York, NY: McGraw-Hill: 2004: 28-29.

[6] Simon Sinek, The Infinite Game, Portfolio: 2019.

[7] Jim Collins, Good to Great: Why Some Companies Make the Leap…And Others Don’t, New York: HarperCollins: 2001: 17-40; James C. Hunter, The Servant: A Simple Story About the True Essence of Leadership, New York, NY: Currency: 2012: xvi.