“I never would have come to work if I’d known it was to face this XXXX” – Southwest Airlines ticket counter rep, Pittsburgh, December 26th, 2022
My family and I were among the hundreds of thousands of travelers harmed by Southwest Airlines’ operational collapse over the holidays. The airline inflicted two series of cancellations, dozens of hours of physical waiting and online waiting, confused and contradictory communication, and stress on us — not to mention the stress on the small number of employees, all trying their best to help us when we were able to make contact.
In the end, Southwest was unable to get us to my mother-in-law’s long-planned 80th birthday, where we also would have seen our oldest daughter for the first time in six months. At least we stayed safe, avoided being stranded, and the experience certainly made us reflect on our overall good fortune in life.
While I don’t like “pile on” blog posts and think we all need to be humble when it comes to judging the leadership of others, I thought I’d use my firsthand experience of the crisis and what I know about healthcare quality, safety, and financial excellence. And to share a few points that may be relevant for healthcare CEOs who want their legacies to be something very, very different from what the past two Southwest CEOs' legacies are headed toward — and different than those healthcare CEO’s in the institutions highlighted in the New York Times’s recent exposé, “ How a Sprawling Hospital Chain Ignited it's Own Staffing Crisis.”
We can get better results by not following their playbooks.
Are you shooting for “Virtuous Cycles,” or are you content to risk being remembered for “Vicious Cycles”?
At Value Capture, we talk a lot about virtuous cycles vs. vicious cycles and the fundamental role that leaders’ frameworks (and their discipline in executing those frameworks) play in determining where they will end up.
A virtuous cycle arises when an organization’s primary orientation is not only supporting employees rhetorically, or even with perks and high pay. Better yet is when executives are very frontline operations focused – ensuring everyone understands and stays close to the actual flows of work that serve customers. It means providing aggressive daily support to the employees carrying out that work, so they feel they can be successful and feel effectively supported as problems inevitably occur. When problems do occur, they support them in quickly solving them to root so they won’t reoccur.
This leaves customers more satisfied and employees more productive, more satisfied, less likely to leave, and much more innovative and fulfilled. And the organization will be more profitable as a result. In these organizations, strong finances are recognized as a CONSEQUENCE of great people supporting operations-focused leadership instead of being the primary objective.
To illustrate, one of the most misunderstood aspects of Toyota’s great success over the decades is that they provide much more support to frontline operators than their competitors, not less. Their amazing productivity and profitability revolution has gone hand in hand with providing one team leader to help, on average, every four workers on the assembly line. This fact is beyond the comprehension of many healthcare leaders we talk to. But others get it and the close-to-operations mindset it represents get similar yields when the ratio of workers to supervisors is reduced.
See this recent case study of how the Duke Home Health & Hospice division drove their RN attrition rate from 70% to 19% per year during COVID:
Vicious cycles in healthcare, as highlighted by the New York Times, or those I saw the consequences of first-hand at the airport ticket counter, result from leading with a finance-first mentality. In this mindset, leaders are treating people as costs instead of value creators, leading with pencils far from the actual value-creating action. They're willing to take culture-destroying, blunt-instrument steps like across-the-board layoffs.
In this type of organization, customers are less satisfied, more errors occur, employees are less productive and innovative, employees leave, and costs rise. According to the Southwest employees, it sounds like the airline had for years started to stray from its once notable virtuous cycle focus to a finance-first approach in dangerous ways.
Build your systems to catch and fix problems, especially from frontline operations, when they are small
The thing about problems is that they not only are waste by definition, but they also tend to snowball. This was easy to see as we experienced the Southwest crisis itself. Cancellations and failures to signal or allow effective rebooking online led to long call cues, eventually crashing the phone system. A false message that a canceled plane was merely delayed sent us scrambling to the airport, only to get into the hundreds-deep line being served by two exhausted employees. Automated invitations to contact Southwest electronically for help went unanswered. Because there was not a reliable way to get help, most Southwest passengers were simultaneously for days seeking help from Southwest from at least 4 channels -- effectively 4 times the waste.
But the real emerging story, as it always does, is a record of ignored early signals that were stretching back years.
First, employees asked for help because their scheduling system was cumbersome and outdated — it was inflicting waste on them daily long before any crisis, in a gradually-building cry. Then incredibly, big crises did occur, in 2017 and 2021, long before the recent enormous crisis. But the leaders didn’t make sure the systems got fixed! A leader’s most important role is to oversee the creation and maintenance of the key systems of the organization! And so, of course, the massive crisis struck. And there was no quarter.
Healthcare leaders who are willing to listen rigorously, through well-constructed improvement and leadership systems, can hear the abundant signals in our own organizations and make sure they are responded to when they are small, before it's too late.
Follow the evidence in the big external picture too
When he was CEO of Alcoa, Value Capture’s founding non-executive chairman Paul O’Neill was one of the first corporate CEOs to acknowledge the reality of global warming and behave accordingly as a multi-national corporate leader.
Why?
He was trained to look at evidence rigorously, and the scientific evidence convinced him. The holiday and post-holiday mega storm systems affecting the nation are just what the scientists have shown evidence to expect. One can’t help but wonder if the nation’s largest airline had failed to fix its core systems despite what would be inevitable growing weather event challenges.
For some healthcare leaders, global warming accommodation is, of course, an imperative, but the point is broader. Consumer, technology, social and competitive forces are ramping up everywhere in healthcare. Is your strategy development and deployment system, together with your core support for your people and operations, keeping pace?
We have never earned the future
As a colleague noted, one reason Southwest’s mega-crisis and what it revealed is so disappointing is that Southwest once had such a strong “virtuous cycle” foundation, as described above. And even now, in low-stress times, Southwest remains the choice of many because of the ease of travel that the remnants of that foundation provide.
But the gradually escalating “missed” crises, including this one, and the patterns they have revealed, remind us that we have never earned the future. Paul O’Neill used to say organizations are habitually excellent, or they are not. When leaders shift their focus and their habits, things start to hollow out, and what was once excellent can crumble quickly.
On the other hand, the future is ahead of every organization and every leader. The opportunity to shift decisively toward virtuous cycle leadership is right in front of us right now.
- Choose whether you are shooting for “Virtuous Cycles” or if you are content to risk being remembered for “Vicious Cycles.” That starts with choosing a people-centered, finance-as-a-consequence approach.
- Build your systems to catch and fix problems, especially from frontline operations, when they are small. If you don’t know how to do that, get help.
- Follow the evidence of how things are changing in the external environment and upgrade your capabilities accordingly.
- Never rest. The future is not assured.
Healthcare executives who would like concrete inspiration and guidance from fellow healthcare leaders that have sat in their seats and followed such a playbook can access an e-book entitled “Lasting Impact – Leaders Share lessons from Paul H. O’Neill”:
We are rooting for Southwest and the healthcare leaders who must make that commitment and follow up with grit and determination. For all of us, and for your legacies as leaders.
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