What is Culture? The Random House College Dictionary describes culture in a social sense by stating it is ?the sum total of ways of living built up by a group of human beings and transmitted from one generation to another.? Thus if we substitute the social world that we live in, for a business organization that we work in, we get only a slightly different definition. The definition provided by my text states ?Culture is the set of values, guiding beliefs, understandings, and ways of thinking that is shared by members of an organization and taught to new members as correct.? In essence, culture represents the unwritten, feeling part of the organization we work in and society we live in. The culture that has evolved around Herb Kelleher at Southwest Airlines is unquestionably the source of their success.

In the next few pages I will introduce you to Herb Kelleher, and Southwest Airlines, a company he helped start nearly 36 years ago. I will then discuss the culture of Southwest and its importance to their success in the very competitive airline market.

Back in 1966 Herb Kelleher was a very bright, successful lawyer in San Antonio, Texa

In the early 1990?s Colleen Barrett, then the Executive Vice President, and Kelleher?s right hand set up a company culture committee, comprised of people from all geographic areas and levels of the company. The committee, which meets four times a year, is charged with preserving and enhancing company culture. One of the committee?s successes is illustrated by the company organization. It is well known that functional structures such as Southwest?s are designed to promote specialization and scale economies, but often at the expense of teamwork and coordination. As these organizations grow they become even more difficult to operate in an integrated manner. The committee developed a number of initiatives to improve cross-functional cooperation. For example, all company officers and directors have to spend one day every quarter in the field, working real ?line? jobs. This idea has recently been expanded to include ?line? employees experiencing other ?line? employee jobs.

Herb Kelleher became chairman in 1978 and then CEO in 1982. At that point the airline had just 27 planes, $270 million in revenues, and 2,100 employees, and flew to just 14 cities. Since then Kelleher has built the company into a $5.7 billion business. Based in Dallas, Southwest now has more than 30,000 employees and flies to 57 Cities. At $14 billion, Southwest?s market capitalization is larger than American?s, United?s and Continental?s combined. And still they offer some of the cheapest fares in the industry.

Jim Parker Southwest?s former CFO and Colleen Barrett former Executive Vice President are currently CEO and Executive President respectfully. Jim Parker was recently asked ?How are you going to handle succeeding Herb?? And he said, ?Well, Colleen?s going to handle the smoking, and I?m going to handle the drinking.? Herb Kelleher responds, ?At least they have that divided up.? Kelleher?s advice to entrepreneurs: ?Ask your employees what?s important to them. Ask your customers what is important to them. Then do it. It should be that simple.?

s. One of his clients at the time was a San Antonio entrepreneur, Rollin King, the owner of a small commuter air service. Rollin King approached Herb with a colossal idea. In a bar, over drinks, with doodles scratched on a cocktail napkin, Rollin King proposed his concept: starting a new airline using larger planes to serve the three major cities in Texas. The plan was to fly between Dallas, San Antonio, and Houston. Herb?s response to the offer: ?Rollin, you?re crazy. Let?s do it!? With $10,000 of his own money to get it started Southwest Airlines was born. No one, not even Herb Kelleher himself, was sure it would work. From the beginning, their competitors were determined to make certain it did not work. As soon as the Texas Aeronautics Commission authorized them to fly, the other carriers immediately went to court to stop them. It was constant litigation from then on. Southwest was fighting, just to exist for it?s first 3 1/2 years.

That initial $10,000 capital Herb Kelleher invested in that smoke filled bar in San Antonio is now

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Approximate Word count = 2093
Approximate Pages = 8 (250 words per page double spaced)