Southwest Airlines and Walt Disney: Comparing to Determine Their Success

Southwest Airlines

Southwest Airlines is a standard-bearer for low cost carrier initiatives. The original founders, Rollin King and Herb Kelleher, started a different kind of Airline Company 37 years ago. King and Kelleher began with one simple notion: if an airline can get its passengers to their destinations when they want to get there, at the lowest possible fare, and they have a good time doing it, people will fly this airline. In 2008, Southwest Airlines flew 70 million passengers annually to popular cities all across the country using a standard fleet of Boeing 737 jets (Southwest Airlines, 2007).

Major Leadership Component: Personal Commitment

Creating long range competitive advantage requires personal commitment, consistent discipline and steadfast investment (Spreitzer & Quinn, 2003). Toward personal commitment, Southwest Airlines places emphasis on employee job satisfaction and their leaders take extra steps to ensure that the corporate environment supports employee health and welfare. This assurance is consistent with Herzberg’s motivation-hygiene theory which highlights a link between motivational factors supporting job satisfaction and maintenance factors ensuring job satisfaction is maintained at acceptable levels (Smerek & Peterson, 2007).

With respect to consistent discipline, Southwest Airlines addresses the needs of shareholders, stakeholders, customers, and employees. As a result, Southwest’s cohesiveness generates sustained economic growth in a very challenging airline industry. Their corporate culture is a blueprint both inside and outside the airline industry (Whitelegg, 2005). Relative to steadfast investments, Southwest’s company culture promotes resource efficiency and personnel effectiveness. An example of this efficiency is the operating cost per passenger mindset, which is significantly lower than any other airline in the market (Bond, 2005).

Service Niche

The uniqueness of Southwest Airlines’ corporate planning is its low fare service derived from specialization of domestic flights and point-to-point service. Their uniqueness is a tangible asset closely related to the business strategy of the company. The company celebrates years of low fares and the ability to continue being profitable in a demanding aerospace market (Southwest Airlines, 2007).

Business Operating Structure is evidence of Southwest Airlines’ unique business performance, which positions the company to be the only airline in the world to make a profit for its years of continuous service. Their innovative approach to aircraft utilization, employee performance, labor union partnership, and customer satisfaction has propelled the company above the remaining low cost carriers in total revenue and profits (Chapman, 2005). Southwest has a proven safety record that promotes customer safety and satisfaction. The airline also uses innovative approaches to sustain a slow but measurable growth in the aerospace industry (Chapman, 2005). In addition, through stalwart leadership, the company maintains its lead in the low cost carrier airline industry.

Critical Business Headings

The basis for Southwest Airlines’ reputation for taking care of its employees is derived from its corporate vision, mission, goals, and objectives. A company that documents its support for its workers is not unusual. However, Southwest Airlines’ approach is unique in that it solicits and receives trust and loyalty from its workers (Chapman, 2005). Southwest leaders put their support for their workers on par with the business mission. For example, the mission statement communicates to Southwest Airlines employees that they are an integral partner of the business enterprise and that Southwest is committed to modeling organization behavior to meet both mission requirements (Milliman, Ferguson, Trickett, & Condemi, 1999). Southwest Airlines practices leadership characteristics such as honesty, forward-looking, inspiring, and competent, which are important leadership characteristics (Kouzes & Posner, 2003). The current chief executive officer continues to follow the tradition of past Southwest Airlines’ executives by bringing simplicity, consistency, straightforwardness, and dedication to the aviation business (Chapman, 2005).

The Walt Disney Company

On October 1, 2005, Robert Iger replaced Michael Eisner as The Walt Disney Company’s chief executive (The Walt Disney Company, 2005b). On February 1, 2008, Iger’s contract was renewed for the next five years (The Walt Disney Company, 2008b). Transformation plans were initiated under Iger’s direction prior to assuming his new role, with Eisner’s full support (The Walt Disney Company, 2005a). The major leadership components were three-fold: (a) strategic planning, (b) five year plans and goals, and (c) growth initiatives.

Major Leadership Components

Strategic planning was demonstrated to be an important leadership component. First, current chief strategic officer, Peter Murphy, became an advisor to Iger focusing on identifying long-term trends and growth opportunities (The Walt Disney Company, 2005b). Second, the CEO-elect created a decentralized structure giving business unit leaders legitimate power and authority to create shareholder value (The Walt Disney Company, 2005b). Third, Iger diplomatically reestablished challenged and suffering relationships with major stakeholders, such as Pixar’s Steve Jobs and Roy E. Disney. Iger also created several new collaborative relationships with Hungama, Apple, and Comcast (The Walt Disney Company, 2006a, 2006b, 2006c, 2006d).

Five-Year Plans

Iger affirmed the existing corporate five-year plans, which include a focus on acquisitions, emerging businesses (new to the current portfolio), and new technologies (The Walt Disney Company, 2005b, 2007, 2008b). To position itself to achieve the kind of growth that will continue to keep investors happy, Disney spent heavily – an increase of almost $350 million in 2008 than in the previous year. Among the capital projects are the overhaul of the California Adventure theme park, two new cruise ships, a luxury resort in Hawaii, and video game development (The Walt Disney Company, 2007).

Growth Initiatives

Iger established growth initiatives in the areas of creativity and innovation, new technology, and international expansion (The Walt Disney Company, 2005b, 2007). Producing hits across business units and the Disney brand distinction reduces financial risk and produces a certainty that competitors cannot claim. The success of this strategy was demonstrated in Disney’s 2007 fiscal year revenue, which increased five percent over the previous year – an all time high (The Walt Disney Company, 2007).

Critical Business Headings

Strategic planning, five year plans, and growth initiatives make up the three major leadership components of The Walt Disney Company (2007). From these tenets, critical business headings can be extrapolated. First, Iger’s reputation as a blockbuster chief executive depends on his ability to continue producing growth during the nation’s economic downturn (The Walt Disney Company, 2008b). CEO and corporate governance, performance, and accountability issues rose to the forefront. Second, Iger was challenged to align all decentralized business unit activities (Hills & Welford, 2006) with the corporate strategies, plans, initiatives, and mission – “The Walt Disney Company continues to proudly provide quality entertainment for every member of the family, across America and around the world” (2008a).

Southwest’s structure focused on employee, union, and customer relationships (Chapman, 2005), and Disney’s structure focused on surrounding the new CEO with wise leaders, decentralization, and repairing damaged relationships (The Walt Disney Company, 2007). This comparison reveals that while such a topic as organizational structure elicits thoughts of hierarchical organization, these organizations applied the concept in three different ways making organizational structure difficult for competitors to anticipate or replicate.

Southwest Airlines provides employees with a personal commitment and job satisfaction (Spreitzer & Quinn, 2003). Of interest is the fact that Southwest Airlines distinctly and specifically link the resolution of employees concerns with business and operational success. Employee job perceptions and satisfaction influence workforce events and is used to predict responses to organizational change (McShane & Von Glinow, 2004).

Disney, perhaps because of a generally stable organizational culture, specifically addressed plans to increase international expansion efforts (The Walt Disney Company, 2005b, 2007). Furthermore, Disney addresses and focuses on creativity (The Walt Disney Company, 2005b, 2007). Because of the kind of experience Disney seeks to provide consumers, an emphasis on creativity is not surprising. Two main conclusions are drawn from comparing the two organizations. First, operational plans offer similarities but leadership plans are quite unique. Second, the type of industry and competitive environment in which each organization operates influences the major leadership headings and critical business components that emerge.