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 / Summer 2004 / Issue 35(originally published by Booz & Company)


Herb Kelleher: The Thought Leader Interview

S+B: I think boards play two very different roles. On the one hand, they play the role of cop: “Boy, this thing is out of control, it’s not working very well. We need to find a new CEO.” On the other hand, they help management by offering advice and counsel and by playing a sounding-board role. Are we in danger of losing the sounding-board role?

KELLEHER: I’m concerned about that. It’s not that I rebel against any of the changes that have been made, because I think in and of themselves they are salutary and not particularly burdensome. But I am a little bit worried about the psychological reaction to them. I was talking to a CEO in Dallas probably a month ago and he said, “I formulated a new strategic paper. It proposes that my company go into another business. I’ve been trying to present it to the board during the last two meetings, but we were so preoccupied with compliance issues and fear of noncompliance that I haven’t been able to present it to the board.”

Training Entrepreneurs

S+B: You funded the Herb Kelleher Center for Entrepreneurship at the University of Texas. Why?

KELLEHER: Because I think it’s very important to Texas and to our country that we preserve our entrepreneurial spirit. As you get bigger and things get more complex, I think there is more of a tendency to get mired in the details, to get mired in the bureaucratic aspects of things and the hierarchical aspects of things. One of the things I always tried to do was to keep the entrepreneurial spirit alive at Southwest Airlines, even as we grew bigger and more complex. That’s where the job creation is coming from. It’s from the small businesses, not big businesses.

S+B: What would you like business schools to be doing better?

KELLEHER: By and large, our business schools, at least in the United States, are doing a far better job today than perhaps they were doing 30 years ago. Now, business schools are actually talking about entrepreneurship, perhaps kindling that spark in their students. They’re focusing more on dealing with employees and how you achieve good relationships with your employees. They teach more about customer service and how to do customer service. They’ve gotten away from pure financial analysis and planning, to some extent, which I think is very important if you’re going to have a well-rounded CEO.

S+B: What advice would you give brand-new CEOs if they wanted to have the kind of success you’ve had?

KELLEHER: First of all, they have to focus intently upon what’s important and what’s unimportant, not be trapped in bureaucracy and hierarchy. Be results- and mission-oriented. Keep it as simple as they possibly can, so that the values and the destination of the organization are well understood by all the people that are part of it — so that they can feel that they are truly participants in it. I don’t know whether it was Calvin Coolidge or Bianca Jagger who said — they’re both thin, that’s why I get them confused — “the business of business is business.” We’ve always said, “The business of business is people.”

Reprint No. 04212

Author Profile:

Chuck Lucier ([email protected]) is senior vice president emeritus of Booz Allen Hamilton. He is currently writing a book and consulting on strategy and knowledge issues with selected clients. For Mr. Lucier’s latest publications, see
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