"One thing I tell our people is that the intangibles are much more important than the tangibles..."
Kelleher said this in an interview when he was talking about the extraordinary performance that his company enjoyed; not just in low fares, but in the high quality of customer service.
He quoted the Transportation Dept. statistics at that time saying that Southwest Airlines (LUV) had the best customer-satisfaction record of any airline in America. They had fewer complaints filed per 100,000 passenger flown than anybody.
He's right! To be able to offer those low costs along with tremendous customer service is an accomplishment that few in any industry can match.
Now in reference to his comment on the "intangibles" being the most important, he added that he was referring to the spirit of the people working for Southwest.
Why is that so important? He said because the tangible things are things that can easily copied and reproduced. But when it comes to intangibles, it is very hard to duplicate that part of a company. In other words, it is a true competitive advantage is very difficult to compete against.
The secret is that the spirit of the people involved a couple of things. The first being that Kelleher cultivated this type of spirit as the culture of the company. And second, because it was the culture of the company, he would only hire those based upon that core value.
That more than anything else is what made Herb Kelleher and Southwest Airlines what it was. To this day none have been able to duplicate the spirit that has become what makes the company what it is. That's the reason why intangibles are such a key to the success of any company.
Other Herb Kelleher Sources:
Herb Kelleher on the Record, Part 1
Belief Model for The Leadership of Herb Kelleher (Southwest Airlines)
Herb Kelleher, Chairman, CEO and President, Southwest Airlines
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