From Worst to First: How Culture Transformation Saved Continental Airlines.

IN A LETTER TO HIS ENTIRE TEAM at Airbnb CEO and Co-Founder, Brian Chesky writes that when he asked investor Peter Theil to share with him the most important piece of advice. “Don’t Mess up the culture,” said Peter. According to Peter, the reason he invested in Airbnb was their culture, but he feared from his experience that as a company grows to a certain size, the culture becomes the first victim and begins to decay and deteriorates. He warned Brian Chesky to be extra careful. Sticking to the advice has paid huge dividends. Airbnb has grown almost 800 percent in the last decade.

Brian writes further in the letter, “The thing that will endure for 100 years, the way it has for almost 100 years companies is the culture. The culture is what creates the foundation for all future innovations and successes. Culture is forever.”

Now the question is: what is company culture?

The moment the word culture is mentioned, for most of us the first thing that comes to mind are things like better pay, solid perks, hefty bonuses, free lunches, yoga classes, outings, unlimited vacations, pool tables, and much more. These are of course great things to have but are mere components of a corporate / company culture. They are mere fringe benefits of a good culture, but it’s not the culture itself. It is quite possible and there are many instances when the company gave all of the above, but still was a bad place to work.

So, what exactly is corporate culture?

What personality is to a person, culture is to a company. As a human personality is what defines us, a culture defines an organization. In humans, the personality is made up of values, beliefs, traditions, perceptions, outlooks, habits, interests, and experiences.

The company culture is also made of all such traits shared by a group of people who come together and work together. The personalities of people who come and work together form the personality of the company. A company’s culture is shaped by its people, what they say, how they say, what they do, why they do and how they do it.

Even though a company culture is a sum of how its people interact, behave and work with each other. Also agreed that every individual in the organization plays a crucial role in building culture and impacts an organization’s direction but like everything in life, it’s again the Leader who has the most influence and by far the largest impact on company culture.

It starts with top leadership.

It’s obvious since they have all the power, authority, and influence to set and define all the parameters that build and shape a company’s culture. Again, like everything in life, though it begins at the top, doesn’t stay there. Gravity then takes over and makes it flow downwards in the bloodstream of the organization and thus creates DNA in the process.

Always remember, changing or creating great company culture is always Top-Down not Bottom-Up. Business history is replete with examples where a leader at the top created a great culture that empowered, engaged, and energized its people and crafted great successes. But unfortunately, the same history carries in its womb thousands of stories where a leader created a toxic and indifferent culture and successfully bought a downfall of a company.

Bad leaders create cults, good leaders create a culture. Want some proof?

Let’s go back in time. The mid-90s witnessed one of the most dramatic and legendary turnaround stories in the airline industry. Continental airlines a US airline underwent a super successful turnaround surgery under the able hands of Gordon Bethune, one of the most acclaimed and accomplished business leaders. I am a big fan of business turnaround stories, it’s like getting a master’s degree in management and leadership. Believe me, it’s a great inspiring story for all to learn whether or not your organization is in crisis.

The situation of Continental Airlines at the time when Gordon Bethune was called to save the airlines was quite grave. See for yourself:

— It was losing over 50 million dollars per month as loss.

— It saw 10 CEOs in the last 10 years (Says a lot).

— Ranked last in all industry metrics- like customer complaints, luggage handling, departures, punctuality, and more.

— Highest no of baggage mishandled and lost.

— Planes were ugly and uncomfortable: dirty carpets, broken seats, and tray tables.

— Duct tapes would hold many overhead bins.

— The culture was rotten and toxic.

— Employees were demotivated and frustrated.

— Had already undergone bankruptcy twice before.

Well, the list can go on and on. But amazingly the planes were still flying. Ask yourself: would you take up the challenge of running such a company if you were asked to lead it. No way! Isn’t it? Come on who would like to board a titanic- a sinking company. But, that’s the very reason why its turnaround from point of no return to being transformed into a powerful, profitable and most admired global airline is considered to be the most legendary in business history.

Gordon Bethune, at the time, was doing great at Boeing and when asked to lead the airline, jumped at the opportunity unknown of the real situation. Later on, when he was asked why did he leave a safe and good job at Boeing to join Continental. He jokingly said. “I was stupid.”

Well, the die was cast and Bethune was at the helm, fully in charge and in command. Time was fast running out. It was now or never. Very soon, he got into action and rolled out the “Go Forward” Plan. The plan worked on 4 key areas a) Market Plan b) Financial Plan c) Product Plan and d) People Plan.

He knew very well, that of the 4 key areas, the most important and crucial area was the “people plan.” It was very clear to him that when he gets that right, will the plan work.

The reason was very visible and quite palpable: toxic culture at Continental. He called it caustic. Morale among the employees right from senior executive to a baggage handler was at an all-time low. Motivation and inspiration had become an alien world. The blame game, dirty politics, infighting was the norm. People actually hated working at continental, no exaggeration. The hate manifested to an extent that employees would tear the company’s logo from their uniforms. Ashamed of the company, they didn’t want people to know that they worked at Continental Airlines.

Just imagine a company, where people working just hated to get up in the morning, for they know what’s in store at the workplace. Like other days, this day will be the same. At the end of the day, they will have any positive and good memories to cherish, but dissatisfied customers shouting at pathetic service, customer complaints, late planes, lost baggage problems and others. They would just pray for the day to end soon and go back home. They were unempowered and disengaged.

Continental airlines employees knew the meaning of the word motivation but didn’t know how it feels as they have never experienced it at work for long. Prior to Bethune, Frank Lorenzo was the CEO. He was so hated by employees that he had personal bodyguards around him all the time for safety. See, I told you this story has all the ingredients of a Hollywood potboiler. The lack of trust and confidence of the company’s management was at its peak.

Leaders must always remember, strategy and planning no matter how earth-shattering will never work in a vacuum. To manage and implement strategies, the key players are people. Organizational culture is nothing but the thoughts, actions, and behaviors of its people. Bethune knew very well that the key to changing the fortunes of continental is changing the culture.

To be successful either you create a new culture or modify/rebuild the existing culture. He decided to create a new culture. He knew that people need to be motivated, their morale uplifted, trust rebuilt, and most importantly empower them.

“Working together” was the means by which he intended to do it.

He began with communication, created an open-door policy. Earlier, it was almost impossible to meet CEO Frank Lorenzo. It is said, his secretary had a buzzer switch under his desk in case she needs to call the police. Bethune opened his executive suite door to every employee. Anyone from any rung could enter and talk to him.

Gordon Bethune started meeting people, talking to them at every possible opportunity. He would go down to the airport, load bags alongside baggage handlers, meet the gate agents, talk to the crew in the crew room. He would enter the cockpit of the plane and say hello to his pilot. He would talk to all of them, listen to what they have to say and then communicate what he intends to do. He was everywhere among his people all day.

A baggage manager said, “Anybody, who has worked here longer than 2 months can easily recognize Gordon as the CEO.” Leaders at the top need to halt and ask themselves- can his people say the same thing about them.

Their communication policy changed from- “Don’t listen and tell anybody to listen and tell everybody everything.”

Also, he started holding weekly “Town Meetings” at different places on the company’s country network and created an information hotline to disperse and recap highlights of each meeting.

Another way he adopted to create a culture of trust and confidence was what he called “Worst to First”. He would personally call his employees and congratulate them on a job well done, would publicly celebrate various company milestones and victories.

Gordon Bethune’s leadership was very transformative and appealing. Gradually, his leadership saw a massive shift in employee attitudes and the negative working atmosphere slowly changed to positive. His hands-on approach removed the climate of fear, doubt, and uncertainty. Employees again became proud to work at Continental, thanks to a dedicated and focused effort and intention on the part of Bethune and his team. Gordon Bethune was successful in dismantling the caustic and toxic culture at Continental.

Continental’s turnaround story besides being inspirational offers us some key strategic, managerial, and leadership lessons which can be powerfully applied to various aspects of life. The most important lesson we get to learn is related to the key role of employees in a turnaround. When leaders and managers need to change and overhaul the culture of a company, the leader has to touch the head and heart of its people. Building a new culture and changing people’s mindset is not an easy task, but an important and crucial dimension of an organization’s long-term success.

Let me know in the comments box below your experience on the importance of a healthy culture.



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