David Neeleman, CEO of JetBlue, tries to fly at least once a week, and makes a point to let the customers and crew know that he's aboard and ready to work and hear feedback. He describes a full day of traveling, listening to customers, asking questions, and learning from customers and crew members. JetBlue defines all employees as crew members, and all passengers as customers.
Neeleman talks about how technology is very important and has revolutionized many things in the airline industry. At JetBlue, we call technology high-tech, high-touch. You need to be able to do both.
JetBlue uses technology to become more efficient, to lower costs, says Neeleman. Today at JetBlue, we book 71% of our bookings over the internet, he says. We can't ever forget that there is a human aspect to our business, he adds.
Neeleman talks about how JetBlue has been able to succeed in a really bad industry. The airline industry has lost more money than it has ever made. In the beginning of human transportation, be it steam ship lines or railroads, there are very few companies who have survived. It has never been good business to move people. It was with that backdrop that Neeleman decided that he wanted to start an airline.
Neeleman has had a lot of experience in airline industry-starting with Morris Air, and then selling to Southwest. Southwest was a beacon that was out there-it had a market cap of all the major airlines combined.
Neeleman tells the story of his first startup failure during college, and the airline partner he was working went out of business. He shortly thereafter received a call from June Morris, who encouraged him to come and build Morris Air. Morris Air grew and prospered, and was sold to Southwest for 130 $M, with Neeleman as the second largest shareholder at the time.
I build companies, it's what I love to do, says Neeleman. I want to build a legacy-something that will last for a long time, he says. We came up with a simple model of bringing humanity back to air travel, and making a difference, he adds. Becoming a better company, being the best in a really bad industry, is his mission.
Neeleman talks about how Herb Kelleher of Southwest had a strange saying: "I don't care about my shareholders, I only worry about my employees." In 32 years, Southwest has never laid off an employee. Neither has JetBlue, which has only been around for several years, but has experienced September 11th and a war. We have learned that it is all about taking care of our people, he says.
Neeleman shares an experience he received by asking for feedback about of the airlines business from a class of business students. He emphasizes the importance of a customer's experience.
What does JetBlue think about organizational structure? We thought about how we would hire, train, set expectations and monitor to make sure this was actually happening, says Neeleman. We train employees well, and empower them and compensate them well, he adds.
Neeleman points out that JetBlue pays employees more than standard wages at United Airlines. They use technology to be more efficient, to spend less money in other areas. Much of the pay that employees receive is incentives. For example, pilots and flight attendants who fly over 70 hours each month receive time and 1/2. About 20% of compensation last year was based on the success of the company. In the 2nd full year of operation, over $17 M was given back to employees, which is 15 1/2%. We have an ability to give people an upside in the company based on their performance, he says.
Neeleman talks about how he tells his employees a simple formula for success: Show up to work, on time, with a good attitude. Take care of your fellow workers. If you set that expectation level, and are consistent, and model the behavior you expect, the employees then model it for each other, he adds. Neeleman also tells the story of the Southwest pilots who were fired for flying naked in the cockpit.
Neeleman talks about how JetBlue has to continually take the temperature of the company and its employees. We have to model the values that we want to see in our employees, and make sure they feel they are being respected, he says. To monitor performance, JetBlue gives surveys for employees. Preliminary results show 72% of employees completed the survey. We scored just below world-class scores, and will now review all the feedback and make action plans for improvement, he says.
In 2002, we received negative feedback from employees regarding the leadership within the company, says Neeleman. We realized that there was not a leadership training program-we weren't training the managers to be the conduit for the company culture as we brought on new people, so we implemented a leadership program with 5 principles of leadership, he says.
Neeleman talks about how Sam Walton, founder of Walm-Mart, figured out that knowledge in distribution, price points, and that little human touch would revolutionize retail. He also mentions Dell Computer as another example-computers are a really bad industry right now, but Dell manages to offer low prices, and offers great customer service and personalization. Nucor steel has been successful in the steel industry. JetBlue appears to model the successes of these companies, he says.
JetBlue has comment cards on board of every plane for customers to complete while on the plane. We survey our customers through the internet, and manage the email feedback we receive, says Neeleman. This information is shared with all the employees through JetBlue's intranet.
Neeleman believes the success of JetBlue to this point is the company's price points. I pray for the day our competitors can match our fares, he says. Currently, competitors are desperate to gain back market share and have been undercutting prices. The success of JetBlue is because of loyal customers. We have somehow been able to levitate above a commodity business, as Dell or WalMart have done well during bad industries, he adds.
Neeleman believes execution of the strategy is key. You must, as a leader, be able to expose yourself to your employees and ask for feedback, he says. You must be able to answer when you are wrong, or don't know the answer, he adds. These are very simple concepts, but are very difficult to execute on a daily basis.
How does IT differentiate Jet Blue? Neeleman on things they are doing well: We decided to roll out a frequent flyer program, but held on long enough to make sure it was completely implemented and managed online-we don't send anything out via mail. JetBlue has 10 or 15 people available via telephone to deal with problems, and 700,000 members online. Neeleman on things JetBlue should improve: checking people in using technology, increasing functionality on the web.
We spent 4.5 years defining the customer experience, and we tried to put our money into things that mattered to people. Food is one example: I have never heard a single soul say that they haven't had a good meal, and so they'll book an airline ticket. This year, we'll serve 10 million customers. If we'd spent $5 on a meal for each customer, we'd have spent $50 million of food that wasn't appreciated. So we use humor to inform people that there won't be full meals, and we provide snacks at 17 cents apiece. We knew that televisions would be memorable. I remember one of the happiest days when we were starting JetBlue was when we found the companie who installs direct TVs in planes. I wanted to give people control on an airplane. The cost of implementing the televisions was a fraction of the cost of serving full meals. Cleaning the airline was another example. And helping customers put bags away, to improve the gateway time.
Some said to me recently, If your business were to disappear today, would anyone miss it? Would your customers miss it? Your employees?... The most rewarding part of my job is when people-employees and customers-come up to me and thank me for starting JetBlue. If your company matters to others, you will be fulfilled.304,David Neeleman"
JetBlue's secrets for success: Hire and train great people, develop purpose, vision and values. Establish organizational culture, listen to customers and employees. Cultivate leadership. Provide incentives to employees.