Lessons For Boards Of Directors Courtesy Of Southwest Airlines

The December holidays are speculated to be crammed with joyfulness, respite, household get-togethers, and even a long-planned trip. However this was to not be for the 1000’s booked on the 16,700 flights Southwest Airways
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canceled between December twenty first and December twenty ninth. It’s arduous to fathom the immensity of the chaos attributable to this debacle. It’s now being reported that it’ll value Southwest within the neighborhood of 1 billion {dollars} and trigger them to report a loss as an alternative of a revenue for his or her fourth quarter. This, in fact, doesn’t keep in mind the decimation of repute, belief, and goodwill, which is tougher to measure and tougher to recoup.

However, as Southwest seeks to get better, firms in all places and the boards of administrators that govern them ought to listen and be forewarned. Each firm is a know-how firm. This doesn’t imply that they promote software program or servers, however quite in 2023, all firms are closely reliant on the soundness and resourcefulness of their know-how. It may be argued that the power of an organization’s technological infrastructure and programs will instantly affect its success or the dearth thereof.

Sometimes, the information is crammed with tales about cybersecurity issues and knowledge breaches. For instance, in 2021, private knowledge from 533 million Fb accounts was leaked on-line. This included the private info of individuals from 106 international locations.¹ In 2018, Marriott reported unauthorized entry to info on friends of its Starwood model had been occurring since 2014. This concerned copying and encrypting friends’ names, mailing addresses, telephone numbers, e-mail addresses, passport numbers, and extra.²

For Southwest, the issue was extra pervasive. Specialists state that “the first purpose for the mess at Southwest was its outdated optimization know-how, which the airline has outgrown over the previous couple of many years.”³ This software program is core to the operations of the airline in that it assigns crews to flights and permits crews to make their whereabouts identified. Evidently within the present system, crews truly need to name a scheduler on the telephone to offer this info. One experiences states that it took 10 hours to get by way of on such a name. Appears a bit 20^th century, doesn’t it?

Southwest has lengthy had a historical past of underinvesting in know-how. It’s an analog airline in a hyper-digital world which begs the query of how. How can this occur? There are various tales being reported about numerous departments and unions asking administration to enhance know-how. They pleaded and implored and predicted issues.

Maybe, nonetheless, a special technique would have been to have know-how be a core a part of the board of administrators’ purview and agenda. As they are saying, ‘a fish rots from the pinnacle’, and it’s on the high of the group that such a strategic focus must be. To do that, it will be useful to have not less than one director with a powerful background and expertise in know-how. This director may ask the powerful questions, perceive the worth of the potential investments in know-how and urge his or her fellow board members on the important significance of turning into extra digital and maintaining with the developments and alternatives supplied by know-how.

The Southwest board has 13 members, and in response to the 2022 proxy, just one director has some know-how experience. That is CEO Robert Jordan who was an Government Vice President of Technique & Expertise from 2006 to 2008. Fifteen years have handed since he held the position, which is many lifetimes within the evolution of know-how. The constraints of Southwest’s board might also be attributable to the truth that there are quite a few long-tenured administrators. Two administrators have served greater than 20 years, and three others have served greater than fifteen years. Lengthy tenure is the antithesis of excellent governance and may engender some complacency and lack of independence. Some age variety on the Southwest board may be useful. The typical age of the 13 board members is 72, and there is just one director youthful than 60 years previous. Maybe a digital native or two would supply a differing understanding and perspective about all factor’s know-how associated?

All of the above is to not say the Southwest board members usually are not achieved and certified in their very own proper. Quite it’s to emphasise the significance of know-how experience on all boards. It is usually to be identified that board refreshment is important to creativity and transformation. Boards ought to admire the insights and values of their administrators and study from them, however after a decade or so, why not avail themselves of latest pondering and contemporary perspective? Sure, institutional information and knowledge is vital and have to be revered however this needs to be counterbalanced by a should be ever evolving as a company.

Certain, Southwest will now put money into their know-how, however will that be sufficient to get better their repute? It mustn’t take an upheaval for boards to refresh themselves and be sure that round that desk is not less than one know-how professional (if no more!)