David Neeleman’s Rules for Succeeding in Any Business (Part 1)

RULE 1. FOLLOW YOUR PASSION

Growing up, Neeleman was haunted by the specter of future failure. A poor student who always fell behind his peers, he wondered how he’d ever find work, let alone be a success. That changed when he began to focus on something he loved: the travel business. Without that passion, he would have been lost. Indeed, his much-noted ADD prevents him from focusing on anything that he’s not passionately interested in, and this goes all the way back to boyhood. Neeleman followed his passion when he left home to become a Mormon missionary in Brazil. And, while the odds were against him when he came up with the idea for JetBlue, he was passionate about his idea and followed it with all of his heart.

RULE 2. THINK OUTSIDE THE BOX

Much of Neeleman’s success can be traced back to his creativity— his ability to think outside the box and his refusal to accept conventional wisdom. Those who have worked with him over the years still marvel when recalling how he is able to generate ideas nonstop—while admitting they aren’t always good. This ability to see problems in new ways is critical to standing out and adapting in all walks of life. Far too many let their inner talents lie fallow, often because they don’t have confidence in their ability to be creative. Neeleman believes in taking chances. He isn’t afraid to fail, knowing that if an idea doesn’t work out this time, it might the next time around.

RULE 3. WORK WITH AND LEARN FROM THE BEST

Leading by example has its corollary in “learning by following.” Neeleman may have blazed many trails on his own, but he’s discovered the value of emulating and gathering wisdom from the leaders in his chosen field. At Morris Air, he learned from June Morris, one of the country’s most innovative travel agents at the time. Morris frequently had to temper Neeleman’s wilder inclinations, though he was encouraged to be creative and take risks.

Early on, Neeleman made Southwest Airlines his model, and its chairman Herb Kelleher his hero. Neeleman sent Morris Air employees to Southwest to learn that carrier’s operational methods. He then made those methods his own. Neeleman applied those lessons so well to his operation, Southwest wound up buying his company, largely because it was nearly identical to its own.

Neeleman further emphasized this principle when putting together JetBlue’s executive management team. He recruited the best people he could find for each position. He also made hiring the highest-quality workforce—down to the lowest level—a top priority. When it came time to find investors, he went to the cream of the crop, including the legendary George Soros, who became the carrier’s biggest underwriter. Neeleman has even stocked JetBlue’s board of directors with savvy, independent-minded people who aren’t afraid to contradict him.

Neeleman knows that great organizations require brilliant teams. After all, even a genius can come up with a lot of bad ideas. Neeleman has always surrounded himself with teams he respects, can listen to, can bounce thoughts off of, and can learn from.

RULE 4. BE READY TO MOVE ON

Neeleman really didn’t want to leave Southwest Airlines, but in retrospect he concedes the firing was a good thing—for him and for the airline. Since then he’s exhibited a flexibility and willingness to get on with his life to great effect. For example, after helping to found WestJet in Canada, he left before the company went public. He was anxious to start the next chapter of his life, JetBlue. After turning Open Skies into a success, rather than holding on, he sold the company to Hewlett-Packard, pocketing a nice profit in the process. Even now at JetBlue, the company’s willingness to reverse course, as demonstrated by its exit from Atlanta, shows that Neeleman is still able to gracefully accept failure, while not being tied down to imperfect assumptions, old ways of doing things, or complacency.

RULE 5. BUILD A BETTER MOUSETRAP

Neeleman has prospered over the years not just by doing things differently, but by doing them better. He calls it “building a better mousetrap.” It might be a cliché, but to Neeleman it’s a golden rule. JetBlue’s better mousetrap consists of low fares combined with comfortable new airplanes, live in-flight entertainment, and great customer service. As Neeleman contends, anyone who can combine the best product with the lowest price, as JetBlue has, will be successful in any industry (just as Wal-Mart built a better mousetrap in the retailing business and triumphed over Kmart).

Don’t be cowed by the size or strength of competitors, he urges. There’s plenty of room for David versus Goliath triumphs. The major airlines are known for brutal combat. Traditionally they have eaten new start-ups for breakfast. Before taking them on, Neeleman carefully studied the big players. He knew their strengths and weaknesses, and decided to avoid the former while exploiting the latter. JetBlue’s operations can be seen as almost a point-by-point answer to the deficiencies of his competitors. They showed a lack of caring for passengers, so he provided extremely good customer service. They flew beat-up old aircraft, so he acquired brand-new planes. They often weren’t on time, so he operated from airports where delays were minimal. Throughout his career, Neeleman has never backed down. In building JetBlue, he did his homework, assembled all the necessary pieces, and didn’t let fear of the competition deter him from pushing ahead.

RULE 6. BE WELL CAPITALIZED

Neeleman was on his way to making his first fortune while still in college. The travel agency he started grew to $6 million in annual revenues. But it all evaporated almost overnight for one reason: The airline he was dealing with went out of business, taking all of his money with it, and he wasn’t sufficiently capitalized to continue on. He didn’t have the cash cushion necessary to ride out this temporary storm. Since then, being well capitalized has been one of Neeleman’s most important rules.

When Morris Air went from being a charter airline to a scheduled carrier, he had the Morris family put up more money than was needed. When he went to raise money for JetBlue, he followed the same rule. The $130 million he amassed made JetBlue the best-capitalized start-up airline in aviation history. Having this strong financial position has enabled the airline to comfortably do battle against the competition, while surviving—and thriving—in one of the toughest periods ever for aviation.

RULE 7. TAKE GOOD CARE OF YOUR PEOPLE

Neeleman repeatedly talks about how JetBlue’s employees—crewmembers, as he calls them—are the primary reason for the company’s incredible achievements. While downplaying his own role, he often cites the proper care of his people as JetBlue’s number one priority. Whether a service business fails or succeeds is in the hands of its frontline people, Neeleman believes. These “moments of truth,” which he ascribed to during his Morris Air days, occur when customers interact on a personal level with a company. These experiences have a profound effect on customers. Therefore, whether a plane is on time isn’t as important as how a passenger feels he or she was treated during the flight. But if you don’t have workers who believe they are being taken care of by you, they won’t make an effort to take good care of your customers. If they’re unhappy on the job, it’s bound to show up in the service they provide—or the lack thereof.

By Neeleman’s example, it’s important to both tell and demonstrate your company’s commitment to its employees. Communicate frequently and by whatever means available how much you value their contributions and how important they are to your company. For Neeleman, this communication extends to getting out and working alongside his crewmembers—loading luggage on the apron, serving snacks aboard aircraft, and even cleaning up trash in between flights. If these jobs weren’t important, would the CEO waste his time doing them?

The airline also demonstrates its commitment in good old “show me the money” fashion. Neeleman believes in sharing the wealth. Generous stock purchase plans and other benefits ensure that everyone does well, financially and otherwise. The fact that Neeleman donates his entire (though by CEO standards paltry) $200,000 salary to the employee catastrophe fund makes it personal, not just a corporate concern.

Working conditions add to this spirit of caring the company promotes. Innovative programs, from the virtual call center staffed by home workers, to flexible job-sharing arrangements, make for a happier and more productive workforce. Management policies create a positive and supportive environment, leading to satisfied employees and well-served customers.

by James Wynbrandt, via Flying high : How JetBlue founder and CEO David Neeleman beats the competition—even in the world’s most turbulent industry

Tags: Book_Flying high, customer service, David Neeleman, James Wynbrandt, JetBlue, Rules of Business