Famous Line #1: "Greed is good." Academy Award winning actor
Michael Douglas spoke these infamous words during the movie
Wall Street, inspiring a generation in financial services.... Oddly, instead of inspiration, his character intended his comment to be a
warning.
Famous Line #2: "Bags fly free."
Southwest Airlines new mantra is based on a $0 luggage fee. Their competitors charge $25 or more per bag. What does Southwest know the others don't?
Given the recent katzenjammer on greed between Goldman Sachs and Congress, these seemingly unrelated quotes are anything but.
Greed is a hot, often confusing topic. Publicly, we say greed is awful. Privately, we wonder how those at the top got there and suspect greed played a role. What I notice, more often than not, is that greed is as much a matter of perception as reality.
Recently, Southwest Airlines CEO
Gary Kelly explained to me that Southwest spends $500 million a year to handle checked luggage. When the other airlines began charging, Southwest decided against following the pack. So far, Gary told me, Southwest has gained a 1% market share, earning about $900 million. For Southwest, this is a net gain of $400 million.
Of course, the bags are not "free" any more than your airline rewards miles are free. The ticket price covers the cost of the luggage and is part of the package. Nor does anyone think Southwest "greedy" for profiting. Personally, I wish SWA would think of more clever ways to improve the flying experience and make even more money for itself.
Their gain as a result of their gamble feels like fair play. Southwest's contrarian move increased our trust. The amazing thing is they actually leveraged the flying public's perception of other airlines' greed to their favor and came out smelling like a rose. Southwest made a bet and got it right.
As for Goldman and other Wall St. firms, whether or not they were greedy or simply practicing good business remains a worthy debate, marred by political grand standing and arrogant communication, and impossible to answer here. Time will tell.
What I can say is that like most words in our language that carry a negative note,
context is crucial. Even a word such as greed is "good" or "bad" depending on the situation. A greed for knowledge or a greed for greater humanity in business are prime examples of good greed, whereas greed that tramples others is hard to stomach.
So what might you take away from this discussion besides the fact that on occasion you can break all the rules and it's a good thing?
1.
Greed in business as a long-term strategy
is not sustainable. Yet, like all vices, it is a silently seductive one. Watch yourself and those in your organization, because sometimes we fall into needlessly greedy thinking without realizing it.
2.
Greed is a weak, long-term strategy because it
destroys trust. People rarely want to work with or stand by people they don't trust. At the same time, check your own psychological leanings toward wanting this or that for "free." At the apparent opposite end of the spectrum from greed,
free can also be a seducer. What's wrong with seduction? Value. Seduction is a come on with little or no value. If you are the leader in any organization, it's your job to make sure all your company's offerings are backed with value.
3. Good business, in my book, means that a company balances risk with reward and
meets an ethical, legal, and moral market need. When a company does all that, at the end of the day, I guarantee, those at the helm sleep with a clear conscience. And that, as the saying goes, is priceless.
For more discussion on stellar leadership such as the kind Southwest Airlines is famous for, check out my blog,
Leadership Mojo.
To discuss ways to implement thought leadership for your company or into your thinking, please contact me at
alex@lodestaruniversal.com.
Post Script: It's too much fun to leave out that just a few weeks ago while in Beverly Hills staying at the new
Montage Beverly Hills hotel, Michael Douglas stepped onto my elevator, looking relaxed, fit, and fabulous.
