How Southwest Airlines inadvertently taught us about the importance of investing in your operations & technology

We hear a lot about things like “the customer experience” or “the user experience” and how important it is for businesses to invest in this area but it's rare that we see an entire corporation's operations, systems and technical infrastructure so severely affected by a lack of investment.

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However, this is not as uncommon as you might expect — in fact, I'd bet that there are many organisations out there facing a similar problem to Southwest Airlines — for all of its success in the airline industry, Southwest has continuously been criticised and derided for having outdated operations and technology. They are the largest domestic airline operating within the United States, with most of its revenue coming from domestic travel. Its focus on efficiency and customer service has seen it achieve a large amount of success over the past few decades, but that was threatened in December 2022 when a perfect storm of events caused them to cancel more than 2,500 flights and left thousands of passengers stranded in terminal lounges across the country.

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Let's start by looking at the contributing factors that caused this perfect storm.

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The storm hit Chicago and Denver hard, where Southwest has two of its biggest hubs – Chicago Midway airport and Denver International airport.

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More bad luck: The storm hit just as the so-called tripledemic surged across America, leaving people and their families sick with Covid, the flu and the respiratory syncytial virus. Although Southwest says it was fully staffed for the holiday weekend, illness makes adjusting to increased system stress difficult. Many airlines still lack sufficient staff to recover when events like bad weather cause delays or flight crews max out the hours they’re allowed to work under federal safety regulations.

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But Southwest also hurt itself with an aggressive schedule and by underinvesting in its operations.

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Southwest’s schedule includes shorter flights with tighter turnaround times, which are causing some of the problems.

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Southwest Chief Operating Officer Andrew Watterson explained that the company’s outdated scheduling software quickly became the main culprit of the cancellations once the storm cleared, according to a transcript of the call obtained by CNN from an aviation source.

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Staff resorted to having to put together flight schedules manually. A hugely complex task, a delicate house of cards that could quickly tumble when the company encountered a problem. And that's exactly what happened.

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This is not a one off though, Southwest Airlines have been experiencing these issues for the last 20 months and it's all to do with outdated processes and outdated IT. This latest problem is likely to have cost them $825 million.

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Understanding the problem

Whilst I use Southwest Airlines as an example, there are many corporations of different sizes out there that face the same challenges in different sectors.

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Prioritisation

Once you are confident you have identified what areas need to be improved and that you have a solution that ensures you are building the right thing it’s essential to get key stakeholder buy-in. This needs to be tackled in a way that can be understood by a non-technical layperson and also prioritised in a way that doesn't have the business trying to tackle multiple things at once, even when the amount of technical debt may suggest that needs to happen.

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Justification such as “This service needs a rewrite.” is not going to get that buy-in. Explaining the reason why and demonstrating that you have a solution that delivers the right outcomes rather than replicating the old with the new will deliver far more success. Is it an area that is going to have a lot of changes or increased demand in the coming year and the new solution allows for future scale and reduced business and customer friction? Will the speed or stability of this particular service be much better and take advantage of the knowledge and technology that we have now?

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Return on investment will also be a very important factor but in the case of the services industry, you will need to think about how it may also reduce complaints, overall customer satisfaction level and ultimately brand perception.

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Conclusion

In conclusion, the recent flight cancellations and stranded passengers at Southwest Airlines serve as a clear warning of the vital role that investing in customer experience and modernising operations and technology plays for businesses. The incident highlights the need for businesses to understand the problems they are facing and take proactive measures to address them.

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This includes mapping out the overall business experience, both from an internal and customer perspective, identifying the high-priority problems that need to be tackled, and working out solutions that are right for the business and not just a rebuild of the old. Businesses must also be prepared for the time, effort and money it will take to make changes that will ensure that they remain fit for purpose, and prioritise improving the customer experience to avoid similar incidents in the future.

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