Southwest Airlines exhibits an entrepreneurial culture through several factors: 1) Employees feel comfortable voicing new ideas and implementing them as part of a team, rather than viewing themselves solely as employees. This is encouraged by stock options that give employees an ownership stake. 2) "Management by fooling around" allows employees to try new ideas without fear of reprisal for failures, fostering risk-taking. 3) Herb Kelleher has structured a climate of integrity, mutual respect, and high spirits that encourages entrepreneurial activity and risk-taking from employees who feel like owners, not just complacent workers.

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Jeffrey Fisher 9/10/08
MBA 630 Prof. Bellman
CASE 3.2 Southwest Airlines
1. Describe some of the factors needed to reengineer corporate thinking that Southwest
Airlines already exhibits.
Southwest Airlines already exhibits intrepreneurship. This results in employees not only
feeling comfortable voicing their opinions and trying to implement new ideas for the
corporation but allows them to feel unafraid and part of a larger team. The result is a
different mindset pertaining to the employee relationship with the corporation. A
motivating factor for this is not only recognition for departments through airplane tattoos
but also through compensation which is done through stock options for employees. By
having employees own approximately ten percent of the corporation you have thus
created not only the stereotypical nine to five employee but one who has a vested interest
not just in the success of the company but the success of the stock as well. This creates
an owner/employee mentality. By not having a hierarchy individuals may feel more free
to experiment with new ideas and not have a boss breathing down their neck all of the
time.
2. What specific elements of a corporate entrepreneurial strategy are apparent within
Southwest Airlines?
Management by fooling around is a way to foster entrepreneurial strategies. In
particularly, fooling around by trying new ideas. Due to the fact that this may result in an

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employee feeling comfortable enough to try a new idea that may seem outrageous at first
but may turn out to be a blockbuster. Another important aspect is the concept of
management by love not fear is another way to foster an entrepreneurial environment.
Nurturing risk takers such without fear of reprisal or suffering, let alone firing, for failure
is a fine way to allow the spirit of new ideas to flow freely. When new ideas and risk
taking that fails is reprimanded or results in the firing of an individual others will not be
quick to follow their lead which will result in a lack of entrepreneurship. This would
have the opposite result of an environment nurtured by love and encouragement without
negative repercussions.
3. How has Herb Kelleher structured a climate conducive to entrepreneurial activity?
Through creating an environment that condones and is conducive to integrity, mutual
respect, high spirit and low complacency Mr. Kelleher has succeeded in creating an
entrepreneurial environment that allows for employees to take risks and feel and think
like owners. Low complacency in particularly creates a highly dynamic environment
where change through entrepreneurship can be allowed to excel. Integrity from the top
down is important to the entrepreneurial environment so that employees do not use low
moral and ethical standards for their activities. Mutual respect creates an atmosphere
where many ideas can compete, flourish and be built upon. Each idea with the hope of
being implemented by the corporation and receiving positive input from peers. High
spirits will build upon itself, for once one employee sees another employees ideas being
implemented they too will want to join the fray and create their own ideas for
implementation.

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Perhaps the most important element of the entrepreneurial spirit of Southwest Airlines
that results in it being the most profitable commercial airline in the world, and known for
its no frills flying such as festival seating and “snack packs” providing only short flights
is it management style. Managing with love and not fear provides an atmosphere that
fosters creative entrepreneurial input from employees. This results in the proper
environment for employees to engage in trying out new concepts as opposed to an
environment of fear where they may tip toe around sticking their neck out for fear of
reprisal if they don’t succeed.