Entrepreneurs, Managers, and Leaders

Entrepreneurs, Managers, and Leaders

Entrepreneurs, Managers, and Leaders What the Airline Industry Can Teach Us about Leadership Anthony J. Mayo, Nitin Nohria, and Mark Rennella

ENTREPRENEURS, MANAGERS, AND LEADERS Copyright Anthony J. Mayo, Nitin Nohria, and Mark Rennella, 2009. Softcover reprint of the hardcover 1st edition 2009 978-0-230-61567-0 All rights reserved. First published in 2009 by PALGRAVE MACMILLAN in the United States a division of St. Martin s Press LLC, 175 Fifth Avenue, New York, NY 10010. Where this book is distributed in the UK, Europe and the rest of the world, this is by Palgrave Macmillan, a division of Macmillan Publishers Limited, registered in England, company number 785998, of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave and Macmillan are registered trademarks in the United States, the United Kingdom, Europe and other countries. ISBN 978-1-349-60387-9 ISBN 978-0-230-10095-4 (ebook) DOI 10.1057/9780230100954 Library of Congress Cataloging-in-Publication Data Mayo, Anthony J. Entrepreneurs, managers, and leaders : what the airline industry can teach us about leadership / Anthony J. Mayo, Nitin Nohria, Mark Rennella. p. cm. Includes bibliographical references and index. 1. Airlines United States Management. 2. Leadership. I. Nohria, Nitin, 1962 II. Rennella, Mark. III. Title. HE9803.A4M39 2009 658.4 092 dc22 2008053005 A catalogue record of the book is available from the British Library. Design by Newgen Imaging Systems (P) Ltd., Chennai, India. First edition: September 2009 10 9 8 7 6 5 4 3 2 1 Transferred to Digital Printing in 2013

To our children Hannah, Alexander, and Jacob Mayo Reva and Ambika Nohria Davis and Benjamin Rennella

Contents Acknowledgments ix Introduction 1 Chapter 1 Part I The Entrepreneurs The Guggenheims: Promoting Aviation in America 21 Chapter 2 Juan Trippe s Early Entrepreneurial Efforts 41 Chapter 3 C. E. Woolman and Delta Air Lines 61 Chapter 4 Part II The Managers Juan Trippe and the Growth of International Air Travel 85 Chapter 5 C. R. Smith and American Airlines 107 Chapter 6 William Pat Patterson and United Air Lines 129 Part III The Leaders Chapter 7 Herb Kelleher at Southwest Airlines 155 Chapter 8 Gordon Bethune s Revival of Continental Airlines 173 Epilogue 191 Notes 197 Bibliography 235 Index 239

Acknowledgments The rise, bitter fall, and rebirth of the airline industry over the past onehundred years captured our imaginations and sparked our interest in exploring industry evolution and specifically the role that leadership played in shaping that evolution. In many ways, the research and writing of Entrepreneurs, Managers, and Leaders was, for us, an evolutionary process one that took us down many different avenues. Along the way, we received a considerable amount of support for which we are very grateful. We are thankful for the support and encouragement provided by Harvard Business School, especially Dean Jay Light and the Faculty Chairs of the Division of Research, Professors Debora Spar and Srikant Datar. We also wish to acknowledge the support of other members of the Division of Research, including Research Director, Professor Geoff Jones, Ann Cichon, and Steve O Donnell. In particular, we would like to acknowledge Linda Hill and the HBS Leadership Initiative for supporting us throughout this project. We are indebted to the staff of Baker Library, especially Laura Linard and Melissa Murphy of the Historical Collections Department, who helped to identify and provide archival photos and information about the early years of aviation in the United States. Throughout the process of researching and writing Entrepreneurs, Managers, and Leaders we have benefited from the insights and fresh perspectives of a number of friends and colleagues, including Tom Gaffny, Rakesh Khurana, Joshua Margolis, and Scott Snook. In particular, we would like to acknowledge Christopher Marquis who read an early draft of the entire manuscript and provided thoughtful and actionable feedback. We are grateful for Laura Singleton s assistance on the C. R. Smith chapter, Mark Benson s work on the Gordon Bethune chapter, and Michael Horn s insights and background on the early years of Juan Trippe. At various times throughout the last few years, Deborah Bell, Letty Garcia, Amanda Pepper, and Lisa Pode provided excellent research assistance and administrative support. Amanda Pepper was very helpful in conducting the early rounds of photo research for the book. Finally, we wish to thank our publisher at Palgrave Macmillan, Laurie Harting, who provided insightful advice and suggestions during the final editing process.

x Acknowledgments I (Tony Mayo) wish to thank my co-authors Nitin and Mark for their support and dedication to this project. Entrepreneurs, Managers, and Leaders is the culmination of a truly collaborative process in which we explored a variety of conceptual models and a vast array of literature. I am deeply indebted to Nitin and Mark for their commitment and enthusiasm throughout this journey. Each of us is fascinated with aviation and that sense of wonder and awe enabled us to work together productively and have fun in the process. I have greatly enjoyed sharing this journey with my family. My wife, Denise, and our three children, Hannah, Alexander, and Jacob, have been a tremendous source of inspiration and encouragement for me. I wish to thank them for their steadfast love and support. Some of my (Nitin Nohria s) best memories are travels on airplanes from my boarding school to my home in Calcutta when I was just five years old, flying on newly introduced Boeing 707s under the care of gracious air hostesses, to traveling when I had just become an adult on a Boeing 747 (a Jumbo jet as it was affectionately called) to leave India for America, which eventually became my new home country. Now, my children complain that I live on an airplane, given the amount of travel I routinely do (I am a member of the million mile club on three different airlines). Understanding how an industry that does so much to make the world a smaller place can yet be one that has lost so much money was one of the conundrums that drew me to this exploration of the evolution of the airline industry. And what a journey it has been. Working with Tony and Mark, the best fellow travelers I could have hoped for, has led us to better understand the ups and downs of the airline industry and the role that different types of executives have played in different stages in its evolution. It has also led us to think more broadly about how leaders can influence the evolution of any industry for better or for worse. I (Mark Rennella) am very grateful to have worked on this project with Tony and Nitin. In addition to their expertise and experience in business, Tony and Nitin both have a talent of bringing out the best in the people they work with. Projects this enjoyable and interesting do not come around every day and I was very fortunate to be invited to contribute to this one. In my years working on historical projects, I have seen not only how the past helps to shape the present, but that history is the outcome of human choices, both large and small. Looking at the past, surprisingly, shows how the present is ripe with possibility. My children Davis and Ben show me every day how vibrant that promise is. My deepest thanks, also, to my parents who have believed in my promise from day 1. More to come, Mom and Dad.