During peak holiday travel season, American-based Southwest Airlines experienced a major IT failure riddled with missed red flags, resulting in hundreds of flights being grounded and major financial losses.
The incident taught the airline industry an important lesson - that having a comprehensive IT system is key to running a successful business. By investing in the right technology, companies can ensure more reliable service and fewer disruptions. In addition, Southwest Airlines learned the hard way that they must be wary of their reliance on third-party vendors and have more stringent risk management practices, audits, and business operation evaluations.
Though this was not a good look there are lessons to be learned in any organization. Companies must realize the importance of having a robust IT infrastructure and how critical it is to have the right safeguards in place. Having a well-structured disaster recovery plan can help minimize downtime and provide businesses with an additional layer of protection against cyber threats. Furthermore, performing regular security checks and assessments could have helped detect weaknesses before they caused major damage.
Ultimately, the incident at Southwest Airlines demonstrated the importance of proper IT management and how failing to do so can lead to severe consequences. As technology continues to advance, businesses must keep up with industry trends and ensure their systems are stable and secure. Otherwise, they risk serious financial losses that could take years to recover from. By following the lessons learned from Southwest Airlines, companies can protect themselves and their customers against costly IT failures.
That said, let's get into some key learnings we can garner from this situation:
When you are a large, billion-dollar organization it can be easy to ignore regular process audits and just go with what is "working" right now. It is important to regularly assess the efficiency of your business process and IT infrastructure, plan for potential pitfalls, and identify ways to improve them.
Southwest employees, for example, have been very vocal about broken processes that have been in place for years but never addressed. According to a New York Times article source, flight staff had to manually call to coordinate hotel rooms for canceled travel.
The Southwest bargain airline brand can be a disadvantage when something like this happens because lower margins may mean competitive pricing but not necessarily an excess in capital to invest in new technology. This causes duck-tape-type fixes that cannot withstand the stress of a highly urgent situation, such as weather-related issues during a high volume of travel.
Broken or weak processes will almost always lead to a bad customer experience. Evaluating business operating models regularly and addressing any areas of weakness should be a critical part of business governance.
The right technology can help ensure smoother operations and fewer disruptions. Having the proper IT security protocols implemented is also essential for protecting your business from cyber threats. Southwest Airlines had failed to modernize its systems despite an industry-wide push to invest in more advanced technology. Companies must find the right balance between meeting customer needs and investing in tech infrastructure that can help protect their customer’s data and ensure reliable service.
Many keyboard warriors are calling for a full technology overhaul or digital transformation after the failure of the disastrous system. However, it takes time to plan and deploy the right technology for business needs. Moreover, tech investments can be costly, so companies must weigh their options carefully before committing.
New technology will not fix damaged processes or poorly designed operations. Hopefully, the Southwest executive leadership team won't bow to pressure and rush to implement new technologies without a full review and evaluation of the current state of the business. New systems will only stress broken operations. Invest in process improvement in IT, don't run to technology, and treat it as a savior.
Risks will always be present in any business, but they should never be ignored or underestimated. Companies must have a risk management plan in place to mitigate potential losses and address any issues that may arise. Having the right policies and procedures in place can help organizations respond quickly to any unexpected incidents.
Southwest Airlines was unprepared for such a massive system outage, resulting in delays, cancellations, and thousands of unhappy customers. As far as public perception, Southwest did not put a risk management plan in place and was not able to react quickly, resulting in even more fallout from the incident.
Worst-case scenario planning and risk management evaluations are critical for any business. Companies should regularly review their existing policies and procedures to assess any areas of weakness. Investing time in developing a risk assessment program will help identify potential issues before they arise, allowing organizations to be more prepared for any unexpected incidents.
The Southwest Airlines incident is a reminder that businesses must not only invest in technology but also assess their existing processes and put risk management plans in place. This will help ensure they are better prepared to react quickly and effectively in the event of a crisis.
Now, it's easy for me to say this situation could've been prevented and I am certainly not alone in that assessment, but regardless - clearly and risk-based governance was not effective. Having passengers whose flights were canceled escorted from the airport via local police is not a good look for any brand.
It is essential for companies to realize that risk management should not be an afterthought but rather integrated into business operations from the start. Planning for potential risks and having a strong risk management system in place can help prevent major disruptions and ensure smooth operations, especially during peak times of travel.
Third Stage CEO & Founder, Eric Kimberling recently produced a YouTube video that inspired this blog post. We also talk about the Southwest on an upcoming of our weekly podcast Transformation Ground Control. (Also, click here sign up to be notified regarding our weekly livestream via this form).
Organizational culture can have a major impact on IT projects, so companies need to examine the existing culture before investing in any technology or system. Understanding the root causes of any issues and taking ownership of them can help a company develop a better plan for future projects.
Southwest was started in the 1970s by an entrepreneur who had a vision for a different type of airline. As we see with many entrepreneurial organizations that scale massively, the culture can experience a variety of growing pains that center around inefficiencies such as tribal knowledge and cowboy culture. Standardization and overall governance can be difficult to establish and it's important to consistently assess company culture to understand the tolerance of change.
Forcing a change in an organization that is unprepared or averse to new policies can be a recipe for disaster. Understanding the overall culture and its strengths and weaknesses will help ensure any risk management plans are tailored to the organization's needs, allowing it to better manage potential risks.
Overall, Southwest Airlines' system failure was a reminder to all businesses that risk management plans should be in place before any major project is started. Companies should understand their existing culture and be prepared to make changes when necessary, such as establishing standard procedures or investing in the right technology. By properly assessing risks and having a strong risk management system in place, businesses will be better able to manage any potential issues before they arise.
For most IT best practices, including risk management and organizational culture assessment tactics, I highly recommend you download our newly released 2023 Digital Transformation Report. I always welcome and appreciate your feedback. Feel free to reach out to me directly at kyler.cheatham@thirdstage-consulting.com.
