David Neeleman: Flight Path of a Servant Leader (A)
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9-409-024 REV: MAY 2, 2011 BILL GEORGE MATTHEW D. BREITFELDER David Neeleman: Flight Path of a Servant Leader (A) David Neeleman was deeply frustrated as he reflected on the events that followed JetBlue’s operational collapse on February 14, 2007. On Valentine’s Day, JetBlue, the airline that aspired to bring “humanity back to air travel,” suddenly became the poster child for inhumane treatment of its passengers. When an ice storm hit the East Coast, passengers on nine flights were stranded on the runways at New York’s John F. Kennedy International Airport for up to 10 hours. During the next five days, JetBlue canceled over 1,000 flights, inconvenienced thousands of passengers, and bore the brunt of relentless negative coverage by the media. Since its founding in 1999, Neeleman had built JetBlue on the basis of superior customer satisfaction. With the Valentine’s Day problems, JetBlue’s customer goodwill seemed to evaporate almost overnight. JetBlue went from longtime media darling to the butt of jokes on late night television. Neeleman understood that he had a steep hill to climb to restore the confidence of his customers and his board of directors and get JetBlue back on track. He also believed his decisions had to be based on his personal values. As a seventh-generation Mormon and a public figure, Neeleman acknowledged that he would be held to a high standard. “I have to be an example and live my life in the business world the way people believe I should,” he said. 1 Neeleman had built his career on the idea that serving others was a noble calling. He created JetBlue around the proposition that his airline would set a new standard in customer service. Now he grappled with how to restore the confidence of the people he had worked so hard to serve. The March 5, 2007, issue of BusinessWeek that ranked the best U.S. companies for customer service should have been one of Neeleman’s crowning achievements. In an industry known for its abysmal treatment of customers, JetBlue ranked number-four across all U.S. industries for quality of customer service. This was a major accomplishment for any company, let alone an airline, and a sign of how far Neeleman and JetBlue had come in the seven years since its founding. Unfortunately, the cover story had a line drawn through JetBlue’s ranking and a phrase that pained Neeleman to his core, “. and one extraordinary stumble.” (See Exhibit 1 for a copy of the BusinessWeek cover.) Neeleman responded immediately to the crisis by implementing plans to regain customer goodwill. He took personal responsibility for the failures, saying he was not going to fire anyone due to the crisis, because “the responsibility rests with the CEO.” He posted an apology on JetBlue’s website stating, “Words cannot express how truly sorry we are for the anxiety, frustration and ________________________________________________________________________________________________________________ Professor Bill George and Matthew D. Breitfelder (MBA 2002) prepared this case. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2008, 2009, 2011 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1- 800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu/educators. This publication may not be digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School. This document is authorized for use only by Oleg Tsoy ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies. 409-024 David Neeleman: Flight Path of a Servant Leader (A) inconvenience that you, your family, friends and colleagues experienced.” (See Exhibit 2 for the text of Neeleman’s letter.) Next he took the unprecedented step of announcing a Customer Bill of Rights that committed JetBlue to paying approximately $30 million in compensation to passengers who had been stranded during the storm and thereafter.2 (The complete Customer Bill of Rights is shown in Exhibit 3.) It was a bold, expensive move and vintage Neeleman. To announce the new bill of rights, he went on the Today Show and Late Night with David Letterman to express his regret. On the Today Show, Neeleman admitted that “we had a weakness in our system. We were overwhelmed.” In response to concerns that the bill of rights would be costly, Neeleman said, “It is going to be expensive, but it is far more important to win back people’s confidence.” Because he took responsibility for the crisis, Neeleman received high scores from the public and from crisis communications experts. However, certain members of the JetBlue board had doubts about his actions, suggesting to Neeleman that he had gone overboard in apologizing and in admitting JetBlue’s shortcomings.3 Although he recognized the board’s qualms, Neeleman felt he couldn’t have handled the crisis any other way. As he noted, “I learned from this experience that I had a board I wasn’t communicating with.” He explained: I felt I had to apologize for what had happened. How could I face our customers and our crew members if I didn’t take accountability for our problems? It was definitely the right thing to do. Most importantly, our brand image recovered. JetBlue was voted the number-one crisis management company by 2,400 investment analysts because of the way we handled that crisis. Our actions are seen as a textbook response, but certain members of my board were quite critical.4 Now that Neeleman faced his biggest challenge ever, he wasn’t confident that he had the support of his board of directors. How should he have handled the board’s concerns about the way he responded to the crisis? Had he been too passionate and too involved emotionally, or had this been required to lead JetBlue out of the crisis? For its part, what process should the JetBlue board have followed to ensure that the operational and leadership deficiencies exposed by the Valentine’s Day crisis were corrected? How engaged should the board have been in this situation? Struggles in School Neeleman was born in Brazil into a Mormon family of seven and spent his first five years there before he and his family moved back to their hometown of Salt Lake City. His father Gary had been a missionary in Brazil who had fallen in love with the country, returning years later as Latin America Bureau Chief for UPI. The family regularly went back to Brazil for visits and formed a strong bond with the Brazilian people and culture. From an early age, Neeleman was known in his family for being full of ideas and energy—a gregarious and extroverted child. The transition back to the United States at the age of five was not easy for him. Having spoken Portuguese in Brazil, he felt like a fish out of water in the U.S. as he struggled in school to grasp concepts and the fundamentals of reading and writing. His father referred to him as “a window gazer who constantly fell behind on his lessons and was always looking out the window, thinking of something else.” 5 His third-grade teacher recommended holding him back a year, suggesting that “what he needs is an assistant to organize his life and then he’s going to be really successful one day.”6 2 This document is authorized for use only by Oleg Tsoy ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies. David Neeleman: Flight Path of a Servant Leader (A) 409-024 Neeleman had a great deal of anxiety about school due to his struggles with the basics of reading and writing. Even today, he cannot recall a single book that he read during high school. While applying to college, he scored so poorly on the ACT admissions test that his counselor said that he would have scored better if he had simply answered “C” on every question. It was not until many years later that Neeleman was diagnosed with attention deficit disorder (ADD). Once he came to terms with his condition, Neeleman could see the pros and cons of the ways in which ADD had shaped him. In coping with ADD, Neeleman also realized how it had affected his success, especially in sparking his creativity and fueling his competitive drive. He openly acknowledged, “A lot of what drives me is an inferiority complex. I never feel satisfied that I have done enough or achieved enough.”7 Even now, Neeleman refused to take medication to control his ADD because he felt it would make him just like everyone else. Neeleman first developed a passion for business at age nine, while working in his grandfather’s convenience store in Salt Lake City. His grandfather had strong ideas about the importance of customer service. When a customer requested an item that the store did not carry, his grandfather would frequently ask Neeleman to keep the customer occupied while he went out the back door to obtain the item from another store, without letting the customer know about his creative supply chain. Neeleman explained, “My grandfather taught me a lot about business. I used to stand on a milk crate and talk to customers. I learned how pricing worked and found I had an aptitude for business.” Mission to Brazil As part of a Mormon family, Neeleman received his first opportunities for leadership and public speaking through his church.