Contrary to a shareholder-first dogma, these leaders operate on an employee-first principle. They believe that well-treated, empowered employees provide superior customer service. This creates loyal customers, which drives sustainable profits and ultimately delivers superior long-term returns for shareholders.
Many iconic founders, like Southwest's Herb Kelleher, were beginners in their industries. This lack of experience was an advantage, freeing them from established dogmas and allowing them to approach problems with a fresh perspective. They built unconventional models that incumbents dismissed or couldn't replicate.
To ensure growth and opportunity, tire mogul Les Schwab mandated that store managers appoint an assistant and give them 10% of the profits. To enforce this, he decreased the profit share for any manager who failed to develop and promote their top employees.
By communicating that only five customers per flight made the difference between profit and loss, Southwest's management made the abstract concept of profitability tangible for its 15,000+ employees. This showed every employee that their interactions directly impacted the bottom line.
Charlie Munger's term describes leaders who aren't just driven, but are adaptable learning machines. They build high-performance cultures based on trust and ownership, focus on long-term value, and create competitive moats that rivals cannot initially comprehend or replicate.
When a large competitor matched Southwest's $13 discounted fare, Southwest countered by offering customers a choice: the $13 fare, or the original $26 fare with a complimentary bottle of liquor. Most business travelers chose the higher fare, turning a potential loss into a profitable marketing coup.
By paying higher wages than competitors, convenience store chain QuickTrip attracts a large applicant pool. This allows them to be incredibly selective, interviewing just three out of every 100 applicants. The result is a high-quality, loyal workforce with a turnover rate of 13% versus the industry's 59%.
Schwab recognized that newer tire stores were unfairly burdened by higher rent-to-sales ratios. He implemented a system where every store, new or old, paid the same percentage of their sales as rent. This effectively subsidized new locations in their crucial early years, fostering sustainable growth.