Why Ticketmaster And Southwest Failed So Badly

DENVER, CO – DECEMBER 28: Pristine Floyde searches for a friend’s suitcase in a baggage holding area … [+] for Southwest Airlines at Denver International Airport on December 28, 2022 in Denver, Colorado. More than 15,000 flights have been canceled by airlines since winter weather began impacting air travel on December 22. (Photo by Michael Ciaglo/Getty Images)

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In November of last year, the nation’s biggest ticket seller — Live Nation — had a spectacular failure when tickets for Taylor Swift’s Eras Tour went on sale via its Ticketmaster service, leaving thousands of customers without tickets because of a massive technology failure caused by bot attacks. There is now a Congressional investigation into this failure.

Just a few weeks after the Ticketmaster debacle, tens of thousands of passengers had their holiday travel plans disrupted when Southwest Airlines’ operations melted down in late December in one of the worst failures of a U.S. airline in recent memory. Strikingly, of all major U.S. carriers, Southwest was unique in its inability to quickly bounce back from weather related cancellations. As Southwest floundered, travelers were booking fares on their competitors.

In both cases, while buckling technology was the immediate cause of the meltdowns, poor management was ultimately the root of the failure.

The Southwest debacle is a perfect illustration of how management failures lead to service failures.

Southwest’s pilots, crews and equipment were stranded in the wrong places and the wrong times for days as the company’s IT systems collapsed under the scale of the problem. What started as a staffing shortage in Denver turned into a nationwide catastrophe for the airline, with passengers paying the price. All told, Southwest canceled almost 17,000 flights over the final days of December. Those cancellations cost the company $425 million in lost revenue and resulted in a quarterly loss of as much as $825 million.

Indeed, the pilot and flight attendants unions had both warned management for years that the scheduling system — technology responsible for ensuring crews, equipment and pilots are available when and where they’re needed — was aging and inadequate.

“For more than a decade, leadership shortcomings in adapting, innovating, and safeguarding our operations have led to repeated system disruptions, countless disappointed passengers, and millions in lost profits,” a statement from the Southwest Airlines Pilots Association said.

Now, CEO Bob Jordan has announced plans to spend $1 billion on IT upgrades at Southwest. However, the damage is already done. Congress and the Department of Transportation have taken an interest, and it will likely take more than frequent flier miles and promises to improve to win back the trust of travelers. It’s no wonder; the problems began before the winter storms and the meltdown of Southwest’s systems. They started with management that failed to plan for exactly these sorts of problems, despite warnings from their employees.

If Southwest’s frontline workers — pilots and flight attendants — could see the problem coming, why didn’t its executives? The only explanation is a breakdown in management practices and philosophy. While no one can control the weather, leaders can shape how their companies plan for challenges, how teams listen and communicate, and how they respond when the worst happens.

From left, Live Nation Entertainment, Inc. President and Chief Financial Officer Joe Berchtold, … [+] SeatGeek, Inc. Chief Executive Officer Jack Groetzinger, Jam Productions LLC Chief Executive Officer and President Jerry Mickelson, The James Madison Institute Senior Vice President Sal Nuzzo, American Antitrust Institute Vice President For Legal Advocacy Kathleen Bradish, and singer-songwriter Clyde Lawrence appear before a Senate Judiciary Committee hearing to examine promoting competition and protecting consumers in live entertainment on Capitol Hill in Washington, Tuesday, Jan. 24, 2023. (AP Photo/Andrew Harnik)

Copyright 2023 The Associated Press. All rights reserved

Turning to Ticketmaster, we see a similar situation. As Republican Senator Marsha Blackburn noted in congressional hearings on January 23, other major companies — including banks — deal with the exact same kind of problems Ticketmaster encountered, without failing.

“They have figured it out but you guys haven’t? This is unbelievable,” she said, according to the AP. “We’ve got a lot of people who are very unhappy with the way this has been approached.”

And Republic Senator John Kennedy went a step farther, stating in stark terms that the leadership at Live Nation “ought to be fired.”

Here are some specific ways executives at any company, from airlines to ticket-sellers, can avoid these sorts of failures and protect their businesses, shareholders and customers:

Plan ahead: Leaders and teams should always plan and strategize at least 2–3 years out. This means looking ahead to understand what sorts of technology upgrades you may need, rather than waiting until after they’re needed. It also means advancing the planning every quarter; when a new quarter starts, make sure your planning advances too, so you’re always thinking a minimum of 2–3 years in the future. Know your priorities: When something goes wrong, know what your priorities are. At any time, you have three overarching priorities — employees, clients, and shareholders. If you don’t have any clients, you don’t have a business. They must come first if there are major problems. Empower your people. Make sure that your managers and employees have the power to respond when something goes wrong. They should have the discretion to make common sense decisions for the benefit of customers or to prevent problems from occurring or getting worse. Hiding behind policies and procedures doesn’t help anyone. Listen well. Usually, someone in an organization sees a problem coming before it arrives. That certainly seems to have been the case with Southwest. Leaders and managers who listen well and seek to truly understand what their employees are saying will do a better job of preparing for and preventing big problems. Follow-up and practice accountability. If you see a problem on the horizon, push for a solution. Give managers and teams time to change things, but then follow-up. If the situation hasn’t improved, drill down on why. Is there a policy that’s preventing changing? Are the incentives right? Why aren’t actions being taken proactively to prevent problems from occurring?

It’s easy to lead when the skies are clear, but when there’s trouble on the horizon, it quickly becomes evident who the great leaders are. They’re the ones that have already planned ahead for how to weather the storm. While Southwest and Live Nation may have missed the mark, business leaders can learn a lot by examining where they went wrong and how they could have averted disaster. Hopefully, the company learns its lessons too.