The Idea in Brief

When Greg Brenneman joined Continental Airlines, the company was plunging toward its third bankruptcy in a decade. Little wonder it had churned through 10 presidents in as many years. “I had never seen a company as dysfunctional,” writes the air carrier’s president. Brenneman and CEO Gordon Bethune produced one of the fastest and most unlikely corporate turnarounds ever.

How? Above all else, Brenneman explains in this HBR interview, it was common sense and simple logic. They created a model that works when you have little time and less money—as well as when you have more of both. Their strategy focused on understanding markets, improving products, increasing revenues, and infusing employees with the energy and power to transform Continental’s corporate culture.

The Idea in Practice

Brenneman attributes Continental’s turnaround to five operating principles, which incorporate the key components of any successful strategy—markets, products, finances, and people. “None will knock your socks off,” he acknowledges, but all are well worth considering for any company.

1. File your flight plan and track your progress. Strategic clarity is particularly important when time and financial resources are limited. Continental’s was “pure common sense. [They] needed to stop flying 120-seat planes with 30 passengers . . . get people to their destinations on time and with their bags . . . and start serving food when people were hungry.” The plan got every employee heading in the same direction.

The plan also included key performance measures to track internally as well as against competitors (for example, monthly on-time performance, mishandled bags, customer complaints).

2. Clean house. Brenneman replaced 50 of his 61 top officers with 20 new individuals. But he didn’t stop there; he cleaned house from the top floor to the baggage handlers, keeping or recruiting only individuals who were smart, driven to get things done, and team players.

3. Think “money in,” not “money out.” As Brenneman wryly states, “I knew the fastest way to make money was to stop doing things that lost it,” such as flying empty planes. But he also knew that when you focus only on cost reductions, you risk sabotaging the very products you’re trying to sell.

The first step in refocusing on “money in” is to apologize for your bad service. Once you’ve rebuilt strong customer relationships, you can proceed to the next step: making better products they’ll pay for.

4. Ask the customer the right question. To figure out which products to make, you first have to ask your best customers what they will pay extra for (for example, safe and comfortable airplanes, good food at mealtimes).

5. Let the inmates run the asylum. “We decided that at the new Continental, the employees were going to be liberated to do right by the customer and to have fun at work.” Actively involving employees in the turnaround is essential. Continental’s weekly voice-mails, monthly open houses, quarterly magazines, and semiannual videos shown at regional meetings all focused on talking with and listening to employees.

Of all the contributors to Continental’s success, Brenneman says, “the biggest factor in our favor was momentum. . . . We lit a fire of urgency. . . . Pretty soon, we were unstoppable.”

I will never forget my first flight from Dallas to Houston on Continental Airlines. It was a hot, humid day in May 1993. At the time, I was a partner specializing in corporate turnarounds in Bain & Company’s Dallas office. My goal that day was to sell Bain’s consulting services to Continental’s CEO and new owner, a leveraged buyout firm that had just rescued the airline from its second bankruptcy in nine years.

A version of this article appeared in the September–October 1998 issue of Harvard Business Review.