strategic principle at southwest
TRANSCRIPT
7/23/2019 Strategic Principle at Southwest
http://slidepdf.com/reader/full/strategic-principle-at-southwest 1/4
Strategic DirectionStrategic principles at Southwest Airlines
Mark Thomas
Article in formation:To cite this document:Mark Thomas , (2015),"Strategic principles at Southwest Airlines", Strategic Direction, Vol. 31 Iss 8 pp. 10 - 12Permanent link to this document:http://dx.doi.org/10.1108/SD-03-2015-0047
Downloaded on: 23 October 2015, At: 01:19 (PT)
References: this document contains references to 3 other documents.
To copy this document: [email protected]
The fulltext of this document has been downloaded 167 times since 2015*
Users who downloaded this article also downloaded:
Reetesh Sharma, Mark Thomas, (2015),"Cathay & Southwest: flying the flag of good practice in airline mergers",Strategic Direction, Vol. 31 Iss 8 pp. 20-22 http://dx.doi.org/10.1108/SD-06-2015-0089
Michael E. Raynor, (2011),"Disruptive innovation: the Southwest Airlines case revisited", Strategy & Leadership, Vol. 3Iss 4 pp. 31-34 http://dx.doi.org/10.1108/10878571111147387
Mark Thomas, (2015),"Ryanair: success before love", Strategic Direction, Vol. 31 Iss 8 pp. 1-3 http://dx.doi.org/10.1108/SD-02-2015-0034
Access to this document was granted through an Emerald subscription provided by emerald-srm:534651 []
For Authors
If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors serviceinformation about how to choose which publication to write for and submission guidelines are available for all. Please viwww.emeraldinsight.com/authors for more information.
About Emerald www.emerald insight.com
Emerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio omore than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of onlineproducts and additional customer resources and services.
Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on PublicationEthics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation.
*Related content and download information correct at time of download.
7/23/2019 Strategic Principle at Southwest
http://slidepdf.com/reader/full/strategic-principle-at-southwest 2/4
Strategic principles at Southwest Airlines
Mark Thomas
Mark Thomas is Professor
of Strategic Management
at the Department of
Management and
Technology, Grenoble
EM, Grenoble, France.
Strategy in thirty seconds
Herb Kelleher, founder and Chairman Emeritus of one of the world’s most successful
airlines, Southwest, is fond of reminding people of the simplicity of the company
strategy:
I can teach you the secret to running this airline in thirty seconds, he will say.
This is it: We are THE low-fare airline (Heath and Heath, 2007).
“Once you understand that fact, you can make any decision about this company’s future as
well as I can”.
This is typically modest of Kelleher making light of his own achievements. From the humble
origins of its creation in 1967, Southwest has grown to become one of the most respected
and successful airlines in the world. For several years, it was even the world’s largest airline
by passenger numbers and was surpassed only after a series of defensive mergers by
several US airline giants[1]. It still remains the world’s fourth largest airline operating 3,400
flights a day by the end of 2014. That same year, Southwest generated $18.61 billion of
revenue with a net income of $1.14 billion. This gives it a margin of over 6 per cent, more
than twice the industry average. Such results, consistently achieved over nearly five
decades, have made Southwest Airlines the poster child of the aviation industry. Kelleher
attributes much of the company’s success to the use of strategic principles rather than
detailed strategic plans.
Strategic principles
A strategic principle suggests that there is a guiding logic to how the company should
be run and that employees should use their own judgment to apply this. In a Harvard
Business Review article entitled “Transforming Corner-Office Strategy into Frontline
Action”, Gadiesh and Gilbert (2001) have pointed out that many large corporations
have overcome the problem autonomy versus central control by establishing such
principles and then allowing their employees a certain degree of latitude to work freely
within these requirements.
It is well-known that even senior executives, let alone the rank and file, are incapable of
citing the strategic plan of a company to any great detail. This is despite the fact that the
strategy may be in prominent display on the company website or office walls. Memorising
a comprehensive list of what the company is about and what it wants to do is simply too
complicated. Guidelines are far easier to remember and allow employees to make prompt
judgements when the situations requires.
PAGE 10 STRATEGIC DIRECTION VOL. 31 NO. 8 2015, pp. 10-12, © Emerald Group Publishing Limited, ISSN 0258-0543 DOI 10.1108/SD-03-2015-0047
7/23/2019 Strategic Principle at Southwest
http://slidepdf.com/reader/full/strategic-principle-at-southwest 3/4
According to Gadiesh and Gilbert, an effective strategic principle lets a company
simultaneously:
maintain strategic focus;
empower workers to innovate and take risks;
seize fleeting opportunities; and
create products and services that meet subtle shifts in customer’s needs.
Senior managers at Southwest had long been putting this into practice. Kelleher
demonstrates this with the following example:
Suppose Debbie from the marketing department comes into my office and says that they had
interviewed many customers who said they would like to have a free meal during the flight.
Our answer would be:
Would that make us THE low fare airline?
This is a clear message, and the use of the rhetorical question gives all employees an
anchor on which to base their judgement. Behind such simplicity lie some smart business
practices designed to give its 46,000 employees the opportunity to take certain initiatives.
For obvious safety reasons, the airline industry is subject to some strict rules and
regulations. These cannot be compromised. However, employees at Southwest are
encouraged to adapt to situations to ensure the prompt departure of planes. Thus, when
problems do occur, internal procedures ensure that all employees will “lend a hand” try to
deal with the setback rather than wasting time going through bureaucratic channels.
Cleaning planes without conflict
The use of “THE low fare airline” principle also enabled Southwest to persuade flight
attendants to “make a reasonable effort” to clean the aircraft before landing. Indeed, it is
even written in their contracts. Such a practice was unheard of in the industry before it was
popularised by Southwest. The fact that the company avoided the same industrial conflict
that took hold of other airlines that tried to copy this practice is in part due to the strategic
principle on which the practice is based. Many airlines have been dogged in their labour
relations by the stereotypical management versus workers syndrome. In short, employees
of certain airlines resent the feeling of being forced to do things for the benefit ofmanagement or shareholders. However, the low fare principle puts the customer at the
centre of the debate. By cleaning the cabin, the flight crew enable the planes to get
airborne more quickly, ensuring greater customer satisfaction through punctual arrivals
and lower fares.
Principles of fun
A second strategic principle upon which Southwest has been founded is that of
encouraging employees to have fun at work. Given the long hours, the need to follow
rigorous safety regulations and the inherent stress felt by customers, this is not easy
mission. However, since its creation, Southwest has repeatedly championed employees
trying to bring a degree of humour to an often demanding occupation. This includes anticssuch as flight attendants rapping the safety information at the start of a flight[2] as well as
allowing employees to offer a free flight to the first customer who could prove they had
holes in the socks they were wearing (Smith, 2004). Again, these were not top-down
management strategies designed to generate publicity. However, by allowing employees
to follow their instincts within the framework of a guiding logic, such events have given a
massive boost to the positive image that the company has today. Southwest has
consistently won awards for service, reliability and punctuality and is considered to be one
of the top ten airlines in the world for safety.
VOL. 31 NO. 8 2015 STRATEGIC DIRECTION PAGE 11
7/23/2019 Strategic Principle at Southwest
http://slidepdf.com/reader/full/strategic-principle-at-southwest 4/4
Strategic principles in other industries
Gadiesh and Gilbert conclude in a fast-moving business environment, it is vital for
employees to make decisions quickly without constantly having to refer to their superiors.
Of course, this has to be within unambiguous structure. Southwest might be “THE low fare”
airline but that does not mean it would neglect the basic safety and comfort of passengers.
That would be a disaster. Kelleher and the senior management of Southwest have shown
that governance through strategic principles rather than strict and detailed plans can lead
to greater employee engagement, a more efficient organisation that is adapting to the
needs of its major stakeholders and greater customer satisfaction. If this can be done in anindustry as heavily regulated as aviation, it can be applied with the same success to many
other business sectors and organisations.
Notes
1. Delta and Northwest Airlines between 2008, and 2010; Continental and United Airlines in 2012;
American Airlines and US Airways in 2013.
2. For an excellent example of this, see the following video: www.youtube.com/watch?vpvd
CFYLf_JI
References
Gadiesh, O. and Gilbert, J.L. (2001), “Transforming corner-office strategy into frontline action”, Harvard
Business Review , Vol. 79 No. 5.
Heath, C. and Heath, D. (2007), Made to Stick: Why Some Ideas Survive and Others Die , Random
House.
Smith, G. (2004), “An evaluation of the corporate culture of Southwest Airlines”, Measuring Business
Excellence , Vol. 8 No. 4, pp. 26-33.
Corresponding author
Mark Thomas can be contacted at: [email protected]
For instructions on how to order reprints of this article, please visit our website:
www.emeraldgrouppublishing.com/licensing/reprints.htmOr contact us for further details: [email protected]
Keywords:
Aviation,
Autonomy,
Organisational behaviour,
Herb kelleher,Southwest Airlines,
Strategic principles
PAGE 12 STRATEGIC DIRECTION VOL. 31 NO. 8 2015