Finding the Core

29 Feb 2008 /

Shared vision as the DNA of an organization . . .

It’s common knowledge that Southwest is a successful company, but there is a shocking performance gap between Southwest and its competitors. Although the airlines industry as a whole has only a passing acquaintance with profitability, Southwest has been consistently profitable for more than thirty years.

Made to Stick cover

The reasons for Southwest’s success could (and do) fill up books, but perhaps the single greatest factor in the company’s success is its dogged focus on reducing costs. Every airline would love to reduce costs, but Southwest has been doing it for decades. For this effort to succeed, the company must coordinate thousands of employees ranging from marketers to baggage handlers.

Southwest has a Commander’s Intent, a core, that helps to guide this coordination. As related by James Carville and Paul Begala:

Herb Kelleher [the longest-serving CEO of Southwest] once told someone, “I can teach you the secret to running this airline in thirty seconds. This is it: We are THE low-cost airline. Once you understand that fact, you can make any decision about this company’s future as well as I can.

“Here’s an example,” he said. “Tracy from marketing comes into your office. She says her surveys indicate that the passengers might enjoy a light entree on the Houston to Las Vegas flight. All we offer is peanuts, and she thinks a nice chicken Caesar salad would be popular. What do you say?”

The person stammered for a moment, so Kelleher responded: “You say, ‘Tracy, will adding that chicken Caesar salad make us THE low-fare airline from Houston to Las Vegas? Because if it doesn’t help us become the unchallenged low-fare airline, we’re not serving any damn chicken salad.'”

Kelleher’s Commander’s Intent is “We are THE low-fare airline.” This is a simple idea, but it is sufficiently useful that it has guided the actions of Southwest’s employees for more than thirty years.

— Chip Heath & Dan Heath, Made to Stick

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