Profiles of Great Companies: Southwest Airlines

Posted by Chuck Kocher
On July 11, 2011

What makes a company great? We’re often tempted to look for the “Holy Grail” of business, or search for the “secret sauce” that makes outstanding companies stand out. More often than not, however, great companies focus on simple disciplines and they are tenacious about doing them well.

In an era when most airlines are staying afloat by raising rates and charging fees for bags, Southwest Airlines continues to thrive—without doing that. Here are a few lessons we can learn from Southwest Airlines about being great and staying great.

Being a Little Crazy Isn’t a Bad Thing. If you have a business idea that sounds great to everyone, chances are someone else (and maybe a lot of people) have already thought about it and tried it—or will shortly. Southwest started out doing something that nobody else was doing. A lot of people thought they were crazy. But they ended up having a whole market segment to themselves. What can you do that nobody else is doing?

Take Advantage of Your Lack of Funds. Can the fact that you don’t have a lot of money be a positive? Absolutely! A lack of money can make you frugal (always good in business) and it can make you creative with the resources you have. Southwest got a huge price break from Boeing (who had overbuilt aircraft in the 70s and were willing to sell at a much lower price—and even financed the deal!). Where are the areas in your business where you can be more creative—instead of throwing money at a problem?

Keep it Simple Stupid. In the fall of 1972, Southwest introduced the two-tier fare system. Regular fares were $20 to $26, and “Pleasure Class” fares—offered on weekends and on weeknights after 7 p.m.—cost just $13. Fares remain simple to this day. There are still no extra fees. Southwest extended this virtue of simplicity to
their equipment. They bought 737s for most of their fleet, making maintenance and training for flight crews and ground crews more efficient and cost-effective. What can you do to simplify your business?

Put People First. For Southwest, that includes employees. The airline has a reputation for great worker relations, and its work rules are remarkably flexible. How many CEOs do you know who come in to the cleaners’ break room at 3 a.m. on a Sunday to pass out doughnuts or put on a pair of coveralls to clean a plane? Southwest’s CEO did. They were also the first airline to offer a profit-sharing plan to employees—who now own 13 percent of the airline. Words of encouragement aren’t enough. What actions can you take to demonstrate that you value your employees?

There are a lot of other lessons we can learn from a great company like Southwest Airlines. But greatness doesn’t “just happen.” You have to pursue it. If you want to know more about what made Southwest successful, contact me and I’ll send you a link to an article that features 40 lessons you can learn from Southwest Airlines.