Earlier this week, a colleague requested that I review the contents of a survey titled “2022 Kenya Banking Industry Innovation” that the Central Bank of Kenya had directed that we submit by end of the week. I was uncomfortable with some of the responses not because they were erroneous but because I realised that we had not been as innovative as I would have liked us to be. I wondered what this realisation would portend for the organisation in the medium to long term. As I wallowed in these thoughts, I came across an article written by Sunny Bindra on 22nd January 2023 forwarded by another colleague on Southwest Airlines. While the article, titled “This airline’s recent meltdown has lessons for us all”, isn’t the focus of my article today, it did remind me of something distinctive that I read in Jim Collins’ & Morten Hansen's book “Great by Choice” five years ago. This is what I will focus my arguments on today.
First, though, who/what is Southwest Airlines and why do they feature in every Strategic Management Course as a case study? Well, let's take a closer look.
Southwest Airlines was founded in 1967 with the idea of providing affordable air travel to people who otherwise couldn't afford it. Southwest Airlines has a unique business model that is based on keeping costs low. They do this by flying only one type of plane, which makes maintenance and training easier, and by using a point-to-point system instead of a hub-and-spoke model, which reduces the need for expensive airport infrastructure.
In addition, Southwest has a strong culture of customer service that is ingrained in the company's DNA. This is evident in everything from the friendly attitudes of the flight attendants to the company's "bags fly free" policy. It is not uncommon to see pilots checking in passengers and helping flight attendants to clear clutter after meals. They do this to turn around the plane as quickly as possible & get it back into the sky again because an aircraft does not make money while it is on the ground.
There is no doubt that Southwest has been such a marvel over the years as they have managed to increase their revenues and profits through both good and bad times such as 2002 & 2008 (very difficult years) while rivals such as US Airways, United Airlines, & Pacific Southwest Airlines (PSA) have either had to seek bankruptcy protection or close shop.
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What is more distinctive though, according to Collins & Hansen, is that Southwest hardly innovated anything at its founding. It copied most of these ideas from another airline – PSA. Surprised? I bet you are.
What is even more surprising is that a good number of very successful companies did not pioneer most of the products they are best known for. Collins & Hansen cite Tellis & Golder who found in a study that only 9% of pioneers end up as the market leaders. The safety razor was pioneered by Star, not Gillette. The instant camera was pioneered by Dubroni, not Polaroid. The personal computer spreadsheet was pioneered by VisiCorp, not Microsoft. Even more shocking, 64% of pioneers FAIL. Let that sink in.
I am not saying do not innovate. I am just saying that there is another ingredient that contributes better to success, and this is execution.
Whether an idea is pioneered or copied, what sets one company apart from the others is its ability to execute ideas. This is what Southwest is very good at - its focus on execution.
It, therefore, gave me some comfort that, while for instance, we do not have a dedicated innovations resource or a Research & Development unit within the organisation, the subcommittee set up to review the organisations' processes, and operations and automate, where need be, will do just fine. More importantly, the execution of the results of the reviews will matter more, in the long run, to enable the organisation to stand the test of time.
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