Southwest Airlines: Culture, Values, and Operating Practices

Southwest Airlines: Culture, Values, and Operating Practices

Evaluation of the company's position and strategy:

Southwest Airlines is one of the air-travel industry's great success stories. For most companies, such rapid growth will cause problems: legions of frontline employees taking up the mantle of decision making from core executives and, inevitably, stumbling. A clear and precise strategic principle can help counteract this shortage of experience. In Southwest's case, employees have consistently made trade-offs in keeping with the company's strategic principle.

There is nothing the competitors do not know. They certainly understand the technology, cost structures, and route planning of Southwest. They even have the same equipment, locations, and marketing muscle. Yet, Southwest's competitors have been unable to imitate its success.

Building Strategic Principle & Business Strategy

Southwest has distilled its strategy into a phrase and have used it to drive consistent strategic action throughout its organizations, "Meet customers' short-haul travel needs at fares competitive with the cost of automobile travel". A strategic principle, as the distillation of a company's strategy, has guided Southwest's allocation of scarce resources-capital, time, management's attention, labor, and brand-in order to build sustainable competitive advantages.

The strategic principle's power is its ability to help companies maintain strategic focus while fostering the flexibility among employees that permits innovation and a rapid response to opportunities. From the beginning to the present, Southwest has maintained the same strategy and operating style. It concentrates on flying to airports that are underutilized and close to a metropolitan area.

Southwest began by identifying a specific niche; travelers who, looking to minimize their costs on short trips, might otherwise drive or take a bus. To meet the needs of this market, Southwest developed a unique value proposition: low-cost, no-frills service combined with the convenience of avoiding congested hub airports

By avoiding a hub-and-spoke system, the company is able to avoid the systemwide delays often associated with connecting flights through hub airports that experience bad weather. This makes short-haul trips more attractive to travelers who might otherwise consider driving. It also pays off in shorter turnaround times and higher equipment utilization.

Organization Structure

At Southwest, as a flat organization, employees can focus on the work itself and on their customers rather than on the chain of command. Coordination among front-line employees helps Southwest achieves high performance outcomes. Southwest counters certain problems with cross-functional accountability. By instituting the concept, it increases cooperation and learning across functional boundaries, while narrow spans of control allow supervisors to engage actively in supporting coordination through coaching and feedback.

At Southwest, the role of headquarter appears to be supportive rather than punitive. The relationship between offices and headquarter is characterized by a two-way flow of information and a focus on learning.

Employees: Investing in Relationships

Southwest's success has been attributed to its intense focus on operations, customers, and frontline employees. Investing in relationships, not only with its frontline employees but also with its unions and supervisors, may be more important to Southwest's success than the operational focus for which it is so well known.

Although the reasons for Southwest's success are many, one highly visible competitive advantage is its cost structure. Part of this cost advantage comes from the remarkable productivity of its workforce. Southwest works because people pull together to do what they need to do to get a plane turned around. That is a part of the Southwest culture. Rapid turnaround of aircraft and use of less congested airports means that planes are in the air more, actually earning revenue.

Southwest is not just a low-fare, low-cost carriers. It also emphasizes in customer service. The flight departure process is one of the most complex processes that an airline performs on a daily basis. Its success or failure can make or break an airline's reputation for convenience and reliability. To achieve Southwest's performance goals, a multitude of tasks must be performed by groups with distinct skills under changing conditions in a limited period of time. Given high levels of uncertainty, interdependence, and time constraints, coordination is critical.

To ensure that the company hires the right people, Southwest is extraordinarily selective in recruiting. Given the emphasis on selecting for attitudes and fit and the importance of culture, it follows that training is an important part of Southwest. The emphasis is on doing things better, faster, and cheaper; understanding other people's jobs; delivering outstanding customer service; and keeping the culture alive and well.

The Southwest model achieves control instead through practices that emphasize the rich flow of information up and down the organization. The span of control is much smaller, to allow a more fine-tuned interaction between supervisors and front-line employees.

Low-Cost Provider Strategy

As a point-to-point carrier, Southwest implements a quick turnaround strategy which requires high levels of coordination. In support of its cost-cutting strategy, Southwest negotiates contracts with its pilots that are significantly longer than the industry norm. It heavily promotes the online sale of tickets. Moreover, the company also selects to fly fuel-efficient 737s and now has over 300 of them, the only type of aircraft it flies. Such operating efficiencies enable Southwest to compete on