Creating the Future at Southwest Airlines

On the watch of three generations of executives, conservative management and aggressive expansion guided Southwest Airline's legendary growth and success in an unattractive industry. Herb Kelleher, founder and industry revolutionary, introduced a business model that transformed the airline industry. After 20 years of steady growth, Kelleher passed the baton to James Parker and Colleen Barrett, the first man-and-woman team to run an airline. This team maintained Kelleher's direction and focus. However, the company soon experienced cracks in its façade in the wake of 9/11 terrorism, spiraling fuel prices, labor unrest, and credible new entrants like JetBlue. After reorganization, Southwest's former CFO, Gary Kelly, took the helm. His message was that the Southwest brand was under attack, and the company would have to change. Kelly had to overcome many challenges within this turbulent environment if Southwest was to continue the impressive track record of profitable growth that they had enjoyed for 35 years. Could Southwest preserve the Herb-centric culture and, more importantly, was this culture critical to their future success? Would Southwest lose its leadership position to copycats, or, worse, have to copy the copycats to meet customer expectations? What could Southwest do to maintain their cost advantage in light of spiraling fuel prices, costly labor concessions, intense competition, and aggressive industry consolidation? Finally, was it time to reinvent the 40-year-old legendary company?

• Management philosophy
• Strategic alignment
• Competitive strategy
• Business lifecycle