Do you know, the Hedgehog concept has helped Southwest airlines of America to generate profits for more than 4 decades!
Southwest Airlines has grown remarkably since 1970. From small, quirky, Texas-centric airline into the largest domestic carrier of the United States. In the past 10 years, change has come fast, with the airline focused mostly at the largest U.S. airports, such as New York LaGuardia, Philadelphia, and Los Angeles, rather than at the outlying airports like Manchester, New Hampshire which it once preferred. Southwest is even adding international routes, mostly to Mexico and the Caribbean.
But do you know that even after all this, Southwest airlines fare prices are the lowest in the market as compared to its competitors and the services it is providing? Southwest has been following this strategy since the 1970’s. And even today it is following the same strategy. Southwest refused to follow its competitors in applying new revenue-producing schemes. Southwest’s competitors have started adding fees or have raised prices for nearly all extra checked baggage, advanced seat assignments, ticket changes, etc.
Southwest is making good money, with operating margins of 20%+. There even came a time when the entire airfare industry was going through crises. But even then, Southwest stuck to its strategy and did not increase its fare price or subtracted any of its services. And yet it earned the profit.
The strategy used behind this was – Hedgehog. As we know the Hedgehog is the one who has only one task to do and it does that with all its focus and concentration so that it can keep safe from the fox. Just like that, Southwest decided to focus only on its customers and not the profits. Paying attention and focusing on just one aspect helped them in gaining their other goals and motives.
Organizations designing their strategies with focus on key aspect make a major mark, as all other aspects are interconnected. They will be automatically accomplished once the key goal is achieved. These strategies have been in use since 1970’s. Are you deploying them?
Written & Compiled by Faber Priyal & Faber Mayuri
